The teenage years are the time when most people get familiar with making independent decisions about spending money. With great power comes great responsibility, but how much do teens actually know about saving and spending? The world of finance can seem confusing, but a good place to start is with your own habits. Building good money habits now is a gift that will keep on giving into adulthood, and later on, can help you achieve financial freedom faster and easier.
Read on for 3 simple money habits to develop in your teen years!
1. Shop Smart
Whether it’s on new electronics, clothes, cosmetics, or food, it can be tempting to spend money without much thought beyond “I want that.” However, smart shopping can save you a lot of money in the long run.
Next time, instead of going to the mall to hang out with friends, try going somewhere else instead, like a park. Without actually seeing and touching potential things to buy, the temptation to spend money is greatly decreased. Think of shopping as a way to buy things that you really need and not a social activity.
To further encourage smart shopping habits, try asking yourself questions such as:
- Do I really need this right now? If so, why?
- Do I already own something similar?
If you have a job, another great question to ask yourself is “how many hours of work is this worth?” The next time you’re judging an item on your shopping list, try putting things in perspective by seeing if its value matches up with the amount of work you’d have to do to afford it.
2. Pay Yourself First
The next time you receive your paycheck or allowance, trying tucking 10% of it away into a fund of your choice before spending anything. Think about your goals: are you saving up to buy something more expensive? Are you interested in investing? Not only will paying yourself first help you achieve those external goals, it will in turn reward you with delayed gratification, which is beneficial to emotional development.
Delayed gratification is the process of resisting temptations of instant gratification, or smaller immediate rewards, in order to unlock bigger rewards later. Not only will saving a chunk of your money help you buy the bigger things you truly want or need, there is also the added bonus of improving your ability to delay gratification. Exercise your self-control, achieve long term goals, and diminish the negative effects of overindulgence and overspending by saving a small – but significant! – portion of the money you receive.
3. Track Your Spending
When small purchases pile up, they can take more out of our money that we expected. Avoid overspending by tracking what you buy. Apps such as Billguard, Dollarbird, and Mint help track how much you spend, on what, and how you can budget better. Seeing unabridged reports of everything you’ve spent money on can help you see patterns; if you’re eating out every day, buying expensive clothes, and going out often, it adds up.
Every Penny Counts
If incorporating all three of these habits at once is too hard, you can try to start with just one at a time. Just as with saving money, every little bit of effort is useful in the process of developing positive habits! Above all, remember your long-term financial goals and think twice before spending. With your money, you have the power, you have the responsibility, and you have the ability to make the most of it.