As a teenager, there are great reasons to start saving. Maybe you want the latest iPhone or have your sights on a new car or holiday. Saving for a goal is a super way to learn about the value of money and makes achieving your goal more rewarding. Plus, you’re learning great lessons along the way, building fantastic financial habits that will last you a lifetime.
The 50 30 20 Rule
To get in to the habit of saving smart, you need to understand a) how much money you have coming in, b) how much you spend on needs versus wants and c) how much you can afford to save. The 50 30 20 Rule will help. It’s a simple effective way to manage your money and is your guide to splitting any money you get, either from a job, pocket money, as a birthday or Christmas present in to needs, wants and savings.
What’s a need?
A need is something you can’t do without, it could be money you need to keep your mobile phone operational i.e. paying the bill or topping up credit or it could be money you need for your transport costs or car insurance. According to the 50 30 20 rule, 50% of your income should go on your needs.
What’s a want?
A want is something that is nice to have, but not essential. This is money you have put aside for shopping or going out with your friends or maybe even that Spotify premium subscription. According to the 50 30 20 rule, 30% of your income should go on your wants.
What are savings?
When you’ve set yourself a savings goal like wanting the latest mobile phone, tickets for a festival or even a car, you are far more likely to stay motivated and on track when you have a defined savings purpose to aim for. According to the 50 30 20 rule, 20% of your income should go towards your savings.
Serious about saving? Here’s 5 top things you need to do!
- Open a savings account
- Set saving goals
- Make a budget
- Save on your spends
- Earn more money
Whether you have a little or a lot, having a savings account to put money in to frequently is your first step to being a super saver and will kick start a great habit for life.
Do you want to have €300 saved by the Summer for that festival ticket or €2,000 saved by the time you finish school to help with your first car? Setting a goal will make it easier to achieve and keep you on track.
Keep a spending diary for a month so you can see where your money is going. Then make yourself a budget you can stick to, eliminating pointless spends and saving the excess. You’ll be surprised how that simple exercise will help your savings stash grow and get you to your savings goal quicker.
If you do need to spend, look at ways you can save on your spending. Seek out bargains, maybe opt for pre loved items or shop around for the best deals. Opting for cheaper options will mean you’ll have more to save.
Why not ask for more hours at work or do more chores around the house? You could also offer to cut your neighbour's grass or offer to babysit to nab a few extra quid. All those extras will fast-track you to your savings goal.
Remember, reaching your savings goal will feel great. Don’t be too hard on yourself if you don’t get there as fast as you like. The most important thing to remember is that you did it! And now you get to have fun and enjoy what you have worked hard to save for.
