Savings tips for teens
Whether you are saving up for a new adventure, a new phone or new clothes, the sooner you get started with a simple savings plan, the quicker you can reach your goal. Here are some tips to help you save for something faster.
Say you want to save $250 to spend in your summer school holidays, which is two months away. The first thing to do is figure out how much you need to save each week so that you can reach that goal.
If you need a hand working out the sums for bigger savings goals, try our Savings calculator which will tell you how much you need to save each month to reach your goal.
Dividing this monthly amount by four will give you a weekly target – then it’s a matter of finding a way to save that amount each week.
If you want to have more money, you have two options: either make more money or spend less. Sometimes finding ways to earn more money can be difficult, but we can usually all find some way to spend less.
One way to do this is to ask yourself what you need and only spend money on that. If you go out with friends on the weekend for example, you might need lunch. But do you really need to spend $10 on that lunch? Or would you be satisfied with making a sandwich at home instead and putting that $10 towards your savings goal? In this way you can easily save more by spending less.
This is a great way to help you identify opportunities to save even more money and can also help you become a smarter shopper.
Keep a notebook where you track what you buy and how much you spend on it, then once a week look back through your diary to see where your money went. Be very honest with yourself. Did you only spend money on ‘needs’? Or are there lots of ‘wants’ in there too?
You can also use your spending diary to plan ahead as well. For instance, if you find that you regularly spend $5 a week after soccer or netball training you can plan to take an extra snack from home on those days so you can still have something to eat but can save the money you would have spent on it instead.
When you have more money, many people fall into the trap of spending more. A good way to get around this is to keep two separate accounts – a transaction account for your spending money and a savings account which is what you will put towards your goal. Make sure your savings account offers bonus interest for putting money in and not taking any out each month. Learn more about our accounts for teens.
Next, make sure you put aside your savings first, each time you earn some money. So, if you earn $50 a week and know you only need $30 a week for things like phone credit and lunches then as soon as you get paid put $20 into your savings account. This will help you get into the regular savings habit you need in order to reach your goal.
Before you buy anything, think about whether you can share the cost with friends or siblings. For example, if you regularly buy magazines, books or nail polish, you might want to go halves on the cost and share the item. Same goes for bigger expenses, such as an iPad or computer – see if you can buy it with a sibling. Just make sure you set ground rules up front about how you’ll share it.