Teenage is a period when the temptations to spend seems to be at the peak levels. Postponement of saving is another common phenomenon. How you manage your money at this age will influence how you manage your life, when you grow up to be an adult. So, here are a few simple techniques for effective money management.
The Non-Earning (Dependant) Teen
If you are dependent on your parents (or guardians) for your personal money, it is time to budget your pocket-money for expenses and savings. Calculate your net pocket money earning for a month. Then calculate your average expenses. It could be a new electronic gadget, garment, makeup kit, or weekend party, etc.
- Categorize Expenses: Categorize your expenses into critical, essential, and non-essential groups. Critical expenses could be fuel for your motor-cycle, internet subscription, paying for your cell phone plans, garments, etc. Essential expenses could be for your laptop, fitness classes, trekking, etc. You can categorize the others into non-essential expenses.
- Manage Expenses: Eliminate non-essential expenses for next week. Reduce essential expenses by 50%. Calculate your savings after a week. You will be surprised to experience an increase in savings by 50%. You can use it for long-term needs like a new laptop or other electronic gadgets. You can also plan travels to destinations you have dreamt about.
- Practice Consistently: It could be an extremely challenging task to suppress the impulsive desire to spend. It needs patience and practice. If you can’t do it alone, it is better to make a group of your friends or siblings who want to manage money in a better manner. Getting ideas from them and sharing your ideas can make a significant difference in the ways in which you manage your money.
The Earning Teen
You may have a part-time job or a full-time job to earn your money. It gives you the freedom to spend more. But you also have the responsibility of saving money for the future.
- Emergency Fund: Have an emergency fund. Don’t use the money for other expenses. Open a bank account and deposit regularly. Avoid taking a credit or debit card for the emergency account. Check transactions will keep your urge to withdraw at low levels.
- Long-Term Saving: Have one more bank account for long-term saving. It could be for 5 or 10 years. Save a minimum of 20% from your monthly earnings in this account.
- Short-term saving: It is for your new laptop, cell phone, gadgets, and other expenses. You can also have it for weekend parties with your friends.
- Smart Investment: Investments on socks using custodial-account could be an ideal option if you know how the trade works. You can take the help of an experienced stock-broker. Certificates of Deposit offer attractive returns in the long term. Install an investment app on your cell-phone and check for the frequent updates.
You need to avoid being a spendthrift. You should also avoid being too miserly. Wise decisions at the right time can transform you into a teenage money management genius.
How to Spend More and Save Extra
The title may look like two contrasting ideas that are exactly opposite to each other. But your life is much more than a mathematical equation. You can open up possibilities which may not be visible to your open eyes. So, you need to close your eyes and think. Focus on how you can achieve the twin goals without having to become a millionaire overnight. Here we suggest a few guidelines which may help you to achieve a seemingly impossible goal in simple steps.
Step-1 Increase Your Income
Avenues: Opportunities to earn more are available online in your hometown. For example, stay at home jobs in Texas can bring you plenty of links on the search engine result pages. You can write product reviews, blogs, social media content, copywriting, advertising content, and so many other types of content.
You may also plan for creative designs, graphics, engineering drawings, art and architecture works etc. Nearly all of them are high paying. You may need to spend only a few hours of your free time after your office hours.
Client Selection: You have to select the clients who pay you regularly and on time. Search for reputed companies whose hourly pay rates are higher and stable. You should have a set of design and content templates for sending as initial samples.
Domain Selection: Choose a domain which makes you happy while working. Taking up boring and complex projects can kill your motivation and complicate relations with the clients. You should have special skills and motivation to work consistently.
Step-2 Start Spending
How to Spend: Once your finances have reached a stable state, you can start spending. But you have to make sure every dollar you spend should earn you $ 1.5 in return. What sort of spending are we talking about here?
Spend on buying a higher capacity computer for your design and content work. Spend on buying a digital printer for printing photographs you shoot.
Spend on buying a scanner to scan old engineering drawings from paper. You can edit those using CAD tools and provide better service for your clients. You can also spend to get training on the latest technologies and tools for your part-time /freelance job.
When to Stop: Once you reach the threshold of your business needs, stop spending and start working. You can experience a surge in your earnings within the short span of time.
Step-3 Start Saving
Now, it is time to start saving. Your office work and the extra job may take most of the time during weekdays. It may also take your weekends. Don’t worry. You can start saving in your bank account. Make intelligent investments in stable stocks like logistics, treasury bonds, pension plans, and others. Your consultant can help you to choose the right plan at the right time.
Step-4 Start Spending
Now, it is time to start spending again. You can think of taking a break and visiting Hawaii for a holiday. You can take a spiritual trip to Tibet. Or you can holiday on the Bahamas with your family. Get inspired and return to work. Start from step-1 and grow rich.
Best Exercises for Financial Flexibility
Financial flexibility is a state in which you can afford to spend a few more dollars for your favorite cuisine in a restaurant. You can afford to buy a more comfortable home with heating and cooling systems. You can afford to treat your parents in a specialty hospital. You can afford to send your children to international schools. You can afford to spend two more days of holiday in Hawaii and the Bahamas. Well, you can increase the list to infinity. But how you do it? Here are a few simple tips.
Essential Spending: You need to give top priority for the essential spending to your household items, grocery, utility bills, tuition fee, etc.
Other Priority: Would you prefer to spend more on an annual holiday or having an expensive sofa in your living room? Would you spend more on buying a home or have an extended holiday in Taiwan? We are talking about prioritizing the spending. When you spend on your mortgage loan, it is possible to save on rent and reduce the risk of having to change rental homes frequently. It is also an investment as the future asset.
Asset Accumulation: Accumulate assets for you and your family. Spending on buying moveable and immovable assets is an investment. You may buy appliances, equipment, and tools, car, gold, bonds, shares, and stocks, etc.
Leisurely Spending: You can take a well deserved holiday during Christmas and New Year. You don’t need to spend a fortune. But you can surely make it memorable for you and your family. Plan your holiday so it can refresh your mind and energize your body.
Language Skills: There are plenty of opportunities to earn extra in the present digital era. You can take up a franchise of an established online language school. If you are well versed in foreign languages, it is the best opportunity to earn. Online translations, interpretations, and transliteration are some of the works in demand today. You may also create English subtitles for foreign language films and documentary.
Other Skills: You may open a small business from your home. It could be selling art and artifact. You may choose to sell handicrafts from Asia. You may choose to teach Yoga. You may choose to open an Italian or French restaurant in your city. You may choose to sell artificial jewelry from or you may choose any other part-time job and small business. Your aim is to earn extra money apart from your regular salary.
You may reserve your salary income for household expenses, loans, insurance, tuition-free, and medical expenses, etc. You can also reserve a part of your salary for short-term and emergency funds. But your entire savings from part-time job and small-business should go into long-term saving.
Optimizing the procedures for earning, spending and saving can give you the maximum financial flexibility in your life. You can dare to spend a few more dollars for the cappuccino you drink at your favorite restaurant on your next visit and smile.
When to Stop Dreaming and Start Building Your Dream Home
You have been dreaming of a home for many years. You have also been saving a significant part of your income. You are still waiting for the right time to start building your home. Today is the time for you to take proactive steps without procrastinating further.
Evaluate Your Savings
You may have done the savings in many forms. Bank accounts, stocks, bonds, and other investments can be useful for making down-payment to your mortgage loan. But you’ll need to convert them into cash assets before taking up the mortgage project. You can consult your stock brokers and find the fastest possible ways to transfer the investments as cash into your bank account.
Credit Rating: It is essential to have a decent credit rating and plan for ways to improve it. The first task is to start paying your bills through credit card. Clear your credit card balances on time. Keeping a low balance can help to increase credit ratings.
Credit Limit: Increasing your credit limit is one way of avoiding negative credit rating. It can also increase your purchasing power and the loan limits for a mortgage.
Reduce Debts: You have to reduce other debts and clear the existing ones as soon as possible. Giving top priority to your home building means you have to forget about other luxuries like an expensive car, jewelry, holiday travels, etc. Initially you may find it to be a tough task, but eventually, you will get conditioned. Then it is possible to have a low debt which is a positive booster for your mortgage.
Plan Your Budget
The budget for the dream home should be within your repayment capacity. Evaluate the basic accommodation you need in your home. If you are a small family, it is better to plan for a two bedroom home.
Buy or Build: You have to choose between buying an apartment and building your home. A real estate consultant can give you the best advice based on your budget. If you own land it is better to build. It gives you scope for extension in the future. You may think of extending your rooms or building additional structures when the finances stabilize.
Buying is more economical than building. You don’t need to deal with the hassles of contractor management, material management, inflation, and other uncontrollable factors. But your home may be restricted in its dimension and facilities. It is better to take a decision after consulting with your family.
Mortgage Loan: You can apply for a mortgage loan after talking to your consultant. He can advise you about the right bank or financial institution to approach. If you are an employee and have a regular source of income, it is possible to approach a federal or state-owned public bank.
Low-interest rate and flexible repayment policies will make your mortgage simpler. Make sure you have insured your home for fire, external elements, and other forms of damages. You can start building your dream home now by taking the proactive measures listed here.
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