How to Save Money as a Teenager
It’s never too early to start building your wealth, and learning how to save money as a teenager is a great way to set yourself up for future success. Saving your money comes with lessons that will benefit you well into adulthood. With the help of a legal guardian, you can make your first financial investment today and, if you are disciplined and save wisely, you could have a great payoff later.
Open a Savings Account
Maybe when you think of saving money, you imagine a box of cash under your bed or a piggy bank that gets filled until it’s ready to be smashed. Well, there’s a better, wiser way to store your money for a later day and it doesn’t require a hammer. If you want to begin saving as a teen, a savings account is the best place to start.
A savings account is a bank account that securely holds your money with the purpose of not being spent. If you keep your money in an interest-bearing account, you can earn a small percentage of your balance. At first the interest you earn might not seem like much, but the more money your account holds and the longer it holds it, the quicker it will grow. It’s free money you earn just for leaving your money where it is.
Although storing your money at home in a jar might feel secure, a lot of things can happen. There’s always a risk of your money being stolen, being destroyed in a fire, or being spent by you. That’s why the safest place for your money is in a bank. You and your guardian are the only ones who can access the funds and they will be protected against theft. Most importantly, it will be more difficult for you to spend it all because there is a limit on the number of transactions you can make within a month.
A savings account comes with the option of having a debit card for making ATM transactions. Owning a savings account is a great way to learn the basics of banking and managing your money responsibly. These are important life lessons for everyone.
Find Ways to Earn Money
If you’ve decided you want to start saving, you should think about how you’re earning your money. Fortunately, there are a lot of opportunities for teenagers to earn their own money. Your parent or guardian could pay you for doing extra chores around the house, or maybe you receive an allowance or cash gifts on your birthday. In the summer, ask around your neighborhood to see if anyone needs lawnmowing. Babysitting is another great way to earn money as a teen, or your local pool might have open lifeguard positions. Some businesses will even hire teenagers for part-time positions.
Once you have some money, you might decide you want to spend some and save the rest. Or perhaps you want to save it all. Both are great ideas but it’s important to have a savings goal.
Have a Goal in Mind
Saving money becomes much easier when you have a realistic and measurable goal. Choose an amount of money you want to save up, or even better, choose something specific you want to purchase. Do you want to buy the new phone that’s being released soon? Are you saving up for a car? Are you starting a tuition fund for your dream college? Find out the exact dollar amount you need and set your sights on it. Be reasonable! You’ll be more motivated if you have a goal you can reach and can imagine yourself achieving.
Create a Budget and Stick to it
Once you’ve set a realistic and tangible goal, you should create a budget. This will serve as your plan for reaching that goal. Determine how much money you want to save, and then write out your monthly expenses. This could include food, bills, gas money, bus fares, etc. Based on your expenses, figure out how much money you can afford to put into a savings account each month. From there you’ll have an idea of how long it will take you to reach your goal.
A good trick to sticking to your budget is to reward yourself for doing well. You can set benchmarks along the way so that you stay motivated. For example, maybe for every $100 you save, you get to buy your favorite snack. Or when you get halfway to your saving goal, you go to the movies with your friends. Choose rewards that motivate you and you’ll find saving is both challenging and fun.
Look for Ways to Cut Back on Expenses
To maximize your savings, you can look for ways to spend less. Instead of spending money on gas, you can take the bus, ride your bike, or carpool with a friend. As thrifting gets more popular, you might try buying your clothes secondhand instead of buying newer and pricier clothing. Talk to your parents about helping with some of your expenses so you can put more into savings.
Now is the Perfect Time
There are a lot of great reasons to open a savings account while you’re a teenager. Setting a goal and sticking to a budget may be difficult at first, but let it be a learning journey. It’s okay to have setbacks. You’ll have a great sense of accomplishment when you hit your savings milestones and feel more empowered to manage your money. Remember that it’s never too early to start saving.
To get started with a youth savings account today, you and your legal guardian can contact our financial experts at 866.762.8392 or visit PlainsCapital.com.