As a teenager budgeting is very simple; most people (I used to be the same) live under the perception that ‘I’m too young to have a budget’ or ‘I don’t need one’ when in reality having a budget is one of the best things you can do to ensure that you always have money and that you are working towards your financial goals!
If done realistic and appropriately budgeting is one of the most simple personal finance habits you can develop and it can be extremely pain free if you follow the advice outlined below. I try to split my budget into three Categories and add to it as and when needed. the three Catagories are below. P.S I always keep my savings and spending money in different bank accounts for boundaries and less confusion!
Spending – this budgeting category can be literally be used for anything you want for money to ‘piss away’or money to go on your next big holiday. Spit As much money as you want into this category it’s usually recommended to put anywhere from 50-60% of your income into this as it’s important to remember that we need to live a little and remember that investing in experiences is possibly the best investment a young teenager can make.
Saving – this category Is used to store your income that you do not want to spend. I lit around 65% of my money into this. Your savings can be used for anything you want really however, personal finance books such as ‘Rich Dad, Poor Dad” tend to advice you to only buy invest able assets with your savings and anything that is not invest able should be bought with your spending budgeting category.
Investing – This category is the wealth builder. Over 90% of my current net worth is in invested assets. Currently my savings only buy assets I try not to use savings to buy luxury such as holidays as I personally see it as something that can be covered by my spending. The investing category includes anything such as bonds, stocks shares, gold, silver, equity!