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4 Financial Tips for High Schoolers Who Want to Master Their Money

4 Financial Tips for High Schoolers Who Want to Master Their Money


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About This Lesson

For many young people, the first experiences earning income feel empowering. Making money is often the first step towards independent adulthood. To establish a solid financial future, it's crucial to learn how to effectively manage your money and make the most out of whatever you earn.  Read on for 4 steps you can take to make sound financial choices starting right now.

Understand Your Earnings

When you get your first job, it's exciting to receive your first paycheck. It is important to know how to understand your paycheck so you can keep up with your earnings.  When you look at a pay stub, you'll find a lot of information such as the number of hours worked, the pay rate per hour, the taxes and deductions that are taken out as well as the net pay and gross income amounts. Now you may be wondering, "what does gross income mean?" and “what is net pay?” Put simply, gross income is the total amount earned before deductions, while net pay is the total amount left, also known as take home pay. It can be surprising to see that taxes and other deductions may cause a substantial difference between your gross income and what you actually have left to spend. Fortunately, you will get used to this and soon be able to easily keep track of how much net pay you have to work with.

Spend a Little, Save a Little

To maximize your earnings, one smart next step is to open a personal savings account so you can begin putting money away for future expenses. At this point, you may wonder if saving money is really necessary, especially if you have not yet graduated from high school and are still living at home with your family. It's actually never too early to develop good habits that will benefit you long into adulthood. Once you open your savings account, allow yourself a certain amount to spend freely as well as a portion to save. As with most things in life, it is important to find a healthy balance when managing finances so that you learn to both enjoy your money and develop financial responsibility.

Set Saving Goals

Now that you have a savings account, you're ready to set saving goals. One mistake common not just to teenagers but also many adults, is not having any idea how much they'd like to save. Without a solid goal in mind, it’s more difficult to motivate yourself to save, and this can result in impulse purchases that drain your savings. To be successful with your saving goal, make sure it is attainable. If you are making minimum wage at a part-time job, or depending solely on a monthly allowance, it will be frustrating to set a saving goal of 10,000 dollars, for example. Instead, start with a goal you know can be accomplished within a few weeks or months. Once you’ve successfully met your first goal, immediately set another to keep your momentum going and your money growing.

Live Within Your Means

Another vital part of money management is to never spend more than you actually have. This may seem like a no brainer, but unfortunately, many adults consistently rely on credit cards and loans instead of simply saving up and spending what they have on hand. Such habits can lead to massive debt and financial stress. You may have people in your life who will give you money to help if you spend too much, but this can actually set a dangerous precedent. To become independent and build a solid financial future, it's necessary to manage your own money and stick to a budget. If you know there's a special item you’d really like to purchase, be patient and save until you have enough. Saving up and staying within your means will give you more satisfaction with your purchases and help establish strong habits so you remain financially stable.

To maintain a positive relationship with your money, it's important to have a firm understanding of your income and how you can make the most of it.  It's never too early to create healthy financial habits that will lead to a prosperous future.


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