Five tips that help teens be successful with money
Landed your first job? Now follow these tips that will significantly impact your financial future.
December 3, 2014 - Author: Barbara Duvall, Michigan State University Extension
You’ve got your first job and every two weeks you get a paycheck. Now there’s real money in your wallet. This is heaven, right?
It sure is! And you can keep that feeling of utopia by being a savvy money manager. Michigan State University Extension recommends focusing on these five important tips:
1. Distinguish between wants and needs. A need is something you have to have to survive (shelter, food and water, and clothes to be comfortable). A want is something you would like to have. It’s okay to buy things you want as long as you recognize that those are nice “extras” and that you could do without them. Go easy on buying your wants. Keep the need/want distinction in mind whenever you are considering spending your hard-earned money.
2. Make a budget. Budgeting is not a distasteful word -- in fact, think of a budget as permission to spend! With that mindset you are more likely to create one that you will actually follow. The Oklahoma Money Matters website outlines the steps a high school student can take to draft a realistic budget. The budgeting process not only helps you set priorities but can also help keep you out of debt.
3. Comparison shop and avoid impulse buying. Before you head out to the store, check prices using one of the numerous free apps that help you find the best price. Shop only when you have specific items you are shopping for. For added reinforcement, check out Spendster, a website that showcases stories of impulse buying, overspending or just plain wasting money.
4. Track spending. Just the act of documenting everything you spend money on may make you think twice before you get in the checkout line. To make it easy, check online for a range of apps that can help you track your spending. This step will help you stay within your budget and will make creating the next budget much easier.
5. Open a savings account. Every time you receive money, put at least 5 percent into your new savings account; if you can deposit 10 percent, go for it! Include your earnings from your job and gifts of cash for birthdays and holidays. When you are making regular deposits, your account will grow so that you can more easily handle unexpected expenses like a flat tire. Eventually you will have the financial resources to invest in your long-term goals. Watching your money earn interest will inspire and motivate you to save even more.
Learning early in life to budget, save and spend sensibly will significantly impact your financial future. For more information on youth money management topics, check out the 4-H Youth Development website, contact your local MSU Extension office or go to the personal finance section of eXtension.