Teens and Budgeting: Mastering Money Management

You might be thinking that “teens and budgeting” advice boils down to: save your money. You’ve become a savvy saver – setting aside money for that big-ticket purchase you’ve been eyeing. For many teenagers: that may be your first car. Or it might be something fun or practical – like a new video game system or the latest phone. Maybe you’re preparing to head to college and a brand-new laptop will be your constant campus companion. As excited as you might be to take that big step and make the final purchase, slam the brakes – most big-ticket items are going to cost more than you think.

Teens and Budgeting: Making your money last

Between school responsibilities and extracurriculars, it’s hard to find time to earn money in your teens. For many, summertime employment is the main source of savings for the rest of the year. That means budgeting carefully is important. And while doing personal homework on top of your actual homework doesn’t sound thrilling, comparing your savings and regular expenses a few times a year can save you a lot of headaches. Budgeting apps, a spreadsheet, or even an old-fashioned paper notebook (if you’re feeling retro) are a good way to take stock of your income and costs over the entire year. If you forget what you’ve spent on, log in to the FFCCU mobile app and look through your Ignite Account transactions. Talk to your parents about ideas on how best to record your budget.

Long-term budgeting (6 months to a year) is where over-saving for high-cost items really comes into play.

Saving Past the Price Tag

Think about that expensive item you have your heart set on. Let’s say, for example, you’re close to getting your very first car. Where are you driving it? School and back? Work? Do you expect to drive your friends around on weekends? That’s probably a full tank of gas once a week. Add that expense to your budget for every week of the school year, and tack that on to the car’s overall cost. And while you’re at it, anticipate a few oil changes, too (put down the full price but keep an eye out for coupons).

What model year is this car, by the way? There’s a good chance your first car is an older used vehicle. You can expect that something is going to break down on it every other year or so. Depending on the part that wears out, you’ll be set back several hundred or even over a thousand dollars. Sometimes this can be avoided with regular maintenance and check-ups, but that will be a few hundred dollars as well. Stick it on the price tag.

See where this is heading? Budgeting for teens can be more complicated than just saving for the things you need or want. The cost of something like a car climbs a pretty steep ladder when you think ahead about near future expenses. That amount is going to influence when you should buy. If the price becomes too steep you may need to consider other sources of income, driving less, or even holding off on your purchase.

The same exercise works for any other expensive item. A video game system isn’t just the console itself. The cost for brand new video games on the current generation of consoles is significantly higher than previous generations. Even if you hold off or pick up games used or during digital-only sales, playing with your friends will likely require an annual subscription service. Will you have enough time to play to make it worth it? Are your friends even going to be playing the game you just dropped $80 on? Walk this through for any big purchase: new phone, bike, snowboard, laptop, etc.

Parental Partners and Budgeting for Teens

So how do you manage all these ongoing expenses? Saving more than you need helps, but sometimes you can’t hold off on buying an item. You need a car to drive to work, you might need a laptop to stay in step with college classes, etc. So how do you handle it?

Talking to your parents or other family is always a great first step. A lot of parents will appreciate a proactive approach to handling money yourself. Try to negotiate with them to reduce some of the costs. Maybe if you’re savings go towards the car, your parents will cover the cost of gas or maintenance. You may desperately want a new phone, but if you can find one you like on a suitable family plan maybe you can avoid or reduce your monthly payment. A fun item like a gaming system could have costs split between yourself and a sibling (albeit after negotiating some scheduled screen-time).

Staying a Step Ahead

Teens and budgeting is always a tricky topic, since your finances may look very different from those of your friends. But you’re all likely to need money for the same things. Think ahead through the whole school year about the things you want to do and buy. Make a plan and find ways to reduce the cost, or decide which expenses you can do without. Having a strategy in your high school years gets you in the habit for the kind of budgeting you can expect to do as an adult. Starting early makes it easier later. A little planning makes it that much easier to get what you want…eventually.

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