It’s really important to start learning to save money as early as possible. Learning important money management skills such as saving will help to set you up for life whilst helping you avoid debt and money issues. Whether you’re a parent interested in how your teen can start learning how to save more of their money, or a teen who wants to take responsibility for their own earnings and savings, read on for lots of tips on how to start saving money as a teenager.
Make the most of the savings already available to you
Being a teen who still lives at home means you are already saving money compared to many adults. You likely don’t have a huge mortgage to pay or rent, so you can really take advantage of this to maximise your savings. Even if you are paying rent to your parents, it’s highly likely it’s a fraction of what it would cost if you were to move out and live on your own. If you are an older teen and working full time then you could set aside the amount it would cost you in rent and bills if you were living independently and put this into savings. Not only is this good practice for when you do move out of home and need to live on the remainder of your income after such outgoings, but you’ll also quickly build up quite a substantial savings pot. You can even apply this if you are only working weekends around studying by saving the relevant proportion of your wages. For example, rent or mortgage might be 30% of your income when you move out, so save 30% of your current part-time earnings to represent this. It’s a great way to begin practising budgeting, whilst having the benefit of saving this money instead of it actually going towards rent/mortgage/bills!
Stay on your parents’ insurance if you have a car
If you have passed your driving test (congratulations) and have your own car for independence then you’re probably pretty shocked at the staggering cost of insurance for new teen drivers. However, if you are still living at home then you can utilise the perks of staying on your parents' insurance and give them the difference in their premium cost with you being an additional driver on their policy. This should work out much cheaper than seeking your own independent car insurance, for several years at least or until you move out of your parents’ home.
Learn to shop responsibly
We are all bombarded with ads every single day and no doubt teens spend a lot of time on social media being tempted by all the amazing new things their friends have or celebrities have. It’s important to not get sucked in and develop a consumerist I-want-it-all attitude that could lead to a shopping addiction and issues with debt down the line, or even an issue with teenage debt. A much better trend that is also co-existing is the sustainability and conscious shopping trend. Rather than shopping new, instead, shop pre-loved by supporting charity shops or buying off individuals on sites such as eBay. Also, once you are done with an item such as clothing and no longer wish to wear it, you can sell it on a preloved marketplace to recoup some of your original costs or even make your original money back. Learning these great money-saving and money-making techniques from an early age and getting excited about them will set you on the right path for your financial future. Also learn to think before you buy. Make a decision to wait at least three days before you buy something you’ve just seen as the novelty may fade during this time and you may decide to keep your money instead.
Think carefully before you buy a pet
Now you’re older, you may wish to choose and buy your own pet, but think carefully as this is a huge financial and personal commitment. Whilst growing up perhaps you had some of the best dogs for families as pets and it’s brought out the animal lover in you, but there are some things to think about before you buy your own pet whilst still living at home with your parents. Firstly, are they onboard? Do they want another pet in the house or not? Secondly, can you afford a pet? It’s going to cost a lot of money from insurance costs to food, toys, equipment and potential vets bills. Likely your parents paid for all this when you had pets as a youngster and you might not realise the financial cost of having a pet. Thirdly, they will take up a lot of your time. Dogs, for example, should be walked every day and can’t be left alone for whole days or weekends if you want to go away with your friends. Fourthly, what about when you move out of home? Do you plan to go to university or into work and rent a house? Many landlords won’t allow pets and then you may have to make the decision to give away your pet and lose any money spent. Whilst buying a cool pet might be the first thing you want to save for as a more independent teenager, it’s not going to be an efficient way to start saving money and it might be a better option for when you have fully moved out of home and are in a stronger financial position and appropriate residence.
Open a savings account
As a younger child you likely had a piggy bank and possibly a savings account your parents saved into for you, perhaps it still exists and you can’t access it until you are older. Now you are an older teenager you can actually open your own savings account! Having a separate account from your main income/spending account that is purely for savings is a great way to manage your finances. This way you can move money into your savings and know that is money saved. You can watch your savings grow, set goals and easily define your savings from everyday spending. Some savings accounts will pay interest too, which will effectively help you to save more money as they’ll increase your savings balance. Interest or bonuses on savings accounts are a great incentive to encourage you to save more as you’ll be financially rewarded.
Set a savings intention
On that note, you should set a savings goal so you have a target and motivation to save. Whether this is saving for something important you want to buy or setting a monetary target, setting an intention for your savings can give you the determination you need to save. Seeing yourself begin to reach this goal and building towards it will give a sense of accomplishment which should aim to inspire you to continue. Getting such gratification from saving at such a young age is a step in the right direction for your future money management skills.
Make more money
Obviously, if you are working alongside studying you don’t want to work more and jeopardise your studies, but if you have the time or are already working full-time but want to earn more to save more, then there are options. From trying to get a promotion at work and progressing your career, yep even as a teenager it’s possible (aim to be a supervisor for example if you have the skills and maturity), to starting a side hustle and becoming a budding entrepreneur. There are many ways nowadays to make more money online or from home in your spare time, even if limited, that can help to increase your savings with the extra income earned. You could even ask your parents if there are household chores or tasks they need to be completed to earn yourself extra money. This could be extra cleaning around the house, or if your parents own their own business then perhaps they have suitable jobs you can assist with. Even if you are studying there are jobs as a teenager, such as babysitting, where you can take your studies with you and revise when the children are asleep, whilst earning money at the same time!