It is important for teens to keep an eye on their spending. It is believed that teenagers spend more money than required, due to their habits and hobbies.
However, contrary to the popular belief, teenagers can also save money and manage their finances well with a little knowledge. Given below are the three ways to develop money-management skills, for teenagers.
Budget – A budget is an estimate of the expected income and expenditure for any time period. It is important for everyone to have a budget and to live on it. It might sound horrendous, but making a budget, especially for teenagers, is quite easy. It is because most teenagers have limited and fixed income that comes from their parents or part-time job.
Every teen should take some time out at the start of the month and draw up a balance noticing all the expected income and expenditure this month. Mention every small and large income or expenditure that you plan on making this month.
Once done, it is important to never go above that budget. The advantage is that you will be aware of the amount you are going to make this month and the expenditures you are going to incur. Always, draw a budget that stands in surplus and not deficit.
Savings and Expenditures – Once you have a budget, it is easy to manage the inflow and outflow of money. To save, one has to cut down on expenditure. From the list of expected expenditure, eliminate the unnecessary ones. It is important to clearly differentiate between necessary and unnecessary expenditures. For example, dining out every weekend with your mates is certainly not required. You can easily cut it to once a month and save a lot of money.
One more important thing is handling unexpected expenditures. For such, savings are very useful. They should always be kept in a bank. You can open one with your parent’s help.
It is also important to not spend everything you save. If you cut one expenditure and increase other, then you will not have any money in your bank account at the end of the day.
Closing Accounts – It is an accounting term which means closing all the accounts. At the end of the month, take a look at the budget you had created on first day of the month and see how much money you have saved. You can also match it from your bank account.
Also, see how much you have saved in expenses and what were the expenses that you had not predicted. This will help you prepare the budget for the next month. Make this a continuous habit to secure your financial position. You will need money for your education and other needs in future. It is important to value it.