4 Money Mistakes Young Entrepreneurs Make

If you’re a teen trying to balance school and a business, it probably feels a little chaotic getting everything off the ground. You might feel pressured to buy every new course, invest in pricey templates, or skip financial planning altogether because it seems overwhelming. In this article, we’ll cover four common money mistakes teen entrepreneurs make and how to avoid them so you can build a sustainable business.

Mistake 1: Not Setting Clear Financial Goals

Having a new business idea is exciting, but it’s important not to lose sight of the numbers, like setting financial goals. Without a clear target for your monthly or yearly income, it becomes difficult to measure progress or make smart financial decisions. Research shows that only 54% of small business owners have a solid grasp of financial planning before launching.

Here’s a quick way to figure out your money goals:

• What’s your dream annual income from this business?
• Break down your ideal income by month or by quarter.
• How many products do you need to sell to hit that?
• How many clients or service packages does that mean?

Write these numbers down, whether in a notebook or a digital doc, and revisit them often.

Mistake 2: Operating Without a Budget

Budgets don’t have to be intimidating, especially if you’ve already had some experience earning a paycheck from a part-time job. Running a business is similar, except your income might be all over the place from month to month. That’s exactly why having a budget (and sticking to it) matters. Without one, it’s easy to overspend in some areas and forget about others that actually matter.

Start by listing out your business expenses. Ask yourself:

• Do you pay for any monthly subscriptions or tools?
• Are you buying supplies or materials to make your products?
• Do you need gear like a laptop, lighting, or software?

Then, make sure you’re separating business expenses from personal stuff like your phone bill. Keep track of everything in a Google Sheet or budgeting app so you know where your money’s going and stay on top of your goals.

Mistake 3: Underpricing Your Products or Services

Pricing your products or services too low might seem like a good move if you think it’ll help bring in more customers, but it usually backfires. You’ll end up overworked, underpaid, and second-guessing whether your work is even worth more, which can make it tough to keep your business going. 

A better approach is to look at what others in your space are charging—browse similar products, listings, or service packages from other freelancers or small businesses. Once you get a feel for the going rates, factor in your time and any costs you’re covering to come up with a realistic price. Try that rate for a little while and adjust based on the response. If a client says something like “that’s a steal,” you’re probably undercharging. On the flip side, if people keep turning you down because of your pricing, it might be time to reassess.

Mistake 4: Mixing Personal and Business Finances

It might seem easier to just use one credit card for both personal and business expenses, but mixing the two can create a lot of confusion and make tax time more complicated. It also makes it harder to track how your business is doing and could even put your personal assets at risk if something goes wrong. 

A better move is to open a separate bank account for your business. From this account, you can track outgoing expenses for your company and deposits from your clients or product sales. No personal transactions should occur using this account. In addition, keep your records organized, and, if possible, talk to a financial advisor to help set your accounts up the right way from the start.

Smart Habits Start Early

As a teen entrepreneur, it’s worth taking the time to set up financial practices from the start. Once your business grows and you start bringing more people onto your team, processes can get more complex. Having a strong foundation in place early on makes it easier to stay organized and sets you up for long-term success.

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