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Saving for Teens

Saving and budgeting isn’t that boring! Here’s how you can develop smart saving habits as a teen and still afford everything.

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You’ve probably heard this a million times: savings are important. And you already know that having money in your savings account is a smart way to be prepared for whatever life throws your way.

But did you know that savings can also make you feel more confident? Or that your savings can eventually make you rich?! Yup. And it all starts with good habits that you can pick up when you’re a teenager.

No need to wait until you’re an adult to worry about money. By taking control of your savings as a teen, you can skip all the worrying. Just learn how to do it right from the beginning and set yourself up for success as a grown-up! 

Why Saving Your Money Is Important

If you ask adults, most of them will tell you that time is your most valuable asset. Does that mean they’re getting older and that they wish they could be young again? Maybe in part. But there’s more to it than that.

When it comes to money, saying that time is your most valuable asset means that saving from a young age can make you rich when you grow up! That’s because saving and earning interest is the best way to grow your money.

Keeping money in your savings account can also help you when you need it most. If your car breaks down and you have money in your savings, you don’t need to worry about how you’ll pay. Or, if an earthquake damages your home, you can repair it without taking out a loan.

Ready to begin saving now? Here are different ways to get you saving before you graduate high school, so you can get your financial life started on the right foot!

How to Save Money When You Have a Job

Having an income is the best way to build up your savings. And if you’re old enough, you can get a part-time job even as a teenager! Depending on where you live, you may be able to start working as early as 14.

If you’re ready for your first job, the first step is to discuss this with your parents. Once you have their permission, check your local regulations to make sure you’re able to get hired. If you’re old enough, all you have to do is find companies that are looking for your skills and get to work!

Some popular jobs with teens include:

  • Barista
  • Lifeguard
  • Store cashier
  • Tutor (online or in-person)
  • Sports coach or referee

Once you land the job, your manager will go over the payment structure with you. You might get paid weekly, every two weeks, or once a month. And chances are, you’ve already started to feel like a millionaire — even though you haven’t received your first paycheck yet!

That’s why the most important thing to do at this point is to figure out what you’ll do with your income. Before the temptation to spend it creeps in, you need to create your budget.

But wait. Don’t click away just yet! Budgeting doesn’t have to be a snoozefest!! Just hang on a little longer and you’ll see.

Budgeting Your Paycheck

We all become spendthrifts when we have extra money coming in. All of a sudden, you remember how badly you wanted those designer jeans that everyone’s wearing. And it’s been a while since you hung out with your friend from elementary school. Maybe it’s time to go to the mall with them.

If you catch yourself wanting to spend your paycheck before it hits your bank account, don’t freak out. This is super common. But did you know there’s a way to enjoy spending and save money? It’s called budgeting.

You read that right. We said “enjoy spending” and “save money” in the same sentence. Because budgeting isn’t about saving every penny that you earn. 

After all, you’re gonna work hard. And you deserve treats to reward your hard work! The secret to saving is to figure out how you want to spend your money.

So, as soon as you get the job and know how much you’ll earn, it’s time to make some decisions. You can do this with your parents or on your own, using our budgeting sheet or an app. 

A good way to start is by figuring out your savings goals and working your way backward. Once you know how much you want to save and when you want to reach that goal, some easy math will help you calculate how much you need to set aside from each paycheck.

For example, let’s say you want to have $1,500 in one year. This means you’d need to save $125 each month. And if you get paid every two weeks, that’s $62.50 per paycheck.

You can set up automatic transfers from your checking to your savings account to make saving even easier. This can help you stick to your plan and separate your spending money from savings.

Planning how you’ll use your spending money also helps you reach your savings goals. If your budget includes a breakdown of other expenses, you might find that you can save even more than you thought!

How to Save Money When You Don’t Have a Job

If you feel like you already have a lot on your plate, you’re not alone. Between soccer practice, AP classes, and volunteering, there’s little time for teens to get a traditional job. The great news is that there are other ways for teens to make money nowadays!

You no longer need to trade your time for money, thanks to technology. Here are some good ways for entrepreneurial teens to earn income without committing to a job:

  • Create an online course for other teens
  • Start a blog with affiliate marketing links
  • Sell your used clothes online
  • Complete surveys
  • Babysit your neighbor’s kids

Budgeting When You Don’t Have a Steady Paycheck

Even if you don’t have money coming in every week, it’s still possible to crush your savings goals! All you gotta do is set money aside every time money comes your way. 

In some cases, it might take you longer. Other times, you may end up putting bigger chunks of money into your savings account. Either way, the principle is the same: You need to know what you’ll do with the money ahead of time.

For example, if you sell an item on Poshmark for $25 take some time to decide how much you’ll transfer to your savings and how much you’ll use as spending money. Once you get the hang of this, you can do it with any money that comes your way: birthday cash, allowance, or money that you may get for doing extra work around the house.

How to Ask Your Parents to Help You Save Money

Whether you have a part-time job or make money from side hustles, your parents can be your best allies when it comes to saving. And they can help you out in different ways.

If you have questions about savings, your parents are the first people you can ask. Even if they don’t know the answer, they might be able to point you in the right direction. Or, better yet, you can research it together. This could inspire you to start having more money conversations as a family.  

When you want to save money, reach out to your parents about your goals and ideas to accomplish them. Depending on what your objectives are, here are ways that your parents may be able to help:

  • By matching your savings
  • Asking relatives to support your goals
  • Help you find a job
  • Provide ideas for other sources of income
  • Lend you starting capital for a business

What’s the Right Amount of Money to Save as a Teenager?

The best advantage that teenagers have when it comes to saving is time. The sooner you start, the more wealth you can create for yourself. That’s why there’s no right or wrong amount for teenagers to save.

As a rule of thumb, experts recommend budgeting 20% of your income for savings. This is known as the 50-30-20 rule, which suggests that you should use 50% of your money for necessities, 30% for wants, and the remainder for savings goals. But, while you still live at home with your parents, it’s easier to put a larger chunk of your money into savings.

Different Types of Savings

Another way to think about savings is by the amount of time it’ll take to reach your goal. This way, you can divide them into short-term, medium-term, or long-term goals. Here are some examples:

  • Saving up for the latest and greatest headphones is a short-term goal. You can set money aside for this in a traditional savings account.
  • Buying your first car is a medium-term goal. Consider a high yield savings account that could earn a little interest while you reach your goal.
  • College tuition is more of a long-term goal. In this case, a 529 savings plan that invests your money in the stock market could help grow your money.

Other Ways to Save

Saving isn’t only about putting money into an account. It’s also about finding ways to cut back on your spending so you have more cash to save. These are some easy ways for teens to save on everyday expenses:

  • Use Groupon
  • Check if stores offer student discounts
  • Wait until your favorite stores have a sale
  • Shop at thrift stores
  • Compare prices at different stores

Once you get into a thrifty mindset, you’ll probably find other ways to save money! And when you do, remember to put that extra cash right into your savings account. That’ll help you reach your goals faster and avoid spending the money on other stuff.

Saving Definitions

Saving can be the beginning of your money journey. And having the right words in your vocab can help you find the right ways to save. Here are a few words you’ll wanna get familiar with:

  • Passive Income: Money that you earn without having to actively do work. For example, if you write an ebook and sell it online. Or if you become an influencer and earn money from your videos. This is the type of work that you do once, but it continues to pay off.
  • Dividends: When you buy stocks of certain companies, they share their earnings with their investors. These distributions can happen several times a year. The amount that investors receive depends on how many shares they own and the company’s profits.
  • Compound Interest: AKA, the 8th wonder of the world. It’s when the interest that you earn on an investment gets reinvested. When that happens, you earn interest on the money saved and the interest that money earned.
  • High Yield Savings Account: A savings account that offers interest earnings of 20 to 25 times more than a traditional savings account. Sometimes, these accounts have restrictions such as initial deposit requirements, minimum balances, or annual fees.

Savings Books for Teens

Saving is easier and more fun when you have the right info to keep you motivated. That’s why we hand-picked these books that encourage you to get in the habit of saving when you’re still a teenager. Head over to our best personal finance books for teens page for more recommendations!

Most Inspiring for Young Adults

With a title like You Are a Badass at Making Money, who wouldn’t feel motivated to read?! And once you get your hands on this book, you won’t be able to put it down. It’s a real-life story that combines short essays with bits of wisdom for an easy read that can change your future.

Best Real-Life Lessons

If you think that managing money is for grown-ups and that you’ll deal with it when the time comes, The Money Club will get your wheels spinning. It’s packed with financial literacy knowledge for teens to use in everyday life, starting now.

Most Practical

You don’t need to change much to see a big impact in your bank account. That’s what Money Hacks is all about. It’s appropriate for teens, but valuable for readers of all ages. And the sooner you learn these hacks, the better financial habits you’ll develop.

As you can see, savings aren’t just for grown ups. They’re a life-long habit that you’re better off learning before you even go to college. Because the earlier that you start saving, the more time you have to grow your money and the greater your chances of becoming a wealthy adult.

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About the Author

Lucia Caldera

Lucia Caldera is a writer who specializes in personal finance. Her goal is to create approachable content that sparks financial wellness and unlocks personal growth. Lucia's work reflects her passion for financial education as the key to reducing the wealth gap for future generations.

Last updated on: July 25, 2022