Budgeting Tools for Teens
If you have a job, or even an allowance, then it isn't too early to start thinking about budgeting. Teens who learn how to budget are better prepared financially for life as an adult and are more likely to achieve wealth. There are several basic tools that can help you as a teenager become good at budgeting and to manage your money effectively so you can achieve your financial goals both in the short term and long term.
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Savings Account
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If you haven't already, open a savings account in your name. When you cash your paycheck, pay yourself first. Determine how much you can set aside for savings each week and pay into your savings account before you spend any other money. This will help you achieve your longer-term financial goals and keep you out of debt. Most savings accounts can be managed online and you can use the online management tools to track your money and evaluate your budget.
Envelope Method
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Create categories for each type of expense or spending you will have each week or month. These categories might include gas money, car insurance, going out to eat, going to the movies, lunch money and clothing. When you cash your paycheck, divide the money into envelopes according to how much you have budgeted for each category. When you need to spend money, spend it from those envelopes. When the money is gone, it's gone. This helps keep you from borrowing against the future or running out of money for necessary expenses because you've spent it on other things. Also, if you don't spend the money in a given period, it's still available in the envelope for the next period.
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Excel Spreadsheet
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Excel spreadsheets are a great way to keep track of your budget, especially if you are computer savvy. You can even import them to smartphone apps so that you can carry your budget with you in your pocket. Set up basic categories on the spreadsheet such as income and expenses. Expense line-items can include both fixed and variable. Fixed expenses include car payments and phone bills, while variable expenses include movie tickets and clothing.
Checklist
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Budgets should be living documents that change to help you meet new needs and accomplish different goals. Create a checklist that you can review monthly to determine whether your current budget is successful or whether you need to make changes. The checklist should include such things as whether you balanced your budget that month, whether you recorded all of your expenses and whether you brought in the income that you thought you would. When you are unable to check something off as being successful, evaluate what changes you need to make to help you be successful in the next month.
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