How to Budget as a Teenager

How to Budget as a Teen

It’s hard to budget to begin with, it’s time to make budgeting easy. With the tips we provide below you are sure to improve your budgeting skills to save more money while you spend.

The best ways to budget are:

  1. Track Spending Habits
  2. Know Your Monthly Spend Limit
  3. Automate Your Money
  4. Give Yourself a Spending Allowance

 

You probably stopped at #3 on the list and are like “how can I automate my money”, we will get to that but first you need to learn what a budget is. A budget is an estimate of your income and expenses over a set period of time. To make it simple – it’s what you spend each month versus how much you make. One of the biggest mistakes someone can make at a young age is to never have a budget and spend more than what their income allows.

You can visit hundreds of sites out there that will teach you how to budget and most of them are pretty good. The way to budget hasn’t changed in what feels like forever. There are tips and tricks on how to budget better but it all comes back down to – set an amount you are able to spend without going over your income each month and never go above that amount.

We would suggest finding an app or something you can use that will allow you to automate your spending habits and keep track of what and where you’re spending. I would first start with reviewing your own bank statement. You can easily see where you’re spending your money. Go line by line for each entry and map out exactly what you bought and the type. Is it all relevant to your survival? We can probably guess pretty good and say it’s not.

So what is a spending plan? Well, it’s a way you can reduce the stress caused by managing your money and it can help you get out of debt or stay away from it. Remember – the goal is to make money not lose it here.

 

Track Spending Habits

Like we said above, the first step is to figure out where you’re offloading your hard earned cash. You have to include necessities like bills, rent, and so on because it all adds up to your income. The goal here is to never match or exceed your income. You always want to be less, if possible.

We suggest not trying to manually track your spending as it just gets tedious and pretty boring quick, we won’t lie to you. Your goal here should be to setup some sort of automated tracking system or app that you can use to quickly log information or, better yet, have it review your bank statements for you. Be careful who you give your financial data to though – better to be safe than sorry.

 

Know Your Monthly Spend Limit

This is something many people have a hard time with and adding credit cards to the mix doesn’t really help. Nearly every teenager, adult, senior, or heck just any person has at one time used a credit card. They are the devil but such a necessity to having a luxurious life. If you don’t have any credit you can’t buy a car or a house without paying the amount in full.

Here are the steps to figuring out your monthly spend limit and comparing it to your spending habits:

  1. Add up the totals of your spending habit necessities (rent, bills, etc.)
  2. Add up your goal amount to save (yes you need to save money)
  3. Get your pay stubs or manually figure out how much you take home each month (after taxes)
  4. Do some simple math (income – expenses) and you have what’s left over for the month.

 

There you have it, in 4 steps you can figure out how much you have left over. The amount you have left over is your freedom amount you can use to spend at the movies, video games, dates, or whatever your heart desires but we suggest you save or learn how to invest your money with only a little bit of money.

 

Automate Your Money

This one is a bit tricky and we covered some automating tips already. There are really a few ways you can automate your money to make it easier on you.

  1. Automate Spend Tracking
  2. Automate Bill Payments
  3. Automate Investments/Savings

These are probably the 3 things you can or will want to automate. By automating your spend tracking you are taking a lot of the burden and tedious tasks of calculating what you’re spending each month. There are tons of apps out there, and maybe your bank already has one, where you can check where your money is going to. I know some of them are even smart enough to know if it’s a necessity or not.

You should always automate your bill paying as much as possible. Not only does this insure that you don’t miss a payment that could kill your credit score but it allows you to already portion out your income for that bill so it’s not even part of your thoughts when you go to see what you can spend.

There are many ways you can invest your money with only having a little bit to begin with. Some of these are dividend stocks, 401ks, treasury securities, and so on. You can pretty much automate a lot of your investment opportunities now days with how advanced the technology is getting. We tend to favor dividend stocks for our automation as we can dump a defined amount of cash each week and slowly build up our reserves.

 

Get That Spending Allowance

We get it. Life is short and you don’t want to spend your entire life constantly thinking about money or the future. We have been there. You should never forget to give yourself a spending allowance each week or month so that you can enjoy life. Remember no matter at what age you are – you can’t take money with you when you’re gone. You can spend your entire life earning money but if you never enjoy it, your family, experience life, or anything like that – it’s for nothing. This seems pretty against the entire article but we felt it was important enough to keep it in. You are human, be a human and don’t forget to spend a little cash to keep yourself sane.