Budgeting for Teens: A Guide

When I hear the term financial freedom, the first thing that comes to mind is the ability to be flexible with your money along with a sense of security. However, it's essential to recognize that there is no financial freedom without budgeting. Budgeting is arguably one of the most important skills to have in life. As teenagers, we are more likely to spend rather carelessly, which sometimes can have negative effects. Instead, here are five steps to budget effectively.

Step 1: Identify Your Income

It is important to note that a budget is not the same for everyone. Some people might save more or spend more. There can be many reasons for that, the main ones being that everyone has a different set of income, financial goals, and lifestyles. In order to identify your income, you must combine all income sources such as an allowance, a part-time job if you have one, and more. Get creative here - do you get money from relatives for birthdays and holidays? Do you do odd jobs or chores for pay? You want to cover all your bases to understand your starting point.

Step 2: Track Your Spending

Tracking your spending is crucial, especially when creating and using a budget. It not only helps you manage your money, but looking at how spending your money can also help you see what you can work on. It helps you differentiate between wants and needs, and when you do that, you're on the right track to reaching your goals!

 Step 3: Set Clear Goals

Establishing your financial goals is important, whether they are short-term or long-term. Whether you're saving for a new pair of shoes or a car, both goals will have different steps to complete them. Knowing your priorities when it comes to goals is essential because you can have two goals, one of which might require more urgency and importance, and that's okay.

Step 4 : Create Your Budget

Now that you've learned how to start your budget, you can now begin to create it. It's actually very simple. All you have to do is separate your income into different categories. For instance, if you have a combined income of $300 per month and you aim to save up for a new iPad priced at $200 within 4 months, you could simply set aside $50 each month for this goal. Then you could assign $125 for your essential needs, put $50 into savings, and allocate $75 for spending.

Step 5: Stick to the plan

Although these steps are easy, budgeting can be difficult, especially when first starting. There is no doubt that once you start budgeting it will improve your life. Making sure that you are being consistent and disciplined is very important.

Always remember budgeting will look different for each person. Some days may be better than others, and that is completely normal. Now, go forth, and save your money!