Money Management Tips for Teens

As a teen, you’re beginning to make some grown-up decisions about how to save and spend your money. These tips from the Federal Deposit Insurance Corporation (FDIC) tell you how to manage your money the right way, right from the start.

Save money before you’re tempted to spend it. When you get a paycheck or receive money as a gift, automatically put a portion of it — at least 10 percent — into a savings or investment account. Financial advisors call this “paying yourself first.” Making this a habit can gradually turn small sums of money into big amounts that can help pay for important purchases in the future.

Also put your spare change to use. When you empty your pockets at the end of the day, consider putting some of that loose change into a jar or other container, and then about once a month put that money into a savings account at the bank.

Some supermarkets and other non-banking companies have self-service machines that quickly turn coins into cash, but expect to pay a fee for the service, often close to 10 cents for every dollar counted. Plus you still have to take the cash to the bank to deposit it into your savings account.

Track your spending. A good way to take control of your money is to decide on maximum amounts to spend each week or month for certain expenses, such as entertainment and snack food. This is known as “budgeting” your money or developing a spending plan. To help you figure out your budget, keep a list of your expenses for about a month to get a better idea of where your dollars and cents are going.

Consider a part-time or summer job. Whether it’s babysitting, lawn mowing or a coffee shop job, working outside of your home can provide you with income, new skills and references that can be useful after high school or college. Before accepting any job, ask your parents for their permission and advice.

Think before you buy. Many teens make quick and costly decisions to buy the latest clothes or electronics without considering whether they are getting a good value. Don’t fall for trends, and shop around before making a big purchase. Always consider how many hours you’d have to work to cover the cost of a big purchase you don’t absolutely need. If the answer makes you cringe, don’t make the purchase.

Be careful with cards. Under most state laws, you must be at least 18 years old to obtain your own credit card and be held responsible for repaying the debt. If you’re under 18, though, you may be able to qualify for a credit card as long as a parent or other adult agrees to repay your debts if you fail to do so.

An alternative to a credit card is a debit card, which automatically deducts purchases from your savings or checking account. Credit cards and debit cards offer convenience, but they also come with costs and risks that must be taken seriously.

Protect yourself from fraud. Even if you’re too young to have a checking account or credit card, a criminal who learns your name, address and Social Security number may be able to obtain a new credit card using your name to make purchases.

One of the most important things you can do to protect against identity theft is to be very suspicious of requests for your name, Social Security number, passwords, or bank or credit card information that come in an e-mail or an Internet advertisement, no matter how legitimate they may seem.

For more guidance on how to guard your personal information, see Protect Against Fraud.

Be smart about college. If you’re planning to go to college, learn about your options for saving or borrowing money to cover tuition, books, fees and housing. Also consider the costs when you search for a school. Otherwise, your college debts after graduation could limit your options when it comes to a career path or where you can afford to live.

For more information on saving and borrowing for college, visit www.students.gov.

Information in this article was originally published by the FDIC.

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