Teenagers are at the prime of their lives. They have big dreams and aspirations. However, more often than not, most teenagers need access to finance to make their dreams and goals their reality.
Whether it’s saving up for a new iPhone or a trip worldwide, learning how to save more money is an essential skill. This will help you achieve almost any financial goal.
And the good news is that this article discusses practical tips on how to save money as a teenager in the UK. So you can start developing a savings habit that will last a lifetime.
Before we get into the tips and tricks, let’s discuss why it’s important to start saving as early as possible.
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6 reasons to save money as a teenager
Saving money is not always a teenager’s top priority.
Money management is a skill that can help them achieve their dreams. Or improve their spending habits, and set them up for financial success in the future. Here are 6 reasons to start saving money as a teenager.
1. Financial independence
The most important reason to start saving money either in your bank account or in your savings accounts as teenagers is to achieve financial independence.
Financial independence simply means having extra cash to support yourself without relying on others.
2. For emergency
Emergencies are mostly unexpected.
You never know when you might face unexpected healthcare cost, car repairs, or other unforeseen expenses. Such unforeseen events can happen to anyone at any time, and having a financial safety net in place can help them deal with them smoothly.
By doing weekly or monthly savings, you’ll have funds to fall back on during emergencies. This will help you avoid taking out high-interest loans, which can quickly lead to debt.
3. Increased responsibilities
Whether it’s saving for university, your first car, house down payment, or contributing to family expenses. Having money saved up can make a big difference. Having a savings cushion can give them peace of mind. It can reduce stress, allowing them to focus on their goals and enjoy their teenage years to the fullest.
4. It helps save up for something you’ve been looking forward to purchase
Saving money as a teenager can help you achieve goals faster and more independently. Maybe it’s the latest iPhone, or that unforgettable summer vacation with your friends.
Saving money may take time and effort. The feeling of accomplishment and pride in saving money for something you want is priceless.
5. It helps understand the power of compounding
As Albert Einstein famously said, “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t. pays it.“
Saving money as a teenager helps you achieve financial goals and enables you to understand the power of compounding by starting early. By saving money at a young age, teens can benefit from the power of compounding and watch their money grow over time. It’s a straightforward concept.
Think of it as a snowball rolling down a hill, gathering more snow as it goes. The more money they save, and the longer they leave it in a savings account, the more interest they’ll earn, and the bigger their savings grows.
6. It gives a sense of security
Saving money gives a sense of security that you have a safety net to fall back on in case of unexpected expenses. So, even if you don’t have a specific goal, saving money as a teenager gives you a feeling of security and peace of mind about the future.
Now that we’ve covered why saving money early is essential let’s look at some practical ways to start saving. The thought of saving money may seem like a lot at first. Teenagers may have questions like:
- How do I go about with my savings?
- How much should I save?
- Where should I save it?
- Where do I start?
Saving money is a habit one can develop with a little effort and discipline.
11 ways to save money as a teenager
Teenagers may not have a lot of financial responsibilities or a stable source of income, but that doesn’t mean they shouldn’t start saving.
Good saving habits can set them up for a more financially stable future and save you from taking unnecessary debts like personal loans, payday loans, etc.
Let’s explore eleven simple and effective ways for teenagers to save money, so read on to learn more.
1. Make a budget
Having a budget is an essential first step to save and manage money as a teenager. It allows them to track your income and identify areas where they can cut back expenses.
Some budgeting tips to keep in mind include setting realistic goals, noting down about everything they spend money on, and being disciplined with their money. They can use budgeting apps that’ll make it easier for them and help them keep track of their finances on the go.
2. Look at your earning versus your spending
Tracking your own money helps them understand where it is going and determine areas where they can cut back. By following their expenses, they can gather an understanding of financial mistakes to avoid. With the right tools and mindset, they can start tracking their costs today and avoid financial mistakes that could hurt their financial future.
3. Stay away from cards
When trying to save money as a teenager, avoid using credit cards. Sure, it will give you instance purchase gratification, but you’ll have to repay the principal amount along with interest. Overusing credit cards will lead to debt which is not easy to get rid of. Thus, draining your finances.
4. Use coupons whenever possible
Make the most out of discounts and coupons whenever possible. Several retail and food outlets offer coupons and discounts on your first purchase, an occasion or a holiday. Brands like Nike offer student discounts on its products. Before purchasing a product, research if the brand/store offers coupons. Finally, ensure you read the terms and conditions such as the expiry date and items you can apply the coupon on before using it.
5. Set a savings goal
Having a goal is an integral part of saving money because it helps you stay focused and motivated, especially when you have something specific in mind that you want to buy or achieve.
Think of it like aiming for a target – hitting the bullseye is challenging if you don’t have a clear goal. But if you know exactly what you’re aiming for, you can adjust your aim and take the necessary steps.
6. Start investing
Investing may sound risky and something only adults do, but that’s not true. Investing means putting your money in something that has the potential to grow in value over time. It’s like planting a tree – you invest a small amount of money in a SIP (Systematic Investment Plan), Mutual fund, etc. it grows and becomes more valuable. By starting to invest as a teenager, you have more time to raise your money and earn higher returns in the future.
7. Leverage from student discounts
Taking advantage of student discounts is an excellent way for teenagers to save money. Whether it’s a discount on clothes, food, entertainment, or technology, every little bit helps. Many shops (including Nike!), restaurants, and service providers offer special discounts to students with valid IDs.
You can save money without sacrificing what you need or enjoy by taking advantage of these discounts. Always have your student ID handy and check for any restrictions or expiration dates on the deals.
8. Shop second-hand
Whether you’re looking for clothes, books, or furniture, buying used items can be much more affordable than purchasing new ones. You can check out thrift shops, consignment shops, and online marketplaces like eBay or Facebook marketplace to find used items at a fraction of the cost instead of buying new ones.
Not only does shopping second-hand help you save money, but it’s also good for the environment by reducing waste and keeping items in use for longer.
9. Separate spending money from savings
Have a separate transactional account for your daily expenses and a separate savings account for saving money. Separating your savings account from your transactional account helps you avoid unnecessary costs. Your savings account acts as a barrier to help you avoid getting tempted to use your savings for expenses like going to lunch or the movies with friends.
10. Get an accountability partner
Think of having an accountability partner like having a study buddy. Just like studying with a friend can help you stay focused and motivated to do your best in school, having an accountability partner can help you remain on track with your money goals.
An accountability partner can be a friend, family member, or anyone who supports your financial goals. Having someone to check in with regularly and share progress with can help you stay focused and committed.
11. Choose the right bank to start a savings account
This is more of a decision than a method to save money as a teenager. Because having the correct account at the right bank offers you a high-interest rate, low fees, and easy accessibility, it’s like choosing the right pair of shoes for a hike – you want a pair that fits comfortably, provides good support, and won’t cause blisters.
Similarly, you want to choose a bank that fits your financial goals, provides good customer service, and won’t charge you unnecessary fees. Researching and comparing different banks can help you find the best fit for your savings journey.
Conclusion
Saving money might seem complicated, but it’s possible. With the right mindset, tools, and strategies, teenagers can start saving up for the future, a car, travel, or anything else they desire.
Remember, even small savings can add up over time, and the earlier you start, the better off it is in the long run. Start saving up for your future early, and you will be amazed at its positive impact on your financial well-being for the rest of your life.
Frequently Asked Questions
How to make money without a job in the UK?
There are many ways to make money without a job in the UK, such as freelancing, selling items online, participating in paid surveys, and even starting a small business. The key is discovering something you enjoy that fits your schedule and other commitments.
What is the best way for a 13-year-old to save money?
There are many ways a 13-year-old can save money, including creating a budget, tracking expenses, using coupons, shopping second hand, leveraging student discounts, and setting savings goals.
What is the 50-30-20 rule?
The 50-30-20 rule is a popular budgeting plan that recommends spending 50% of your income on needs, 30% on wants, and 20% on savings and debt repayment. It’s a simple way to ensure you’re meeting your basic needs while leaving room for extra spending and saving for the future.
What is the ideal age for starting to save money?
The best age to start saving money is as early as possible. Whether you’re a teenager or just starting your first job, setting aside a portion of your income for savings is essential. By starting early, your money has more time to compound and grow.
How much should I save each month?
The amount of money you should save each month depends on your financial situation and goals. Generally, financial experts recommend saving at least 20% of your income, but this may only be feasible for some. So, find a savings rate that works for you and sticks to it consistently.
What are some excellent savings goals for teenagers?
Some reasonable savings goals for teenagers include saving for a car, travel, college or university tuition, or an emergency fund. It’s also a good idea to start saving for retirement as early as possible, as this can give you a head start on building a secure financial future.
Disclaimer: The information given above is provided for reference only. This is not financial advice.