How Do You Manage Finances as A Teenager?

Saving money as a teenager is difficult, especially when your friends are out shopping for new clothes and going on weekend trips. However, it is not impossible. As a teenager, you have big dreams, whether it's a new iPhone, that trip you've always wanted to take, or bigger goals like buying your first car. Your parents may assist you in obtaining some of these items along the way, but saving your own money for these purposes makes achieving them more rewarding. Here's how you can save money in the long run as a teen.

1. Make a list of your needs and wants. It's simple to spend money. What is difficult is spending money wisely. Separating your wants from your needs and spending money primarily on your needs is one way to help you spend money wisely. Consider your immediate needs as well as what you will require in the coming months. In one column, write down what you need and the costs associated with it, and in another, write down what you want and the costs associated with it. "Can I live without these wants?" and "Are there alternatives to my wants?" For example, suppose you've decided you need a cell phone. Is a used cell phone a better option than a brand new cell phone in terms of saving money for other necessities? Writing them down allows you to better prioritise your spending.
2. Begin the Savings Habit. Starting to save for the future while you are young can kickstart a lifetime of healthy savings. You brush your teeth twice a day without thinking about it because it has become a healthy habit. So, as soon as you have any income, start putting money away for the future. This will be used to fund short-term goals such as purchasing a new software game, long-term goals such as purchasing a laptop computer, a rainy-day fund, and college expenses. A rainy-day fund can help you save for unexpected events like seeing your favourite musician or attending a special school event. Once you've established a savings habit, it will be natural for you to save for the long term, including funding for retirement, whenever you have any earned income from a job or a business.
    
3. Make a budget. You may already have some money coming in from weekly allowances, birthday money from relatives, and a part-time job when you get older. When creating a monthly budget, begin by listing all of your income, followed by savings and expenses. "Pay Yourself First" means that you must first establish your savings goals, such as saving for a computer, before listing your fixed and variable expenses. Your total income should be equal to your total savings plus your total expenses. To balance the budget, you must prioritise your discretionary expenses by spending money on things or experiences that bring you joy and eliminating expenses that may be impulse purchases, such as candies and vending machine snacks.
   You must keep track of your spending by writing it down on a notepad or using a tool like a Google spreadsheet. You should compare your actual expenses to your monthly budget on a regular basis and make adjustments to stay within your budget. This is how your budget will assist you in meeting your short-term and long-term objectives.
4. Be cautious when using credit cards. When you go to college, credit card companies may frequently entice you to sign up for their credit cards. They will try to persuade you that having a credit card is like having free money to spend while only paying the minimum amount each month. This money mindset can be very dangerous, as you are more likely to rack up credit card balances quickly and become entangled in an inescapable high-interest rate nightmare.
   
   If you are late with your payments, you will be charged a late penalty, which will have a negative impact on your credit score. A good credit score allows you to get a car loan or even a mortgage to buy your first home at a low-interest rate in the future, saving you money on interest payments.
    
5. Be a wise shopper. Plan ahead of time each week by making a grocery list and sticking to it. Use recipes that call for low-cost, healthy ingredients like tuna, eggs, beans, and lentils. To avoid impulse purchases, eat before you go shopping. Online price comparisons are especially useful for clothing and shoes. Take college classes while you're still in high school if they're free or cheap. When you begin your search for the right college, you will conduct additional research online, speak with counsellors, and visit some colleges. You can finish college early and save a lot of money by taking some AP classes now.
6. Get Yourself a Job. When you're old enough, you can get a part-time job or start a side business that matches your skills and interests to supplement your income and gain valuable life experience. You can work as a babysitter if you enjoy working with children. If you enjoy walking dogs, you could walk them for your neighbours. You can pull weeds, plant vegetables, grow flowers, and mow the lawn if you enjoy working in the garden. You can raise money by selling your homemade cookies and muffins.
7. Read up on Savings and Investing. Few people ever become wealthy solely on the basis of their salaries. Long-term prosperity is generated by saving and  investing over time. A savings account with a bank pays interest, not high interest, but the money is liquid and safe, so you can easily access it to pay for short-term expenses. Investments (stocks, bonds, and real estate) have the potential to earn higher returns over time, but their value can fluctuate significantly. For example, if you have five to six years before college, you can use  investments such as stocks and bonds to earn 4% to 6% annualised returns rather than putting all of your savings in a savings account that earns less than 1% interest. If your parents haven't started a 529 plan (college savings plan) for you yet, talk about how much a four-year college education will cost and how you can help your parents increase savings to the 529 plan because the money put in it can be invested and later withdrawals to pay qualified expenses are tax-free.
    
8. Discover the Secrets of Compounding. "Would you rather have Rs. 10,000 per day for 30 days or a rupee that doubled in value every day for 30 days?" asks the trick question. Today, we know to choose the doubling penny because we'd have about Rs. 5 million at the end of 30 days versus Rs.300,000 if we chose Rs. 10,000 per day.
   Compound interest is often referred to as the world's eighth wonder because it appears to possess magical powers, such as the ability to turn a penny into $5 million. Compound interest is great because it applies to money and helps us achieve our financial goals, such as becoming a millionaire, retiring comfortably, or becoming financially independent. To make the most of compound interest, you should start investing early, invest as much as possible, and aim for a reasonable rate of return.