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Teens depend upon their parents in many ways. Many times we look to our parents to come to the rescue for college education, parking tickets, or even clothes. It’s high time that we learn to manage and save money efficiently for a secure future. It all starts with a way to earn money – the first important financial milestone in every teenager’s life.
Learning financial responsibilities from work teaches us to make smart money choices like saving, investing and budgeting. The sooner we learn it, the sooner we’re on the path to financial independence. Below are the top three tips for teenagers to successfully manage and save money, and make sound financial decisions on how to spend it.
1. Taking Charge of Money
It’s possible to get the wrong idea or impression from our parents’ advice, and sometimes it’s better for us to learn from our own mistakes of over-spending. But don’t be afraid to ask your parents for help in setting up a budget or open a savings account. Once we have the responsibility to manage our own finances, we learn some valuable financial lessons. You’ll likely avoid purchasing unnecessary things or making unplanned expenses, which helps you to understand the significance of having limited finances and how to budget effectively to learn the true value of money.
2. Track Your Day-to-Day Spending Patterns
It is important to keep track of your day to day spending patterns. You might even think that spending on big purchases is what makes your money go away, but it is often the ‘everyday little things’ that leave you with no stash. Therefore it is crucial that you keep track of your cash; where it mostly goes and how can you minimize your spending upon it. To know your spending habits, you can also keep a small spending diary with yourself at all times and make note of everything that you spend on. Soon you’ll make realistic and smart spending choices and know where you want your money to go.
3. Save and Prioritize Your Money – Where it Should Go and Where it Shouldn’t
Once you start receiving money from your part-time job, it is time to refine your budget; direct your money to a list of priorities where it should matter most, like a smart savings plan, college education, rent, health care, transportation etc. This will help you keep the right balance between spending and saving.
Being able to sort out your money priorities helps you sort out your basic needs and wants, and find areas you can compromise on. Buying things which are affordable and necessary and understanding the importance of saving is an essential financial habit. When you develop a savings and a budget plan then you are most likely to become an economical human being.
This article was contributed by guest author Henry Kingston.