Money Management for Teens – An Easy Guide (2021)

You’re old enough to notice that your parents are constantly worrying about money. You can learn from their mistakes and better prepare yourself for adulthood today.

Even if you asked people older than you, they’d probably tell you that the earlier you start managing your money, the better.

Why? Because your financial circumstances will only get more complicated as you grow old. With time on your side, you must start managing your finances now. Money management for teens is crucial if you want to live a successful and flourishing life in the future.

Some teenagers often lose the focus and motivation on their financial goals due to their failure to understand the poor impact their choices can have on their future.

Making the most of your money doesn’t have to be complicated. You don’t have to sacrifice your life in pursuit of success. You only need to be smart.

Here we discuss all you need to know to help you manage your money to avoid the biggest financial mistakes you’re most likely to make.

But before we dive in, it’s important first to understand what managing your finances entails, i.e. personal finance.

What is Personal Finance?

What is Personal Finance

Personal finance is all about managing your finances in a way that lets you reach your financial goals. This involves budgeting, income, expenses, savings, investments, credit cards, debt management etc.

Think about it: What do you want to do with your life? It could be going to college, owning a home, landing the job of your dreams, starting a family etc.

Money can be dangerous, but it can also be fruitful. Most importantly, it gives you the power to create your future and make your dreams come true.

Personal finance guides you on how to earn money, protect it, and use it wisely.

No matter what amount of money you have, you owe it to yourself to be financially smart and responsible.

Personal finance is important for teens because it teaches you lessons that will benefit you for your entire life.

Personal finance takes a lot of work, but in the end, you will be able to do so many things that people without a good understanding of personal finance will never be able to do.

Now that you’re familiar with what personal finance entails, your best bet is to learn the basics of personal finance. Ready? Great!

Personal Finance or Money Management for Teens

What are the Basics of Personal Finance for Dummies


Your income is the money you are paid in exchange for your labour or the sale of your goods or services.

Anything that you earn is considered as income. Income may come in the form of a salary, monthly allowance, or interest from your savings account.

People who work and earn a regular income will usually have a base amount paid by their employers for their work.

A person can also increase their income by being promoted to a higher paying job when they show they are worthy by doing well in their position.

Without income, it’s impossible to be financially stable. There are several ways to earn income as a teenager. For example:

  • Pet sitting
  • Babysitting
  • Blogging
  • Freelancing
  • Personal assistant
  • Tutoring
  • Helping people
  • Food delivery


Banking is an essential aspect of personal finance. People use their bank accounts for many different purposes such as:

  • Make payments
  • Manage investments and finances
  • Save for the future

Money deposited into a bank account cannot be removed or withdrawn without the owner’s consent unless it is a withdrawal to protect against fraud or theft.

Banks typically charge a fee for this protection in the form of a debit card usage fee, along with any applicable transaction charges for the use of an ATM.

Your bank account is a vital part of your financial well-being, no matter how big or small it is.

You should have an account that provides you with the services that best meet your needs and matches your preferences regarding location, hours of operation and charges.

It is also wise to consider teens-friendly bank accounts that offer fewer interest charges and deductions on your account.


You need to understand where your money is going and how you can cut your spending. This is where budgeting comes in.

Budgeting is the process of using your money effectively to reach your financial goals.

Through a budget, you can understand where you are now and where you want to be in the future.

Not only does a budget allows you to see where every cent from your paycheck goes, but it also helps you live within your means.

Not living within your means can lead to unnecessary stress and anxiety about making ends meet. It’s hard to get out of debt when you can barely make ends meet.

Not to mention, it is difficult to have extra money to invest if you don’t know what you’re spending every month.

Creating a budget helps you manage your money, avoid or pay a debt and save more money.

When done right, budgeting can help you reach your financial goals with ease.

Credit Card

If you want to manage your finances successfully, you need to learn how to handle credit cards.

A credit card is a payment card issued by a financial institution that allows the holder to purchase goods and services on credit or obtain loans.

Through your credit card, every bill that you have will be paid via the process of charging. You simply give the merchant your credit card number and ask them to charge it.

It is easy to lose track of money when you use credit cards. The interest payments on the cards make it easy to get into debt with them.

Using credit cards can be a great financial tool, but it can also lead to problems if proper precautions are not taken.

It is necessary to have a good credit score to get excellent interest rates on any loans you would use in the future.

For a better credit score, ensure that you pay attention to your credit card spending. Be smart when shopping with credit cards and pay your bill on time.

Credit Report

A credit report is a record of your credit activity that helps potential lenders determine whether or not to trust you with a loan.

This report provides details of all the loans and credit cards you might have taken in the past.

A credit report also contains any other monetary transactions that might have been made using your credit card.

People with good credit histories are attractive borrowers. They can better repay debt and usually pay lower interest rates on loans, such as mortgages.

On the other hand, people with poor or limited credit histories may have trouble getting loans and may pay higher interest rates for the loans they do receive.

Your credit report determines your credit score, which is a number between 300 and 850. The higher the number, the better your score is.

Think of your score as a grade in school. The higher the grade, the better you did in class. And, in life, the same goes for your credit score.


Saving refers to the act of setting aside a portion of your income for use in the future.

As a teenager, saving money is the best way to make sure you won’t ever have to worry about having enough when an emergency comes up.

You can save money by not spending it as much as possible and trying to find things that you don’t need or want, and selling those things.

You can put your savings in interest-bearing accounts or certificates of deposit (CDs.)

Saving is the cornerstone to a secure financial future. It’s like building a foundation, and without one, you can be sure that your house will crumble in the near future.

You need to start saving now and make it a habit to become your second nature as you grow older.

The pain of setting aside money now is much less than the pain you’ll feel if you don’t start saving money now for big purchases down the road.


Investment is the process of buying something with the expectation it will earn you more money in future.

A typical example of an investment that you can easily relate to is property.

Most people who buy property as an investment do so with the idea of making money when they sell it or rent it out.

Other examples of investment include buying shares and investing in mutual funds.

As a teenager, the concept of saving money may seem like something only the rich do. That’s not true.

If you take money from your pocket and put it under your bed, you probably won’t get much out of it.

However, if you invest and pick the right stock to invest in, you can make money off that investment.

As you continue reading, you will learn about the best things you should invest your money in as a teenager.

Why Master Your Money as a Teenager?

Why Master Your Money as a Teenager

College Expenses

There are two major stages in any teenager’s life: high school and college. Both have a pretty hefty price tag attached to them.

But the college expenses can be more intimidating because they significantly affect the rest of your life.

If you’re already attending college or are still in high school, it’s time to start thinking about college expenses and how you can manage them.

In addition to tuition and other required fees, you have to add in all the extras: apartment and dorm charges, parking, books, food, travel etc.

College expenses are many and continue to increase. Even if you have substantial savings, you could always end up with more than you need if you were not careful.

One way to enjoy a debt-free college experience is by learning how to make money as a teenager and spending less than you earn.

Emergency Fund

You’ve probably heard this a few times from your parents already: “You need to build an emergency fund to be able to cope with the unexpected.” Even if not, now you are aware.

This is the time to have an emergency fund because emergencies never seemed like emergencies when you were a little child.

The real difference is that you’re now old enough to understand emergencies and their impact.

Emergencies are not planned. They just happen. It could be a car accident, total loss of property, or being out of a job.

Should any of this happen, you don’t have to worry much because you already put aside an amount of money in your account that will take care of those situations.

If you’re like most teens, you don’t have much money to save. But saving even small amounts is a significant step to preparing for emergencies.

This also means you won’t have to ask mom and dad for help when the unexpected occurs.

Personal Development

In the book Rich Dad, Poor Dad, Robert Kiyosaki argues that financial intelligence is the key to building massive wealth.

Some may argue that other things such as your health, time management and relationship with God are important.

But while these are important and will contribute to one’s success in life, having a high level of financial intelligence can’t be underestimated when building wealth.

At this stage in your development, life can be fun and free from financial worries.

However, if you want to grow up to live a happy life in the future, learning how to manage your money is the starting point.

Poor money management is like an avalanche – the little rocks are often what starts the whole thing, but after that initial push, the snow picks up speed and covers everything in its path.

Like avalanches, it could be a long time before you see the harmful effects of poor money management. By the time you do, it may be too late to recover.

Financial Freedom

As a teenager, you are at the beginning of your financial journey. These are years that will determine your level of financial freedom for the rest of your life.

Learning how to master your money as a teenager will make you financially free in the long run.

Planning for your future, handling your finances, and making wise choices with your money will set you on the right path to financial freedom.

When your parents tell you not to spend money; money doesn’t grow on trees – they want you to spend money wisely for a better future.

The fact is, at some point in your life, your parents giving you money will stop, and you’ll need to figure out how to make your own money.

But when you start managing your money now, you are preparing for a future that you don’t have to rely on anyone.

It’s no secret that some adults have trouble managing their finances and building financial independence and security in their lives.

This is because they didn’t learn these skills in their formative years. You have the opportunity to make a difference now.

Retirement Plan

As a teenager, retirement may seem like something completely foreign to you.

Yet how you handle your finances in your teenage years will set you up for success or failure later in life.

If you’re still in high school or just started your first job, this may seem like something you shouldn’t be thinking about.

It may seem like “mastering your money” is something for only older adults – one of those things you don’t need to think about until you’re 30, 40, 50, or even 70 years old.

After all, if that’s the case, there won’t be much left by the time it comes to retirement.

The fact of the matter is that time is on your side and the earlier you start planning, the better.

Several studies have shown that people who save money at an early age tend to be better prepared for retirement.

What to Spend Money on as a Teenager?


Books are undoubtedly one of the best purchases you can make with your money as a teenager. They will help you build the knowledge you need to succeed. Books also allow you to learn from other people’s successes and mistakes.

Books are affordable, informative and you can read them anywhere – in bed, on the bus or even take them with you to the beach.

The fact is that if you don’t read, you have no idea how much more information there is out there for you to find and learn.

Books stay with you for life, unlike other things you buy that get thrown away or lost after only a few months.

There are many good books out for teenagers you need to read for your financial freedom. This includes:

  • “Rich Dad Poor Dad” by Robert T. Kiyosaki
  • “I Will Teach You to Be Rich” by Ramit Sethi
  • “Clever Girl Finance” by Bola Sokunbi
  • “The Early Investor” by Michael Zisa


Courses are a great way to give yourself an edge over other people and to build skills.

As a teenager, you need to learn some skills. These skills will equip you to be successful in life.

The world is changing fast, and new skills are being created every day. The earlier you invest in courses that improve your skills, the better.

Courses are a great investment because they are knowledge that can become highly valuable for the rest of your life.

Here are some of the courses you need to invest your money and time in to make your life better:


There are so many opportunities for teens who want to learn and do more with their time and money.

Conferences and events are an excellent chance for teenagers to network and gain knowledge.

Conferences can teach you how to become a better speaker, write articles, and even give you the opportunity to learn from experts.

By attending conferences and events, you get the chance to learn about your passions and meet like-minded individuals or successful people.

Also, going to conferences and events can improve your sense of purpose and will accelerate your development.

The best part is, it doesn’t hurt the pocket too much, and you get to meet new people from all over the world, maybe even make new friends and find a mentor.


Health is wealth! This also applies to money management for teens.

As a teenager, you have a ton of tasks on your mind, and your to-do list may be hard to choose things that are worth the time.

It’s so easy to get wrapped up in schoolwork, extracurricular activities and social commitments. However, this shouldn’t keep you from staying fit.

It’s important to spend your money on fitness as a teenager because it is crucial for developing a healthy habit of taking care of yourself.

You need to exercise regularly and eat healthy foods to have a strong foundation now and a strong body for the rest of your life.


Investing money in business at a young age is a great way to start building wealth.

Instead of thinking about spending your money on random things, spend it on start-up businesses that you want to develop and grow with our cash.

Whether you are earning money by getting a side job, working your summer holiday job, or just receiving money as a gift, it is never too early to start investing in businesses.

You don’t need much money to invest in a business. Even on a small budget, you can make your investments and get good returns from the right plan.


Your teenage years are a spark of inspiration and energy. Take the time to explore your passions, and discover what you love.

Rather than spending the money on material things that do not last or add joy to our lives, investing the money in yourself can be rewarding.

If you’re a creative person, it’s good to have some art supplies. If you’re into sports or fitness, you’ll need some gear.

And if you like having fun and are into fashion, there’s no harm in having some stylish clothing. In summary, think about your passion and get what you love.

How To Manage Money as a Teenager?

How to manage money as a teenager

Educate Yourself

Schools don’t always teach everything about money management for teens.

That’s why, as a teenager, you must educate yourself about personal finance to make informed decisions.

Money management for teens comes with its own set of challenges, especially if you are not educated on properly going about it.

You must use this time to educate yourself on managing money as a teenager.

The more you know, the easier it becomes to make smart decisions about your finances.

There are lots of books to help you with this. You can also read valuable articles on the Internet (such as what you’re currently reading) to improve your financial literacy.

Know Your Needs and Wants

It’s not rocket science – money management for teens is all about understanding your needs and wants.

Understanding your needs and wants will help you not be extravagant with money, instead spend your money on what matters.

From a new outfit for a special occasion to the latest video game console and latest phones – money can buy it all.

But this mentality of “I’ve got the money, I’m buying it” cannot go on for long. As you grow up, you will realize that your needs and wants also grow.

Whether it is your allowance or the income generated from either part-time jobs or in the form of gifts, manage your money effectively so that you invest in things that matter.

Create a Budget

Creating a budget helps you manage your expenses and hold you responsible for the money you spend.

A budget doesn’t mean you have to spend less or go without; it just means you are more conscious of your spending habits and choices.

A good budget helps you control your money by preparing you for unexpected events in your life.

With proper budgeting, you can save more, have better cash flow, and prepare for adulthood.

Not having a budget is an easy way to get into debt. You should recognize this and know how to create a budget and stick to it.

Know Your Limit

Money management for teens helps you cut your coat according to your cloth.

As a teenager, you may be tempted to spend that mixture of pocket money, birthday money and an allowance on the latest fashion trend or gadget.

But it is not all about getting the newest sneakers, mobile phones or the latest computer hardware.

Managing your money means being in control of your finances and ensuring you don’t find yourself in debt.

Make Saving Your Second Nature

Money makes the world go round. It pays the bills, and it allows you to live the life that you desire.

But do you spend your money lavishly thinking that it comes easy? Or do you save it carefully because of uncertain times?

Having money is tempting. You want to spend it on clothes, gadgets and other things that are probably not what you need.

It is unwise to spend your money on fancy things as a teenager with a brighter future.

Since money does not grow on trees, saving some of your money is always a good idea.

But how do you save your money as a teenager? To this, we now turn.

How To Save Money As A Teen

1. Create a Savings Account

Do you think that you don’t have enough money to start saving? Or you aren’t sure how?

Your parents probably don’t care if you save money or not. They just want to buy you the latest gadgets and clothes. But for how long?

Thankfully, even with a small amount of money, anyone can begin saving.

To start, open a savings account. You can either create it yourself or ask your parents to do it for you.

You will need money for it but don’t touch it because that’s part of what you are saving.

Banks such as EQ Bank help you save your money with no monthly charges and transactions plus interest.

2. Separate Your Spending Money from Your Savings

You might think it’s impossible to save any money at this time in your life. But you’d be surprised how much money you can save if you put your mind to it.

Sure, as a teen, when you do have some cash, it’s tempting to spend it quickly on all the cool things your friends have that you want too.

While it’s good to own some things your friends have, it is unwise to buy everything your friends possess.

If you want to save money as a teen, you will need to separate spending money from the money you set aside for savings.

3. Track Your Spending

One of the biggest mistakes you can make as a teen is not to track your spending.

Whether it’s shopping or eating out in your local mall, a lot of money can slip through your fingers, and it might not even seem like you’re spending at all!

Though it might be tedious, tracking your spending will really help you out in the long run.

Through the effort of tracking your spending, you will save money without having to miss out on fun activities.

Tracking your spending gives you a better idea of where your money goes, and you can find ways to save more.

4. Ask Your Parents

As a teen, your parents control the purse strings. If you want to get something, you may have to ask them.

Since they’ve been there and done that before you, they’ll have some great advice on how to save money as a teen.

You can also ask your parents to contribute to your savings account each week or each month.

For example, you can put aside $25 a week and let them believe you’ve accomplished your goal, and you can apply for $100 at the end of the month.

It’s easier to persuade your parents that you mean what you say when you are already well-off. There is no shame in it.

5. Do Housework

If you need assistance but are ashamed to ask your parents, you will earn extra money doing house chores.

You can do all those tasks you like, such as folding the laundry, cleaning the house, and cleaning to earn income.

Also, you can offer to buy your neighbours’ groceries for a fee and help them with household chores such as yard work, snow clearing, and cleaning.

Strip every little chore of its reward, turn every small reward into money, and add money to your bank account when you can.

6. Use Your Student ID

To save more money, you need to learn how to take advantage of your student ID, which opens doors to numerous discounts.

Use your student ID to get discounts at restaurants, clothing stores, textbooks, and so much more!

There are tons of businesses that want your money and will give discounts for showing your ID.

Some companies may offer discounts to students but aren’t likely to advertise them until you seek their attention.

Your student ID can be used in more than just the school cafeteria. Grab your ID and head out into the real world to save some money on items you need.

7. Get a Summer Job

As a teen, saving money can be hard because you have so little to save. Perhaps getting a summer job is something to consider.

A summer job is a great way to earn some extra cash during the summer school breaks.

Having a summer job can teach you valuable skills, help you grow as an individual while helping you earn money.

Even if you don’t have many expenses, finding extra income can help you save money for college and beyond.

There are many summer jobs you should consider. For example:

  • Child care
  • Freelance writer
  • Internship
  • Bank teller

8. Avoid FOMO

When your friends are using their allowances to attend events or visit places, you feel sick to your stomach.

You think, “If only I had the money for it, then I could be having fun in the sun drinking and partying.” This is when FOMO comes into play. That’s “Fear of Missing Out.”

Not understanding what is going on around you and missing everything from concerts to festivals creates fear of not belonging.

While it is great to have the opportunity to attend many different events and activities, you may find that you are spending money on things that don’t support your financial freedom.

How Much Money Should a Teenager Save?

The best way to figure how much money you should be saving as a teenager will be dependent on your circumstances, such as your family background and your financial goal.

As a teenager, you should try to save as much as you can for your financial independence. But the higher you save, the better.

However, a teenager is expected to save $2,000 a year between the ages of 15 to 20.

Having $10,000 saved up by the time you are 20 to invest at that point is a fantastic start for the next chapter of your life.

As a rule of thumb, putting $10,000 in your savings account before you are 20 is a smart decision.

What are the Best Spending Trackers for Teenagers?

  • Toshl Finance: Toshl Finance helps students set monthly budgets and track their monthly spending. Determine how much money you spent and what it is spent on with this software.
  • Manilla: Manilla functions as a folder for digital documents and a medium for paying bills. Manilla’s comprehensive customization features give it an edge over other applications which helps users pay upcoming and past due bills.
  • Left To Spend: This is one of the most budget-friendly software for teenagers. It is noteworthy for being different because of its ease of use. With this software, you can set a limit on how much you will spend and deduct expenses.
  • BillGuard: BillGuard is one of the best spending trackers that help teenagers remain on top of their finances and not get trapped by their expenses.
  • Mint: Numerous personal finance gurus have consistently recommended Mint as one of the teenager-friendly spending trackers. With this software, you have all of your records in one place.
  • Smarty Pig: Smarty Pig is perfect for teens who want to practice personal finance. It allows users to input money targets and measures them regularly. Unlike other software, Smarty Pig is different because it enables others to join in on your journey to help you achieve your financial goals.
  • P2K Money: P2K is money tracking software that helps you document and tracks all your allowances. One great function of this software is that it enables the user to make extra money by completing homework.
  • iAllowance: iAllowance is a software for collaboration on money management for parents/guardians and teenagers. With the help of this software, you can make tailored decisions on your financial goals.

Summary on Money Management for Teens

As a teenager, you are rich in time.

Money management for teens can make the difference between being financially independent and depending on your parents.

It is a proven fact that teenagers who are educated regarding personal finance make better financial decisions in adulthood compared to those that are not.

As boring as money management may sound now, learning about handling and saving money early in life will serve you well in the future when dealing with the most significant expenses in life.

As a teenager, it is important to spend your money wisely and only on items you need. This requires planning, practice, and discipline.

Now that you know what money management for teens entails and where to begin, it is time to take action.

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