Money Management for Teens

Money management is a vital skill that teenagers should consider learning. It can help them handle their finances better when they become adults. We share some tips for teens and parents to help them get started.

Budgeting for teens

Budgeting is the first money management skill teens should learn. Here are a few things to know:

• Keep an eye on spending. A teen can start by recording their daily expenses. This could be on anything — clothes, fun activities, music, coffee or school supplies. Recording the expenses can help them see their spending pattern.
• Do some math. Teens can add up all the money they get from different places, like allowances, gifts or part-time jobs, and subtract the necessary expenses first. If the money isn’t enough, they’ll need to figure out how to spend less or earn more.

How to save money as a teenager

Starting to save money from an early age is a good habit that will last a lifetime. Here are some tips on how a teen can save money:

• Be consistent. Teens can make a plan to save a fixed percentage of income every month. This can help them get into the habit of saving.
• Watch money grow. To help save consistently, teens may want to consider opening a savings account. Some student savings accounts have benefits like low fees or good interest rates. This calculator can show them how savings could grow over time.
• Review bank statements. Looking at bank statements can show them what money comes in and what goes out. It could also highlight areas where they can cut back and save more towards long-term goals, like buying a car or going on a trip.

Teens and credit

Using credit comes with both advantages and risks. Here’s some information to help teens use it correctly:

• Authorized users. If a teen is an authorized user on a credit card, establish rules and responsibilities related to spending limits, charges and payments. It can help teach them to be disciplined and responsible on how they use their money and what they can use the card for.
• Student credit card. Some banks offer credit cards for older teens and young adults. If they pay the bill on time and don’t carry a large balance, it can help them build a good credit history. This will be useful when they want to buy a house or a car in the future.
• Be responsible with credit. Using a credit card and not paying the full amount owed each month will result in credit card interest, which can add up quickly. Teens should try to avoid buying things on credit that they can’t afford to pay for immediately.

When teenagers learn financial skills, it can help set them up for a successful financial future. Knowing how to budget, save, and manage credit will help them make smarter decisions about their money as they grow up.

At State Farm, Joy Knox bring over 40 years of experience as an insurance and financial services agent. She helps people manage the risk of everyday life, recover from the unexpected and realize their dreams. Joy and her team look forward to taking care of all your insurance needs. Come see us or call at 281-759-4300.