Starting out in the financial world can be scary — which is why it pays to start preparing for your financial future as soon as possible. That said, most teenagers aren’t in a position to make “adult” financial decisions; They need to start small.
Here are four finance for teens tips every upcoming adult should know.
1. Get Any Job
Whether you start babysitting or find a paid internship, your first job on your journey to financial independence would be to figure out a way to make money.
First things first, don’t panic! It can be easy to overthink your first job, but odds are your first gig is not going to become your lifelong career — it may not be fun, but as long as it pays you a fair wage, it’s good enough. Odds are, you don’t have any expenses yet, like rent or insurance payments. So your initial goal should be to start bringing in semi-regular income.
Once you start earning a paycheck, you can begin taking other steps to financial freedom.
2. Create a Budget
After you start earning a paycheck, it’s time to decide how you want to begin using your hard-earned cash.
Step one: go out and immediately blow your entire first paycheck on fun stuff — odds are, that money won’t go nearly as far as you expect. Once you complete step one, it’s time to move on to step 2: creating a budget.
Your budget should include how much of your paycheck should go into savings (most experts agree somewhere between 10-20% is more than enough), followed by sub-categories for other expenses like food, clothes, and even fun!
The key to building your budget this early on in your life is to emphasize savings. It’s financial advice 101: the longer you save, the more you’ll have. So, unless you have actual expenses, like rent and utilities, to worry about, you should prioritize your savings.
If you’re looking for more information on other options of how to save money before college, have a look at this article.
3. Open a Beginner Credit Card
One thing you want to try to avoid as best you can as a teenager is falling into debt. That said, the sooner you start building your credit, the better. So, you may want to consider looking into applying for a starter credit card. These beginner cards generally have low limits and are perfect for establishing and building your credit score without racking up credit card debt.
4. Plan a Big Purchase!
Finally, what’s the point of working so hard to earn and save money if you never spend any of it?! An excellent way to experience and understand the effects of all of your efforts is by preparing to buy and purchasing something expensive.
Whether you want to save up for your first car or the latest gaming system, planning to make a big purchase and then making it is a great way to see your money in action. Whether you want to make that purchase by saving up your cash, taking out a loan, or starting a payment plan is up for you. However you go about making your first major purchase, undergoing to process of buying something extra expensive is a great way to prepare yourself for making major purchases, like a house, later on.
Finance for Teens: A Beginner’s Guide
Now that you know a bit more about how to make and handle your money as a teen, it’s time to get to work taking control of your financial future!
Are you looking for more tips on finance for teens? We’ve got you covered! Check out the rest of our blog for more helpful articles!