What Teens Need to Know About Money

Managing money might seem overwhelming, but it doesn’t have to be that way! As a teen, you’re at a perfect stage to take control of your finances. Whether you’re considering a part-time job or dreaming of launching your own business, understanding money management is key.

This guide will cover everything from building a positive money mindset to budgeting and saving for your future. With the right skills, you can create a pathway to financial success.

Developing a Health Money Mindset

Having a healthy money mindset means seeing money as a tool, not something to stress over. Instead of thinking, “I’ll never have enough,” try shifting your mindset to, “How can I make more?”

Here’s what it looks like in practice:

Believing in abundance: There’s enough money to go around. Your success doesn’t take away from others.
Learning from mistakes: If you overspend, don’t beat yourself up. Learn and move on.
Being grateful: Appreciate what you have, big or small.

To develop a positive money mindset, start by setting realistic financial goals and celebrating small wins, like saving for a week, to keep your motivation up. Plus, you can always check out books or podcasts about personal finance to learn more.

Jobs vs. Starting A Business: What’s Best For You?

When it comes to money, jobs and businesses both have benefits. With a job, you get a consistent paycheck, which makes planning your spending easier. You might also get some great perks like health insurance.

Starting your own business, however, could help you earn more money, but your income might go up and down at first. You can even start a business on the side while working a job—this way, you get the best of both worlds.

No matter which way you go, keep track of what you earn and spend, and aim to save at least 10-20% of your income each month.

Budgeting Basics

Budgeting helps you keep track of where your money is going. Here’s how to get started:

Track your money: Start by listing how much you earn and how much you spend (on things like clothes, food, or hobbies). You can use a notebook or a free app like Google Sheets.
Set goals: Think about what you want to save for, like a new phone or college.
Create categories: Split your money into groups like “needs” (food, transport), “wants” (movies, games), and “savings”.
Use the 50/30/20 rule: Try to use 50% for things you need, 30% for wants, and 20% for savings.
Digital tools: Use online banking apps to check your balance and set up automatic savings transfers. Always create strong passwords and keep your bank information private.

Saving and Investing For the Future

Saving and investing might seem like grown-up stuff, but you can start now. Here’s how:

Open a savings account (many banks offer teen-friendly options) and set aside a portion of your earnings.
Ask your parents about setting up a custodial account for investing in stocks or index funds (stocks are tiny pieces of a company, and index funds are like baskets that hold many different stocks together).
Start small; even putting away $5 weekly can make a big difference. Make sure to be patient since investing is for the long haul.

Remember that getting started early allows your money to grow for a longer period. Don’t worry about having a lot to invest—consistency is key.

Managing Debt and Credit

Debt is when you borrow funds and need to pay it back, usually with extra charges called interest. For example, many young people sometimes rack up debt on a credit card by overspending on clothes or outings with friends.

If you don’t track your spending habits, it’s really easy to end up in debt.

Now, getting your first credit card can help you build good credit, which is like your financial reputation. But only use it for things you know you can pay off right away. It’s a good idea to keep your spending under 30% of your credit limit and pay the full amount due every month to avoid paying interest.

Also, if you’re thinking about starting a business, look into options that require little to no investment, so you won’t need to spend a lot of money upfront. Don’t view credit cards as “free money.” Only buy things you would have bought with cash, and always pay your bill on time.

Getting the hang of money management as a teenager is important for a bright financial future. By developing a positive view of money, budgeting smartly, and saving regularly, you’ll make choices that will help you throughout your life.

Young entrepreneurs in Florida can apply for college scholarships from the Kantner Foundation. Click here to learn more and start your application process.