Teens Guide to Building a Simple Budget

Mon, 05 Dec 2011

With all of the talk about the credit crisis and the great recession, being frugal has suddenly become super-trendy. Overspending is a thing of the past, but having nice things will always be in style. The key is finding the right formula to make the most out of the resources at your disposal, and learning how to budget can help. Unfortunately it took me a long time to figure my formula out. Thankfully, I had a wonderful economics teacher who encouraged me to create a budget so I could see where my money was going. Believe it or not, between my modest allowance and a part time job at a coffee shop, I was able to buy my dream car! Here is how I would recommend getting started:

 

Step 1: Take Inventory 

Take note of how much cash you have coming in, a.k.a., your income. Figure in your allowance, birthday and holiday money, babysitting cash, lawn mowing moolah. Whatever form of income you have, write it down. Microsoft Excel is a great way to keep track and has built in math functions you can use to total columns.

 

Step 2: Track Your Spending 

Take note of how much cash you have going out, a.k.a, your expenses. Keep track of how much you spend, and what you spend it on. If you have a smart phone, you can use an app to keep track. There is a great app called “I Was Broke. Now I’m Not” Another popular one comes from Mint.com.This is a third party link. Please review the third party content guidelines by clicking here. It will show you how you spend your money by category, giving you a visual picture of where it’s going. If you’re not into apps, just keep all of your receipts, and at the end of each week sit down and track them in the same Excel spreadsheet with your income.

 

Step 3: Separate Needs vs. Wants 

Look at your spreadsheet and figure out what you need to spend your money on versus what you want to spend your money on. If your expenses outweigh your income try to aggressively cut down frivolous items in those categories. You may really want a shiny new phone, but you may need to pay for your car insurance so you can get to school.

 

Step 4: List Items You Really Want 

Make another list of all the things you really want, like concert tickets, a new game system, or designer purse, but don’t be too short sighted. You might also want to think about starting to budget and save for college or your first apartment so you can move out of your parent’s house. Write down how much you estimate these to cost, and figure out how much you can afford to put towards saving up for them each week, and how many weeks it will take to afford it. If you’re loyal to your plan, you can be texting on your new phone or driving your new ride around town with pride.

 

Step 5: Open a Bank Account

If you are old enough, open a savings account for yourself, or ask your parents to help you open one. Try not to take any money out until you have enough saved to buy the thing you really want. Simply put, know what resources you have available and live by the “everything that you need, some of what you want” rule. I think you will find fiscal responsibility surprisingly rewarding. Here’s a sample budget This is a third party link. Please review the third party content guidelines by clicking here.for teens to help get you started. Have you set up a budget before?  What tips or questions do you have?

Leave a comment

Your email will not be published. *Required field

13 comment(s).

Annu
December 7, 2011 at 2:51 am
Wow,I didn't realize there was a blog on the website. :) This will be extremely helpful for my 16 year old great niece and future teen great nephews. (I'm 41 & "great" thanks to my 55 year old husband). :) Nicely done, Amanda.
Amanda Gabriele
December 7, 2011 at 1:35 pm
Hi Annu, I am so glad you found this helpful. If you or your family ever have an specific questions please feel free to email me directly at agabriele@websterbank.com
March 12, 2012 at 11:44 am
Nice post RD. It's all about priorities and what works for you (and your fiamly, if you have one). Your tips definitely make a ton of sense, and of them all, I'm definitely guilty of eating out too much. Two of the largest monthly expenses anyone will have are their mortgage/rent and car payment/lease. It's amazing how many of my friends are "house poor" or "car poor" because they felt they needed that huge house or fancy new car. Our fiamly doesn't have the biggest house or most expensive car, but we like to travel...so the trade off works for us!
December 8, 2011 at 7:52 pm
<p>http://simplebudgetapp.com is another one to keep in mind. They're currently in invite beta only, but I hear their interface is SO simple to use.</p> <strong><em>Editors note: Please read our <a href="http://blog.websteronline.com/community-guidelines/third-party-content/" rel="nofollow">third party content guidelines</a> before visiting a third party website</em></strong>
joanne armentano
December 8, 2011 at 9:14 pm
Hey Amanda, great idea for teens and spoken in their language. will show to my 16 year old son. He will listen to a stranger before me. p.s. your picture is great !!!!!!!!
Amanda Gabriele
December 8, 2011 at 10:08 pm
Hi Joanne, Thanks so much! Let me know if your son decides to give a building a budget a shot. I would love to hear about his experience.
Kim Syrop
December 9, 2011 at 2:43 am
Great information for my teenagers! Thanks Amanda...
December 16, 2011 at 2:37 pm
Strongly suggest adding a "google+" button for the blog!
December 19, 2011 at 3:56 pm
Great suggestion and we will do that!
Ebony
December 21, 2011 at 1:04 pm
Thanks for sharing Amanda! I will share some of these very helpful tips with my nieces and nephews.
December 31, 2011 at 12:22 pm
This is great thank you. I am going to share this with my daughter who is now 13 turning 14 in March.
Amanda Gabriele
January 3, 2012 at 9:11 am
Kathryn, I am glad you like the info. Keep me posted if your daughter does decide to give building a budget a shot. I would love to hear how she does with it. Also, please wish her a Happy early Birthday from me!
Subhash
March 12, 2012 at 8:41 pm
Resources like the one you mentioned here will be very useful to me! I will post a link to this page on my blog. I am sure my visitors will find that very useful.