For Adolescents: How to Budget

Don't look so glum -- budgeting doesn't have to be a hassle.

Whether you make money at a part-time job, or make withdrawals from the Bank of Mom and Dad, as a teen, knowing how to budget your money can help you save for college, buy a car or just download from iTunes. A budget, in its simplest form, is a document that lists the money you have coming in and what you have going out. It's your income and your expenses. How you divide it up beyond that is up to you.

Instructions

1. Account for your income whether it comes from an after-school job or a weekly allowance. Start your budget document by inputting the income you have right now. If you want, make categories for different types of income, such as allowance, money from occasional jobs or birthdays and Christmas. You can also categorize your expenses by type, such as entertainment or savings.

2. List your regular expenses. Hopefully you don't have very many bills to pay just yet, but if you do, list those first. Examples of regular expenses are cellphone bills, car payments, dues for clubs or other expenses you have to meet on a recurring basis.

3. Determine what's left over after you pay your regular expenses. The money you have left after paying your regular expenses is your discretionary income, otherwise known as fun money. As you spend your fun money, keep track of how much you spend and what you spend it on.

4. Save some of that fun money. Believe it or not, you do not need two more apps on your smartphone, new jeans or thirty bottles of nail polish. Having some savings in the bank, or just in a box under your bed will come in handy when it's time to buy a car or start stocking up on the things you'll need for your dorm room.

5. Set some goals for your money. Want a new cellphone, or better yet, want to graduate from college without a load of debt? Start putting some of your money toward these goals by saving for them. Saving for college or another goal doesn't mean never having money for going out with friends, or for buying the things you want. It simply means that you put a bit of your money back in order to meet your financial goals.

Tips & Warnings

• It's easy to set up a budget using a computer program such as Microsoft Word or Excel. Excel spreadsheets can automatically "balance" your budget by adding in your income as you enter it, and subtracting your expenses as you enter them. There are also free budgeting tools online. See the Resources section of this article for examples. Some of these online budgeting tools include apps that allow you to track with your phone.

• Your budget will only work if you diligently keep track of your income and expenses; your cellphone can help you keep up with what you spend, even if you don't have a smartphone. Simply use the "notes" feature on your phone to tally the amount each time you spend money. Or, make it even easier by taking a photo of your receipt; at the end of the day, or week, add up the numbers and delete the pictures.

References

• FDIC: Start Smart: Money Management for Teens: Simple, Everyday Things You Can Do to Save Money; 2006
• FDIC: Start Smart: Money Management for Teens: 5 Ways to Cut Spending...and Still Get to Do and Buy Cool Things
• Reader's Digest; Dos and Don'ts of Teaching Kids Money Smarts

Resources

• Mint
• Quicken
• Money Strands