Having a debit card can make shopping easy. Sometimes too easy. As a teen, it’s important that you take control over your spending so you that you have money for big events such as buying your first car, spending a semester abroad, or a graduation trip with friends.
Try these budgeting tips to help you save more money this year for the things that will truly matter in your life.
How Much of Your Income Is Going into Your Checking Account?
Whether your income is coming from a part-time job, a weekly allowance, or both, the most important part of budgeting is figuring out how much money you are depositing into your checking account each month. This will also allow you to determine whether you will need to pick up a part-time job if you don’t already have one or perhaps increase your hours this summer to help you reach your savings goals.
If you receive money from relatives for your birthday and holidays, it’s a good idea not to consider those funds part of your monthly income. Instead, put that money immediately into a savings account to help you reach your financial goals even faster.
Make a Needs List
Do you already have a car and know that you spend $70 a month on gas on average? What about a car insurance bill or cell phone bill? Those are going to go on your needs list.
One of the easiest ways to figure out which items belong on your needs list is to review your expenses for the past two months. You may not need those frequent trips to the coffee shop that you have been making, but any monthly bills or necessary food expenses should be included on your needs list.
Make a Wish List
This is the fun part. Think of all the things that you want. This is where a car of your own, a semester abroad, or the latest phone would go. Do you need any of these things? Most likely the answer is no. But will they make your life better? If the answer is yes, put them on your wish list and find a way to save for them.
Next to each wish list item, mark down the price that you expect it is going to cost. If it is a big purchase such as a car, make sure you factor in the entire cost - taxes, tag, and title fees. Talk to your parents to find out whether they are willing to help with any of the costs of these bigger wish list items. Knowing the full price of your purchase can help you set realistic savings goals for yourself.
It’s likely that you won’t be able to save all of the money you need to purchase the items on your wish list in the very near future, so you’ll have to prioritize. Start with your top-priority item by setting aside as much as you can towards your savings goal each month.
See Where You Stand
Now that you have your numbers in order, it’s time to put them together to see how your finances are laid out. Take this example budget below to figure out how much extra income you could save each month. Start with your monthly income:
Monthly Income: $390
Part-time Job $75 a week
Allowance $15 a week
Babysitting $30 a month
Then subtract your monthly bills:
Monthly Needs: $130
Phone Bill $30 a month
Gas $25 a week
Excess Cash Each Month: $260
Currently that $260 most likely goes towards paying for date nights, trips to the movies with friends, or those new jeans you have been eyeing. But what if you put part of that $260 toward your savings goal?
If you are looking to buy a new smart phone that costs $800, placing $100 dollars into a high-yield savings account each month can put that new phone in your hands in just eight months. However, if eight months seems like an eternity, try skipping a weekend outing once or twice a month and putting that money aside to reach your savings goal even faster.
Another option is to seek out ways to earn some extra money. Ask your parents if they would be willing to pay you to do extra work around the house or if any family friends are in need of a babysitter.
Keep an eye on your budget each month by using an online tracking tool to see how much money is coming into your account, and where you are spending the most. Being aware of your spending can help you find new ways to save and reach your savings goals faster.
Start Developing Your Budget Right Now
Don’t let the fear of missing out on one Saturday night with your friends hold you back from your European getaway! Start budgeting for your savings goals today.
If your parents would like further information about our First Checking account or any of the other ways that Bank of Internet USA can help you reach your savings goals as a teen, tell them that we would be happy to help. We can be reached by phone at 1-877-541-2634 or by email at firstname.lastname@example.org.
"Developing a Budget: Savings Tips for Teens"
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