Money Management Tips for Teenagers

When you are a teenager, you often have a limited amount of money at your disposal. So, it is very important that you spend that money judiciously. It is likely that, you are unable to figure out as to where all your money has gone. It is an indication that, it is high time you develop the habit to monitor your expenses and spend more carefully. Some of the tips given below can help you in this task.

Start Budgeting

The money that you get every week or month is fixed. So plan your expenses in advance. Make a list of those expenses that are essential and allot a certain amount to each of them. It should include major expenses like cell phone plans, restaurant bills, gas for car, etc. Additionally, a small amount has to be kept aside for some minor unplanned expenses, which are bound to happen.

Monitor your Purchases

Planning your budget is not very tough. But sticking to the budget is a difficult task. Keep a close watch on your expenditure. It can happen that you make several small unnecessary purchases in a day, and that may sum up to a really big figure. In order to avoid this, pen down the things you bought and their price everyday. On weekends, find out if your expenses matched up with the estimation in your budget of the week. If not, then make sure you cut back on a few spending in the following weeks to fit your expenses. When you succeed to restrain your expenditure, compliment yourself.

Save for Expensive Purchases

When you come across an expensive item like a cell phone, that you wish to buy but do not have the money, you feel disappointed. You feel that luxury items like these are not meant for you. Do not lose heart. That does not mean you go out and buy it impulsively. Start saving some amount every week. Suspend all kinds of unwarranted spending for a few weeks. Eventually, you will be surprised to find out that, you can actually afford to buy the things which once you felt were out of reach.

Avoid Using Credit Cards

You may feel it is very convenient to buy things using credit cards, just because you do not have to use cash on the spot. Later, you will realize that you have ended up paying more than you had wanted to. It happens, because the interest rates charged by credit card companies are very high. So it is better, if you shop using cash payments in order to save a good amount of money.

Handle Cash Machines with Care

There is no doubt that cash machines are very convenient to withdraw cash. But, it often happens that after withdrawing money from a cash machine, we tend to forget how much cash has been taken out. This can lead to the risk of overdrawing on your account. So, make sure that you keep a track of it.

A little bit of attention and practice will help you develop the skills of money management. It is one such quality, that will help you all your life.

Basic Money Management Skills

Money. That which makes the world go round. It all boils down to the money that we have at the end of the day. Money determines the way we live, what we do, and basically every other decision of our lives. Without money, we are basically nothing. And that, I know, is something that no one will want to go through. So it becomes imperative that we earn well. But earning well is not the end all of everything. It actually begins from there. Money which is earned, needs to be managed well, so that we continue to benefit from it for a long time. And therein comes the part where we need to learn some basic money management skills. Because without these, we will not be able to develop effective methods of money management.

Most of us do not have the knowledge of what some of the most simple and effective money management skills are. So to help you out, this article shall provide you with just that.

Money management skills are not difficult to learn once you get the hang of how to go about it. Given below is a step by step plan that you can follow in order to nurture some of these skills.

Take Stock
The first thing you need to do is calculate how much you are earning. Add in all the resources. Once you have this figure, calculate how much money you need to spend every month. To learn how much you spend every month, the best method is to write down each and everything that you spend for a couple of days. The amount will most generally exceed the amount that you had in mind―that’s because we don’t realize how much we end up spending on small things. Keep in mind that you need this spending figure to learn the basic skills. It is also important to note that the figures of two months will never be the same, there will be more expenditures incurred in a particular month and not so many in the next. But an average figure can be definitely arrived at.

Allot Amounts
Now that you know an average amount of the money that you need to spend for a month, it’ll be easier to allot amounts to different things. Make a list of all the things that you need to spend on―rent, tuition, bills (newspaper, Internet etc.) groceries, emergency (very important), and miscellaneous. You can make a long term-short term list as well. Like monthly/weekly/daily, and segregate the items accordingly. Now calculate the amount that you need for each and allot the money accordingly.

Many people use the envelope method for household items and it seems to work for them. For this, use different envelopes and mark them―for example ‘vegetables’, ‘toiletries’, ‘groceries’ etc, and at the beginning of the month fill the envelop with the amount that you need. Stick to that amount no matter what. When you put it down on paper like that, you are constantly reminded of it and the tendency to overspend is curbed.

Take Care of Debts
Never ever keep a debt. Pay a debt off as soon as you can, because if you keep on piling it, it’ll just keep getting bigger and bigger and cut into your regular saving plan. Find out how much you owe and what you need to pay off―that is the first step in managing your debt. Credit cards, surplus bills―everything needs to be paid off. Make a plan for the same. How? Along with the other envelopes, make another one for the debts so that you have a clear segregation made. It might be difficult in the beginning, but once you start physically putting in the money, you’ll deal with the problem head on and with continued efforts, the amount will be paid off.

Plan the Future
Now that the preliminary stage is taken care of, you’ll need to save for the future. The most important thing to do here is draw up a goal. What do you want to save for? Retirement? Children’s education? A house? Car? Or even small plans like a music system, a new phone etc. Calculate the amount you’ll need to save for it. This is your first step. The next steps will be how to get that money in a stipulated period of time.

Budget
Having a budget is really important. One way of budgeting is the envelope way, so that you don’t end up spending more when you have already allotted a fixed amount to yourself. The second method of making a budget, and this is somewhat of a conscious change in attitude, is that you get it in your head to budget things. Consciously decide that you want to budget. Do not spend recklessly. Other than that, planning for the future and drawing up plans of the things you need to save for will help you to budget well. This is because you’ll know what and how much you need to save up on to get that amount.

Invest
After paying all the bills, the surplus amount that lasts needs to be invested well. There is nothing worse than stagnant money. So consult a financial adviser or an investment adviser who will calculate how much you can afford to save per month, after deducting the expenditure and surplus. After this he will draw up a scheme that suits you best. It could be anything from a fixed deposit account to investing in mutual funds or buying property as assets.

Easy Saving Tips
Along with budgeting and drawing up plans, you can also consciously decide to save. Here are some money saving tips that you can use:

– Buy things in wholesale.
– Instead of buying books, join a library or start a club. Use this same formula for different things.
– Car pool to work, that will save on money for gas AND is good for the environment.
– Buy things on sale.
– Go through your daily expenditure sheet, you will find that there are several things in there that you can easily give up. Like a very expensive brand of hair product.
– Turn off the power when you don’t need it.

Earn Extra
It has been found that we never tap the full potential when it comes to expending our talents or finding other means of earning some extra money. This is one of the more indirect money management skills that we need to learn. Here are some of the easiest ways to make money―taking on freelancing jobs, giving tuition, making use of your hobbies and talents like singing or dancing (giving classes, singing in a club) or cooking (providing snacks for a establishment or making a fixed amount for a bakery). Other methods include, selling things for scrap, holding garage sales etc.

Acquiring money management skills allows you to live better. It secures your future and helps you gain control over your life rather than the debts and money problems controlling you. It should therefore be our prerogative to learn and practice the several money management skills to lead a more fulfilling and comfortable life.