Managing finances shouldn’t just be your parents’ responsibility. If you’re a high school student with a part-time job, now is a great time to take a more active role in budgeting and managing your own money. Making good financial decisions as a student goes a long way toward being a financially responsible adult. And it's not as difficult to manage your money as you might think. The first step is to follow the golden rule of finance: Spend less than you earn. And always keep it in mind when you’re about to buy something that may strain or break your budget. Here are six other financially savvy tips to help you on the path to smart money management.
1. Pay yourself first
When it comes to managing your finances, you come first. Put a portion of your earnings—income from part-time jobs, side gigs, birthday or holiday gifts, etc.—into your savings account immediately. If you don’t have a savings account, ask your parents for help opening one ASAP. Financial professionals recommend putting between 10%–20% percent of your earnings aside into savings. (Depending on your income, even 5% is fine.) Just be sure to put yourself first. Whatever money is left can go toward paying any bills you may have, fueling a fast food fix, or other expenses.
2. Open a checking account
A checking account is a great way to build solid money management skills. Just about every bank offers online banking, so you can track your spending easily and even make deposits with your mobile device. Most financial institutions offer debit and/or credit cards. Although convenient (because purchases are automatically deducted from your account), it’s easy to get carried away with your spending. Keep a close eye on your account, and limit your spending to an amount that’s below what’s in your checking account.
3. Set a monthly budget
Fortunately, as a high school student, you likely don’t carry the financial burden of paying all your family’s bills each month. For this reason, now is the perfect time to start budgeting; with a manageable amount of expenses, you can easily track your cash flow. And it’s simple to set yourself a budget. You can go old school with a spreadsheet and list all your monthly expenses, from car insurance to weekly coffee splurges. Or you can keep track of your spending through one of the many free finance apps available, like Mint or EveryDollar. (Be advised: Not all apps automatically sync to your bank accounts. You may have to enter every purchase manually, which requires extra diligence on your part to remember what you bought. Be sure to look into this before choosing an app.)
Be honest about your spending; you may be surprised by what the numbers show. Sometimes seeing it in black and white is the wake-up call we need to curtail unnecessary spending. Do you love clothes and buying the latest styles? You may have to cut back on how much you spend during a single shopping trip. This is a practice you can (and should!) continue well into adulthood. Simply add more rows to your spreadsheet or line items to your app, figure out how much you spend on an item, and try to stay at or below that amount every month.
4. Start an emergency fund
You paid yourself with funds deposited into your checking account. Now, set a little more aside —even if it’s just the occasional $20—for an emergency fund (you may have heard your parents call it a “rainy day” fund). This money is for unexpected or special things that come up—things like your car needing new brakes or splurging on a new gaming system. Or maybe you and your friends want to do something special for this year’s prom. You can dip into your emergency fund in these instances without tapping into the reserves of your checking account.
5. Look for deals
It’s tempting to buy the best of the best to stay on trend with your friends and classmates, but sometimes it’s worth shopping around for a deal on certain items. Stores and retail sites have amazing end-of-season deals on everything from clothing and shoes to electronics, and sites like Groupon offer deals all year round. You could also try browser extensions like Honey, which automatically searches the internet for you for the best coupon for any online store. If you want to stick to the budget you’ve created, make the commitment to curbing your spending and staying within your means.
6. Learn about investing and planning for the future
Some high schools offer financial literacy classes to students, but why wait? There are countless resources available if you’re truly interested in taking control of your financial future. Your local bank is a great place to start. Besides all the reading material they have, a bank associate would be glad to meet with you and explain the basics of investing and managing your money. And of course, you have countless finance-related apps and websites right at your fingertips that can help you become more financially literate.
Good budgeting tools, basic financial literacy education, and a little bit of self-control can all help put you on the path to being financially responsible. Sit down with your parents and have an honest conversation about money. Talk to them about your desire to get a part-time job so you have spending money of your own. If you already have a job, ask them to help you set up a budget. Make it a family project so you’re all accountable for your spending. By laying the groundwork for your financial future in high school, you’ll have the information and resources you need as a college student and beyond. It’s never too early to start!
Another smart move is applying for scholarships as a high school student to save for college! Look for ones you're eligible for now using our Scholarship Search tool.