Money Management For Teen

When children grow into teenagers, their financial circumstances change, including the amount of money they have under control as well as their financial obligations and outgoings.

Teenage money management advice deserves its own manual due to all of these changes in a teen’s financial status as well as the fact that they are not yet adults with real bills and real employment.

How to manage your money as a teenager?

A few things must be done if you wish to spend your money properly as a teen or assist your teen in doing so:

Define your financial values.
Clarify your financial obligations so that you can prioritise needs over wants.
Create a spending strategy that balances your financial obligations and values.
Establish savings objectives so that you can continuously progress toward the purchases you wish to make with your money.

You can create a spending plan based on your priorities, regardless of the amount of money you have available (your money values).

You need to create a spending strategy for each naira that passes through your hands in order to accomplish this.

This entails determining a proportion based on your own priorities in life of

How much of each naira you will spend on needs and wants
What percentage you will save
What percentage you will invest, and
What percentage you will give away.
You will also need to sit down with your parents to discuss your financial obligations since this is teen money management and you’re still a minor living at home.

Let’s delve a little deeper into teen budgets.

3 Teenager’s Guide to Budgeting

Let’s go one step further and provide you with some resources so that your teen can create a budget now that you have established your values around money.

Knowing your income
Identifying your costs, and
Recognizing your top priorities for spending money are necessary to create a budget.

To determine whether or not you are earning enough to cover your expenses and future priorities, as well as whether you need to decrease spending or make more money, you should fill out an ideal month (while keeping in mind that things happen and things change).

Keep in mind that you are creating a PLAN. It’s a wise move to make because you may use your plan to compare what actually occurs to what you had anticipated when something goes wrong.

After that, you can address the issues and modify your plan if you are aware of them.

Using one of these teen money management apps is a terrific way to keep track of everything once you’ve established a budget and see how you’re doing.

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How to Handle your Money While you are a Teen

I wish to lay down the procedures that will teach you and your adolescent how to handle money.

This is a high-level overview; for details on specifics, such as information on typical teen costs, teen money management applications, and typical teen financial issues, continue reading below.

Clearly identify your source of income
Establish a banking system
Create the financial guidelines
Creating a spending and budget strategy
Track your finances

Step 1: Clearly identify your sources of income

Consider teaching an adolescent about managing money. Putting money in their hands regularly is the first reasonable step.

To manage, your kid will need some real money—it doesn’t just appear!

Teens’ sources of income include:

Allowance
Commissions on chores
Kits for young entrepreneurs/establishing their own jobs
Side jobs (mowing the lawn for neighbours, babysitting, tutoring etc.)
Part-time job as a waiter or waitress, etc.

Step 2: Establish a banking system.

If they’re still utilising a money jar or piggy bank, it’s probably time to move on and enrol them in the banking system.

You can open a bank account for your teenager under your supervision that is linked to your own so that you can send funds to it (if you choose).

You’ll also need to decide on the following things:

Will you only open a savings account for your adolescent or will you also open a checking account?
Do you prefer that your teen use cash instead of a debit card to access their checking account?
If they use a debit card, would you permit them to overdraw their account or would you choose to turn off overdraft protection so that if they don’t have enough money to cover the purchase, it will be declined?
Will you make room on your own credit card for your adolescent?
How will money flow between you and your teen so that they may take care of any financial obligations (such as paying a portion of their mobile phone bill) and so that you can continue to provide them with an allowance?

Step 3: Create the financial guidelines

You’ll need to have several important conversations (and continuous ones) about financial boundaries, obligations, and restrictions. As your child gets older, they will change.

Illustrations of money rules

Spending limits: must be approved by you if your teen wants to exceed them
Categories of goods they are permitted to purchase and goods they are not permitted to purchase (even with their own money)
Giving guidelines: (some children tend to donate all of their money, or perhaps you have giving guidelines as part of your money values that you’d like to pass on)
Savings guidelines (if you want your kid to save a specific amount of all their money for anything else, like college – here are 3 tips for how to save for college in 4 years – or their automobile)

These discussions will also assist in establishing expectations for your adolescent so that they are aware of what their costs are, which they will need to know to create a budget.

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Step 4: Create a spending strategy and budget.

Your adolescent will want to sit down and draft a financial plan or budget.

The spending plan will be useful in determining how they will handle every money that comes in. They can see the actual figures that are coming in and going out in the budget.

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Step 5: Track their finances.

The only thing left for your teen to do is set up a method of tracking their money. Everything else is set up and in motion.

Keep track of their financial progress. Maintain a spending log. Monitor the growth of their funds.

Let’s move on to discuss teens money management system, other expenses that your adolescent may include in their spending plan and budget.

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About Money Management for Teens and What they will Experience

Teenagers may experience the distinctions between what is the parent’s responsibility to pay for and what is their responsibility to take care of were muddled when initial earnings from after-school and weekend employment were considered.

All of these brand-new financial circumstances necessitate learning new money management techniques.

Since teen money management only works when both of you work together (This will be discussed in more detail below), this guide is intended for both parents AND teens to read.

To ensure that you both understand what money management is and what the main objective is, we’ll start with the fundamentals.

How Do I Manage My Finances?

Whether you’re an adult, teen, or child, here is the definition of good money management:

Money management is the process of making choices and taking actions with the money you have to achieve the greatest results (both immediately, and in the future). These choices relate to how to use your money in general, such as how to spend it, save it, invest it, etc.

Teenage money management and parent money management are similar in many respects. But there are a few significant distinctions as well, which we will discuss next.

What Makes Adult Money Management Different for Teens?

To begin with, teens have less financial authority than adults do. Teenage expenses are also lower (and likely the lowest they will ever be in their lives, despite what it may seem like!).

The level of parental authority in your home is another important factor in teen money management.

In other words, since you both actively participate in earning and spending money, it’s a true collaboration between parents and teenagers.

An illustration of parental authority

Regardless of whether you provide your adolescent with an allowance or chore commissions
Whether you permit them to work at a first job or not
Whether you set up a child’s custodial bank account or not
Whether you let them use your debit card, make them an assigned user on your credit card, or just accept cash,
What costs you will bear versus what you expect your adolescent to bear

The (often terrifying) big expenditures that are coming up are another way that handling money as a teen differs from doing so when they were children.

I’m referring to purchases like a car, a college education, a first apartment, etc.

Teenagers may need to start utilising some of their own money, as a result, to save up for these significant transitional movements (which is a conversation you both need to have so that everyone understands expectations) which contrast greatly with when they were 8 years old.

List of Possible Teenage Expenses

Let’s face it: this discussion about potential teen expenses is really between you. The teen, and you, the parent.

Who is going to cover what costs?

To determine where a parent’s money ends and a teen’s money begins, parents must establish financial boundaries.

As a child gets older, their financial duties and restrictions change, until one day they become adults and are entirely accountable for themselves. Youngsters should be given some financial responsibility as they become older and become more independent.

It’s among the most sensible strategies for children to discover how to manage their money.

Therefore, some of these listed costs may be on the edge/be necessities, while others will be potential costs a teen may incur on their own (by choice or wish).

And the ones your kid has will depend on the discussions you have with them about financial responsibility.

Teenager Expenses:

Data excesses
Gas
Vehicle insurance
Weekends spent with friends (like going to the movies, or spending money at the mall)
Makeup
Christmas presents for parents, friends, and siblings
Meals after school
Game consoles
Deductibles for any accidents under insurance
Brand-name clothing (vs. the basics you buy them)
Items they misplace or break (like breaking an iPhone screen)
Upgrades that are unnecessary (but desirable), such as purchasing name-brand sneakers instead of more affordable options or name-brand apparel instead of what would typically be purchased are subject to financial penalties (parking ticket, late library fee, etc.)
Microsoft account or the PS4 account

Next, Let’s talk about the reasons your adolescent wants to start saving money now and why they want to establish a savings goal.

Reasons Teens Need to Save Money

You might be asking what an adolescent should use their savings on.

To be honest, money just kind of disappears when there isn’t a specific savings goal to work toward (am I right, Mama Bear?). You can spend it on a new shirt, body wash, data overage fees, or a variety of other things.

To encourage your teen to develop the habit of saving money, you need to give them a REASON to do so.

Not to mention, your teen may need to save money for some significant purchases that they will likely make in the not-too-distant future. This may be part of your family’s savings strategy.

To purchase a car
To get car insurance
To assist in covering the cost of university tuition
To cover the cost of school books
To pay the deductible on your car insurance in the event of a collision
To purchase home furnishings that your parents won’t cover To cover the cost of riding lessons
To cover their first apartment’s security deposit and first/last month’s rent.

I’d like to provide some suggestions below using real-world examples of what teenage boys and girls have saved up for.

4 Examples of Teenage Girl Savings Goals

Prom dress
Expense for vacation
Save money for an iPhone
Summer financial literacy camp

Teenage girls can also go further into learning financial planning for women today.

Examples of Things a Teenage Boy Might Save Up For

Expenses for a vacation
Computer iPad
Skateboard
Smart TV

Next, let’s talk about typical adolescent money issues so you can (hopefully) avoid or resolve them.

Tip: Consider how much you can learn from a money mistake and how much better it is for a teen to make a money mistake NOW rather than in the future, when their mortgage payment doesn’t depend on them getting it right. Avoiding financial problems altogether is not ideal, so keep that in mind.

7 Common Financial Issues Among Teenagers

Let’s move on to discuss some typical financial issues that teenagers experience. These issues may be the result of their own actions or may simply be challenges that they must have to manage their finances.

There is pressure to acquire, wear, and use the greatest products available, which can be expensive.
Losing focus on why they are even trying to save money, leading them to spend it instead.
At the cash checkout, the debit card is declined due to insufficient funds.
Losing the struggle between delayed and quick gratification.
Wanting to spend your own money on something that you can’t get your parents’ approval for.
Not putting money aside because you believe your parents will pay for it.
Changing from commissions on an allowance or duty to a work, and the family determining when and where it is appropriate to discontinue or reduce the amount of allowance or duties they have been receiving.

By creating a budget and learning how to handle money as a teen, some of these issues can be avoided. So let’s get started with it!

Money-Management Apps for Teenagers

Mama Bear, the age your teen is living in is so different from the one we did. There were neither applications for parents nor for teens when I was a teen.

The financial sector is currently flooded with money management apps. Why not start your child off with a teenage money management software since they will probably use apps as adults for banking, investments, and tracking various other things?

In case you missed it, you should also inquire with your teen’s bank to see whether they have a banking app with management and budgeting features.

Here are some of my favourites:

Famzoo
The Wally app
Plan’it Prom

1. FamZoo

This software keeps track of chores and allowances and syncs with a plastic card your youngster can use to make purchases (prepaid debit card).

But it goes beyond that; you can use this function to split household expenses so that your kid pays YOU for the services or goods they use on a monthly basis.

That is a tremendously helpful feature when your teen gets older and is given more financial responsibility. Download the app for Android here

2. The Wally App

is a simple money management tool that keeps tabs on your expenditures. Your child will have to manually enter each purchase (which can aid them in being more conscious) or snap pictures of their receipts. Download the app for Android here.

3. Plan’it Prom,

Plant it Prom is a free app that guides your teen through the budgeting and goal-saving process of planning (financially) for prom, and the free Teen Entrepreneur Toolbox App, which has a nice area:

For setting
Tracking, and
Achieving a savings goal, are both excellent choices for goal-oriented teenage money management apps.

Conclusion

Although you may only be beginning to achieve financial independence as a teen, there are still lots of opportunities for you to learn sound money management techniques and lifelong habits.