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Monday, April 15, 2024

Five Personal Finance Tips for Teenagers

Learning how to manage money from a young age is one of the most useful skills that can be developed early on in life. Studies have shown that children should be taught how to handle money and finances ideally before the age of seven – as money habits and an attitude towards money are already established by then. [Source]

It is imperative for teenagers in particular to take on the responsibility of money management as they are at the age where they are about to enter adulthood and face the financial challenges of the world. This includes learning the art of earning money, saving it and spending it by making wiser decisions that ultimately shape their future.

This article takes a look at how good money management can help teenagers greatly. If you are a teenager, listed below are some personal finance tips that you may find useful.

Always maintain a stream of income

As a teenager, you may be too young to be employed with a full-time job or occupation. However, earning cash at a young age is a great way to learn how to manage cash flow early on – be it through a minor part-time job or a small side hustle. A few suggestions for part-time jobs include tutoring students (a great idea since what you’ve learnt in school is still fresh in your mind), as well as freelance writing, babysitting, running errands and more. If you have the means, you can also manage a simple business – perhaps running your own juice stall in your neighborhood during your free time. You may also consider monetizing your talents; for example if you know how to bake, you could run your own bake page on social media. In addition to helping you develop financial skills, having a stream of income provides you invaluable life experience and also helps you gain great insights into a future job. If you still have not decided on what avenue you want to pursue after your studies, having such experience definitely helps with letting you figure out what you want to do with your life and what you are most passionate about.

Follow useful finance accounts on social media

It has become normal for teenagers to spend a great deal of time on social media. If you are a teenager who does this too, make sure that you are consuming the right type of content that can be beneficial to you and add value to your life. Following a few personal finance accounts is a great way to boost your financial literacy without having to spend too much time or effort. Most young investors turn to the below social media platforms for money advice, according to research: [Source]

Facebook – 33%

Instagram – 32%

Reddit – 29%

Twitter (for money hacks) – 27%

Before following personal finance influencers, you may want to check their background and whether they are adequately qualified to be conversing about the subject. Some individuals share advice based merely on their own experiences whilst others are backed by professional certifications in money management – you may want to take this into consideration when deciding which accounts, you want to follow. However, most accounts share useful tips and strategies that you can adopt. Below are a few reputed personal finance influences that you could check out.

Nick Loper: Side hustles, creating passive income & financial independence

Tiffany Aliche: Budgeting & money management

Chelsea Fagan: Spending, saving, debt, budgeting & money management

Anthony O’Neal: Debt and money management

Spend wisely and don’t give into peer pressure

As a teenager, it is common to feel like you need to adjust your purchasing patterns in order to keep up with what everyone else is doing. Having the latest electronic gadgets, clothing, cosmetics and accessories is often deemed important at that age in order to create a favourable impression amongst friends and the people you associate with. However, it is important that you quickly learn to identify unnecessary purchases and fad items that are simply a waste of money – this is an important step of making wise financial choices. In order to do so, the first thing you need to practice is being averse to peer pressure and learning how to say no. Thinking independently is a crucial skill to develop and it will not only help you realise which purchases are unnecessary; it will also help you reject detrimental behaviour and not get caught by bad habits simply because the people around you are doing it. Mastering this skill will greatly help you later on in life, even as an adult.

Always use an expense tracking app

Tracking your expenses is how you can monitor your progress, in terms of meeting your personal finance goals. Make sure you set yourself a monthly budget at the start of each month for your expenses and also allocate an amount of your earnings for savings. As your month progresses, record every purchase you make – no matter how small they might be. You can download a simple and free expense tracking app for this purpose as it is a convenient way to enter your data immediately, so that you don’t forget your expenses later on. Most apps let you create categories for your purchases – such as food, entertainment, transport, etc – and also offer a number of useful features that allow you to analyse your spending patterns for each month. Having access to this data gives you a clearer idea of where exactly your money is going and what you need to cut down on in the future. For example, if you realise that a large majority of your expenses are unnecessarily spent on food, you can be more mindful about this for the next month and cut down on expensive meals.

Don’t be discouraged & learn from mistakes

Last but not least, it is quite normal to not get everything right the first time. Don’t be too hard on yourself at such a young age; see it as a learning curve and realise that making mistakes provides you great experience on what you shouldn’t do next time.Even if your part-time job does not work out or you fail to meet your finance goals – remember that this is okay. Talk to someone to help you figure out what went wrong and emerge stronger than before, knowing that you won’t make that mistake again.

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