10 Easy Tips for Teens to Save Money
Ask any adult and they’ll tell you that saving money isn’t easy especially if they didn’t start doing it at your age. It should become a habit. Something you don’t have to think about, and you do automatically. Below are some helpful and easy ideas to help you get into that habit and begin to build your own wealth.
Learn the Difference between Wants vs. Needs
We will cover this further in this series, but it is perhaps the number one step to learning how to save. So, what is the difference? Needs include food, shelter, basic clothing, healthcare, and education. Wants are all the extras—from the latest smartphone to movie tickets to designer sneakers. In other words, what do I need to survive and thrive versus what makes me happy in the moment.
Earn Extra Money
Let’s say your parents pay you a weekly allowance for doing chores around the house. Ask if you could add to those chores to make extra money. Or look around your neighborhood or visit family members and see if anyone could use services such as lawn mowing, leaf raking, snow shoveling, or washing cars. Ask your new customers to commit to a weekly or monthly agreement so you know that money is coming in. Then put that extra money into your savings account to fatten it up or to save for a big purchase item.
Learn to Set Savings Goals
Setting goals is not only motivating but is great when you achieve those goals especially when it comes to money. A new iPhone coming out soon? Maybe a new play station. But how do you set goals to make that purchase happen? You could do a “goal reward”. When you reach a certain amount of savings, you reward yourself with that purchase. Keep in mind, the purchase shouldn’t empty your savings. You are simply learning that savings can be rewarding and that good things come to those who work hard and wait.
Find a Place to Put Your Savings
When you were younger, you probably used a piggy bank or a glass jar to keep your money in. Now that you’re a teen, consider setting up a savings account with a local bank or an online bank. (We will get into this further in this series) Most have great free apps to help you plan your savings and most have ways to save for purchases as well. Also, some have a sign-on bonus or low interest rate that pays you for using your money and comes with a debit card.
Important to Track Your Spending
Again, this is something that adults struggle to do. A cup of coffee here, a splurge on a new outfit there. Suddenly, they are at the end of the month when bills are coming due, and they wonder what happened to their money! If you get an allowance, write down your purchases each day and add them up at the end of the week or some apps will track it for you. This can be an eye-opening experience. Look for patterns and how you can cut down or even eliminate them. Buying a ton of apps for your iPhone or iPad? Consider cutting down to one a month. And again, look at want vs. need as we mentioned at the beginning.
Talk to your Parents about Savings Incentives
Need a new tablet or computer for school? See if your parents would be willing to match your savings for that item. Or if they would offer a reward when you reach the halfway mark. Your parents will be happy that you are not only contributing to purchases that they normally cover but they will see you as more grown-up when it comes to money. This leads to them seeing you as more responsible and could open up other freedoms.
Make Sure to Have a Safety Net
Like we mentioned before, don’t purchase an item that will empty your savings. Ask your parents and they’ll tell you that life brings unexpected expenses all the time. A car needs fixed or a washing machine stops working. You might start a side gig of mowing lawns and your lawn mower stops working. Make sure you have a “safety net” in your savings account or like some people call it an “emergency fund” or “rainy day fund”. Get into the habit now and you’ll save yourself a ton of headaches in the future.
See About your Parents Acting as your Creditor
One of the basics of saving is to never live beyond your means. If you have something you want to buy and a great sale for that item is about to end, ask them to become your creditor. Say you want to purchase a pair of sneakers that costs $100. Your parents could “lend” you the money and then require payment from the allowance they provide, with interest. Of course, if you wait and pay with your own money it will cost you less but learning how credit works is a good lesson to learn early on in life.
Tip: Set a Good Example
While you’re learning all this great stuff about savings, think about your younger siblings or cousins. You could be a great example to them when it comes to money. Teaching them what you’ve learned will help them get a jump start on being responsible with money. Also, you could help them weekly with their allowance. It will get you both in the habit of making the most of your money and avoid mistakes that many adults make in their lives!