Why do teens should follow a budget plan? Learning a new thing does not need anyone to attain a certain age. When it comes to finances, acquiring budgeting skills early is not a bad idea.
A teenager in most cases is a jobless person with no financial responsibilities to handle. If they learn the nuances of financial planning, it is going to be good for them. Leading a life of expenses without a budget is nothing less than a curse.
If you know how to budget and follow it religiously, bidding adieu to any tricky financial spot is easy. It comes in handy even when you apply for loans for an unemployed with a direct lender. Repayment is going to be smooth for you despite all odds.
Most importantly, your organised approach towards finances will convince the lender. Getting approval is easygoing when repayment chances are good.
The best thing about learning budgeting is that you can start with your pocket money also. It does not matter how much money you have. Begin this journey even when you can afford the least contribution.
As parents, you can help your child understand the significance of budgeting. Walk them through the below steps as mentioned in this blog.
Budgeting advice for teens who have not started earning yet
Teens should prepare themselves for future financial responsibilities. Budgeting helps them in building a healthy relationship with money.
They will value what they have. Besides, they will learn how to save and amplify the available resources. The benefits of it are huge.
Pay attention to the steps so that you can curate a better financial future.
Start with pocket money
If you receive a fixed amount of pocket money from your parents, you are all set to start. You know how much you receive from your parents. Treat it like your income, as you are not earning from any other sources.
Check whether you are saving anything from the pocket-money. It is well and good if you are stashing money. In addition, it shows your expenses are few.
Monitor all your payouts
Teenagers like you can have multiple payouts to cover. It is where the pocket money comes to your rescue. You are still living with your parents. For this reason, they do not ask you to pay for anything.
Moreover, you are still not earning and dependent on your parent’s assistance. Write down the different expenses you have. Validate which of them are realistic.
Straightaway discard those which are leisurely desires. It will give you an amount you can actually save from your pocket money.
Explore earn opportunities
If you are still studying and competent in writing, you can start earning now itself. Wait! It does not mean you should give up or ignore your studies.
It can be a fun activity for you also. Besides, you can ace your skill furthermore. Utilise the online platforms to get writing projects and earn more than your pocket money.
Suppose, if you are good at teaching, choose any subject and become a mentor for students in junior classes. Avenues are many provided you figure out the best way to earn money.
Formulate budgeting goals
Budgeting without purpose might not work for long. Depending on the amount of money you can commit to salt away, you can choose the budgeting method.
Get clarity on whether your financial goals are achievable or not by analysing the saving amount. If your target is realistic, none can prevent you from beating it.
One of the methods is to straightaway allot a pre-decided amount in the savings account. Do this once you receive the pocket money and your earnings. It ensures that you will have a fixed amount of saving irrespective of what expenses you have to cover.
On the other hand, you can consider dividing the money according to 50/30/20 rule. Here, 50 refers to extremely important payouts, 30 denotes additional expenses and 20 to savings.
Based on your preference and capability, you can go for any of the methods. The ultimate goal of practising them is to take you closer to what you want to achieve.
In this case, learning the procedure is more critical than reaching the goal. The starting point is going to be tough. You must restrict yourself from spending money mindlessly.
Understand the implications of not having a budget
It is your choice whether you want to pursue a budget strategy or not. Without it, managing finances is a difficult task. You cannot keep track of where your hard-earned money is going.
A budget is a crucial financial tool which helps you in maintaining the synergy between income and expenses. The deadliest consequence of not having a budget is the worst credit scores.
Although getting out of this type of tricky situation is tough, very bad credit loans from direct lenders in the UK are available. However, the lender might charge high or ask for collateral or guarantor before issuing you loan assistance.
Failing to keep credit scores under control would mean no financial freedom for you. Budgeting helps in preventing such difficult financial situations.
It will guide you on how to spend money within limits and according to your income. Such a provision facilitates saving for unexpected financial troubles. Your ignorance in learning this basic skill can drag you into a situation where you will have to deal with a huge pile of debts.
The bottom line
Inculcating the habit of budget in teens can make a difference in their life. Besides learning the different subjects, this financial aspect should grab their attention too.
Teaching these aspects is not common in schools or colleges. They can learn this pivotal money habit from their parents. Some teenagers will be very eager to acquire this skill.
They have some interest in learning how to differentiate income and expenses. It will further grow their interest in determining the best way to save money from what is available to them.
On the contrary, some teenagers are a little different. They might need the guidance of their parents and the assistance of their mentor. This blog is for both categories.
Anna Johnson has more than 11 years of experience in direct lending industry of the UK. She is the Senior Content Editor at 24cashflow where she is leading a large team of loan experts. During her career, she has helped the loan aspirants to use the particular loans in the best way and improve their financial lives and status.
Anna Johnson is known for her in-depth research of the UK loan marketplace, as she has worked with many major lending firms in her career. During her educational phase, she has done a research on ‘Finance Fundamentals for Growing Business’.
