Here is a Method to Help Teenagers Budget Better

High school is the perfect time to begin learning about budgeting money. This is especially true if you intend to go on to college. Many teenagers have a regular allowance or a part-time job to count as an income. Budgeting is crucial, as many find out the hard way, whether the income is high or low. Here is a simple money management method that any teenager like yourself can use to help them develop positive money management habits to carry with them into adulthood.

Starting a budget

On a piece of paper or the computer, make three columns: income, expenses, and luxuries. Expenses are items that you must pay for and luxuries are items that you want but do not need.

First, determine how much income you have on a weekly or monthly basis. This might be allowance or a paycheck from a part-time job. If this varies, try to write down an average figure.

Next, determine your expenses. It might take a month or two or monitoring to actually figure out where all of the money goes, and that is fine. Begin to keep track of where your spend money. Fill in the budget columns showing what the expense or luxury is and the amount. Here are some common teenage expenses and luxuries:

-lunch/snacks
-clothes
-cell phone
-MP3 downloads
-video games
-other shopping

Now that you have an idea where the money has been disappearing off to, it is time to make some decisions. What are you willing to cut down on in order to save more money? It takes a lot of discipline at this age to hang on to cash when there are little or no financial obligations that are crucial (such as a mortgage). Keep in mind, however, that college is incredibly expensive, and without a little money saved up, it can be a rough time of working and taking classes just to cover the expense of textbooks. (Not to mention tuition fees, dorm costs, and food).

Maintaining and adjusting your budget

After you cut back on some unnecessary spending, you will have more money left over in your budget. What will you do with this extra cash? The point of budgeting is to save money, right? I recommend getting a bank account and putting money aside at least once a month. Just stick it in the bank, and forget about it. Most banks will allow teenagers to open an account if they have a driver's license and/or a county ID. Check with your local bank about their identification requirements.

The best idea is to determine a specific amount that you know that you will always be able to set aside. For example, if your income is around $200 a month, your cell phone costs you $80, you spend $50 on food, and $20 on random things, you are left with $50. Set aside $10-$20 in the bank. It will not seem like much at first, but a freshman who saves all four years at this rate will have around $700 when they graduate. That's not a bad start, and it will probably cover the first semester of textbooks for college.

It is important to realize that budgets can and will change. For example, if your allowance is cut off or you get a raise at work/put in more hours you will have more or less money to spend. Less money coming in should automatically mean less money going out. Pick something to sacrifice and do it before you run out of money. If you are earning more money, consider increasing the amount you put into savings. Using the $200 example, if you now make $250, bump up your savings to $20-$30 a month, rather than adding another expensive habit or spending the extra money just because you can.

Budgeting can be a real pain at first, but it is definitely worth it. The teenage years are the best years to learn money management lessons, because later in life debt can ruin you. Be smart about how you handle your money now, and you will be very happy that you did later.