The teenager's guide to saving money

Teenager adding money into piggy bank shaped like a van

Finding the motivation to save money can be hard, especially when you might not be making a lot of it in the first place. But just like it pays off to stick with practicing your soccer skills, your piano lessons or your academics, saving money can have huge rewards.

Just like athletic and musical endeavors, it takes practice. You’ll need to understand your priorities, set goals and be dedicated to it if you’re going to create significant savings. And just like athletics, music or even academics, starting with the basics allows you to build on a solid foundation. Soon, it becomes second nature. Here’s how you can get started today.

Making smart spending decisions

It may sound obvious, but it’s worth stating that the easiest way to save money is to spend less of it. If you already have a budget (you don’t? You should. Here’s why), look at your spending habits and decide if you really need what you’re buying. It’s not hard. Try cutting out anything unnecessary—new clothes, new games—and put that money toward your savings instead. Commit to skipping one lunch out and one Starbucks run and put that extra $20 a week in your savings account (that’s more than $1,000 a year).

Nothing to cut? Get creative. See if a sibling is willing to split a Spotify or Xbox Live account with you. Cancel any services with monthly fees that you no longer use, such as a magazine or box subscription. And don’t forget about student discounts. Show your student ID at restaurants and stores—many offer 5, 10, or even 15% off for student shoppers. Shop the clearance racks or wait for sales before heading to the mall, and check for coupon codes before making an online purchase. These small steps can add up to big money if you pay close attention to your spending.

Setting savings goals

You may think saving a dollar here or there doesn’t make a difference. It does. Money grows when you invest it in a savings account, even small amounts.

Opening a savings account is pretty simple, but it won’t mean much unless you have goals. Just like having a soccer ball gathering dust in your closet won’t get you to the World Cup someday, having a savings account won’t give you financial security if there’s no money in it. You’ve got to work at it and do so regularly. But how? Maybe you have a specific goal like buying a new gaming console, or putting aside money for a trip after graduation. Your goal can be ultra-specific or more general. The point is to have one that fits your personal needs.

The second goal you’ll need is how much to save. This will help you stay motivated when you’re tempted to buy something you don’t really need. By thinking twice before spending now, you can make sure you’ll have enough money to pay for what you really want and need down the line.

Once you have a savings goal in mind, you can start mapping out how to get there. If your goal is to raise $1,000 for a trip in one year, for example, you can figure out that you’ll need to set aside about $83 each month. If you want to create a $100 emergency fund over the next six months, you’ll need to save $17 a month. These simple calculations will show you exactly how much of your monthly income — whether that’s an allowance, a paycheck, cash from chores or some combination of those — needs to be set aside to meet your goal.

Opening a bank account

You can save money in a piggy bank or a shoe box, but you’ll be missing out on the magic of compound interest if you do that, so opening an account that lets you track your money and makes it a little harder to get to on a whim can be helpful. Step offers a no fee FDIC Insured bank account specifically designed for teens to track their spending and build their savings.

Tracking finances

Once you have a savings goal in mind, you can start budgeting for it. Just remember — budgeting doesn’t have to be complicated. If you get in the habit of maintaining a simple budget as a teen, you can keep your personal finances from getting complicated in adulthood.

To start, it’s smart to set a monthly savings goal first, rather than spending whatever you want and saving what’s left over. This will give you the confidence to spend your remaining money without feeling guilty or worried about saving. Here’s a good way to establish your first budget.

After setting aside your savings, what’s left over can be used to cover your wants and needs, like restaurant meals or your Netflix subscription.

Earning money

In order to build your savings, you need to have money. For many teens, this will mean finding a job that suits their skills and school schedule. Luckily, teens have several options when it comes to making money.

Whether it’s a part-time job during the school year or something temporary for the summer, there are plenty of workplaces with jobs well-suited for teens. Check to see if your local grocery store or pizza shop is hiring, for example. Certain job search sites, such as Snagajob, specifically cater to part-time or hourly jobs that are a good fit for teens.

Even beyond traditional jobs, there are plenty of ways to make money. Create a side gig mowing your neighbors’ lawns or babysitting the kids across the street. Offer your digital skills, such as social media management or photo editing, through freelance marketplaces such as Fiverr. If you’re crafty, you can even start a business selling handmade goods on Etsy. Whatever your interests, there is likely a way to make money doing it.

And if all else fails, there are still good old-fashioned household chores. Ask your parents if they’d pay you if you pitched in more around the house. Offer to do the tasks that no one else wants to do, like cleaning out the garage or weeding the garden in exchange for a contribution to your savings account. You’ll create a win-win situation—doing your parents a favor while working toward your savings goal.