Prepare Now for a lifetime of Good Cents. Responsible spending is a habit you want to start—and keep.
Have you blown through your entire allowance and weekend job money in less than a week? Are you constantly digging into your pockets to find some spare green, and pulling out pieces of lint? Maybe it's time to learn and use the "B" word—Budgeting, that is. With a little money-management advice, you can be on your way to saving, instead of craving, cash.
Barbara O'Neill, a family and consumer sciences educator with Rutgers Cooperative Extension in New Brunswick, has some good tips on how to stop the money drain. O'Neill works to promote personal finance education for high schoolers and youth groups. She recommends that young teens have an allowance, and start early on learning how to put aside a portion of this money for savings. O'Neill says a small, part-time job is a great way to learn the value of money. "It's all a trade-off, as you can't spend and save at the same time," she adds.
Even so, who says budgeting can't be fun? David Gallico has learned and earned a lot along the way. The 16-year-old junior attends West Morris Mendham Regional High, and has been saving since he was in his early teens. He doesn't regret one minute of his money management time, he says, and has made a few big-ticket purchases with his cash. When he was 14, David bought a $300 kayak. And he hasn't yet exhausted his savings.
David began earning cash at the age of 13 doing pet walking and babysitting in his neighborhood. "I come from a big family, so doing chores around the house, and learning the value of money was very important," he says. David admits that some of his peers weren't as industrious as he, but he doesn't regret putting in the job time while they were hanging out.
A portion of David's earnings go to medium-term savings, like for a stereo, and then finally some of it goes to the bank for long-term growth. "About 10% goes in my charity jar, and a portion goes to quick cash, like for pizza," he explains.
David is now in his second year working as a waiter in an area cafe, and making tips. "The paycheck goes directly in the bank, and I set aside tips for after-school activities and weekly events," he notes. David admits that saving money has become second nature for him. "It's simply an organizational process to grasp the value of money, and to get used to the world of money," he says. He advises other teens that once you get in the habit of earmarking your cash for specific purposes, it becomes so much easier to continue doing it. Your saving strategy might be as simple as remembering to divide up the birthday cash you get from your grandparents—a little for you, a little for the bank.
David has also had the benefit of financial advice from Neale S. Godfrey, a family friend, and the chair of the Children's Financial Network, a company in Chester that educates parents and kids about money. In Neale S. Godfrey's Ultimate Kids' Money Book, Godfrey advises teens to use the approach, like David has, of dividing up their earnings or allowances. She recommends that 10% of savings go directly to charity, and the rest should be divided up into thirds to end up as mad money, intermediate, and long-term savings. Charitable donations, while a personal decision, are always a good use for money, notes Godfrey.
Taking control of your money can also give you more control over your purchases. "You have to make a choice on whether or not the item or other expense is really worth it," says Godfrey. "If you want the designer jeans, you need to figure out if it's worth the 10 weeks of work to get them." Some day soon those decisions will involve buying a house, a car, a trip to Tahiti. Your relationship with money has only just begun.