Saving money as a teenager is a good way to get off to a great financial start in life. By saving money from a young age, a teenager can establish an emergency fund, purchase a vehicle, invest into their own start up business, or pay for his or her own higher education costs.
As a teenager, it is more important to establish good savings habits than it is to save a large amount of money. Since teenagers typically do not make a lot of money, it is recommended that they keep their savings invested in a simple account with little or no fees. A basic bank account is usually best for teenagers. When getting a new job it's easy to think you can immediately apply for instant payday loans just so you have an immediate and large source of cash for going out at the weekend, or shopping. While that is technically correct - it is not always the smartest way to manage your finances. For longer term savings, consider ISAs or government bonds. These investments are simple to understand and will not lose any of the money saved. For now, avoid investments such as stocks, unless you really know what you are doing.
For teenagers who have a job, it is also a good idea to start a budget. Since most teenagers do not have set expenses such as a mortgage or utility bills, now is a great time to get into the routine of paying yourself first. Immediately after getting paid, set aside a portion of each monthly payment into a savings account. Ideally, try to save half of each payment from your employer. If that seems like too much, start small by saving only 10%. As pay increases and the teenager gets into the habit of saving, set aside a larger portion to save for the things wanted in the future.
Also, be sure to establish a goal for the money that is being saved. Even if it is impossible to establish an amount of money, at least know what the money is being saved for. Knowing that the money is to be used on a major purchase such as a car will be the encouragement needed to not touch the money or spend it on other things. Consider writing down this goal, or getting a photo of it and displaying it somewhere prominent to make sure that it is kept.
Of course, be sure to leave money for spending. If everything earned is being saved, it will be harder to be enthusiastic about saving. Leave some money aside for fun. Make sure to track what is saved and what is spent carefully.
Finally, be careful when taking money out of the account. It can take months or years to save up enough money for a major purchase. An impulse purchase can destroy those savings in a matter of minutes.
