As a teenager money matters are generally the last thing on the mind. You just want to have fun and not worry about your expenses right?
But little do you know, the spending habits you cultivate now gets really difficult to let go as an adult.
As a teenager, you have a very limited source of income, or should I say, pocket money. It is the best time to learn money management.
What needs to be understood is very rarely in life will you have money according to your spending wishlist. The general norm in these things is that you plan your spending according to the amount of money you have. As the saying goes, cut your dress according to the size of your cloth, or spread your legs only till your sheet permits. This basically means don’t wish for more money, manage your expenses with the amount of money you have.
The satisfaction that you will feel when you are able to take care of your expenses well within your budget is joyous, also having a decent amount at the end of your saving cycle and being able to buy that beautiful dress or a new pair of shoes will make you feel amazing. Not only that the saving habits that you form now and condition yourself to spend on the limited budget will make your adult life so much easier, it will also put you years ahead of the others with respect to your money.
Some tips on how to manage your money in a successful manner that can start earning you return early in life.
1) Follow The Thumb Rule Of Saving:
No matter what your pocket money or stipend is, always spend your money according to the 50/30/20 rule. That is 20% of whatever the amount is allocated to you on a monthly basis should go into savings.
Many people recommend that you should at least save 1/3rd of your total amount available to you.
Let’s say you get a monthly stipend of INR 2000 Rupees, then the minimum amount to save from that money is 20% of 2000 which is INR 400 Rupees. Or if you can manage your expenses better then 1/3rd of your amount, that means INR 666 Rupees should go into your savings. The more you save the happier your future self will be. You can buy the good old piggy bank or even open an actual savings account in the bank. This will also get you into the formal banking habit.
P.S: Most of the banks offer an interest on the amount you keep in your savings account – so hurray!
2) Track Your Expenses:
Haven’t you often wondered where did all my money go? We sometimes have no clue where are we actually spending the money. We don’t think too much before spending a small amount of money.
Let’s carry on with our example of the stipend INR 2000. When you have 2000, you won’t think much before spending a 20 Rupee note, but we don’t realize that we end up spending too many 20 rupee notes without keeping track of it, and few 20 Rupee notes add up to a big amount.
The point being, always track your expenses. Even if you are spending a very small amount, keep a track of it. At the end of the month, see for yourself where is your money going.
If writing it down doesn’t feel like it’s feasible, then there are various apps available that can help you track your expenses, download the apps that work best for you and start tracking them down.
3) Discounts And Cashback Offers Are Your Best Friends:
In todays hyper-competitive world, consumers are the real winners. Online market places are pouring with offers. There are so many apps that give you cashback offers when you buy through them or provide you with good amount of discount when you purchase something of a higher amount. Even going out to restaurants and events are heavily discounted and loaded with offers.
Be smart with your spending, keep an eye on the offers and discounts available to you. Plan your spending in a way that you can have maximum fun with limited money. A little pre-planning with your money can help you save to a great extent.
4) Time Is Money, Money Is Time.
Investing in stocks and mutual funds at an early age gives you a kick start and gives your money more time to grow. Also, you will learn how to invest and avoid risk at very early in life while facing a very small amount of loss (that is if you face any).
Collect all the money that you have been saving and once it turns into a good lump-sump amount, start investing.
You can also add the cash that you get during your birthday or Diwali and Christmas. You can learn about the stocks and mutual funds and start investing after asking your parents or guardian to open a custodial account for you.
Doing this, you will also get a piece of practical knowledge on how things actually work.
If investing seems like too much of a risky idea for you, you can also create a fixed deposit in your name, and let that money grow for you.
Banks offer interest upto 7%, say you collect INR 10,000 and keep it In fixed deposit account for 2 years, you will receive an interest of say 5% (keeping it in a lower side) on that 10,000 every month or every 4 months (quarterly) (this depends from bank to bank). So you will have an additional INR 500 added to your bank account on a monthly basis.
All you young adults, it’s your age to have fun and not care, but cultivating few small good habits right now can put you years ahead of others. These habits will also help the adult version of you to make healthy financial decisions.