5 Tips for Teens to Save Money Fast

1- Build an Emergency Fund

The very first thing you should do when saving money is to set up an emergency fund. I remember being in college and having less than $2 in my bank account. I stopped at a gas station in between classes to buy a can of Diet Coke for 50 cents. I got up to the register and there was a $3 minimum purchase with any debit or credit card. I froze. As I shuffled around, embarrassed and unsure what to do, the man in line behind me stepped in and paid for my 50 cent Diet Coke. More than 10 years later I still remember how I felt in that moment. Thankfully, a kind stranger swooped in to help me out.

Now imagine if the stakes were much higher than something unnecessary like a Diet Coke. Imagine not being able to afford to fix your broken down car and it was your only way to get to work. Or if you or a family member needed medical care, but couldn’t pay for it. This is how important an emergency fund can be.

Families who make a lower income, but have at least $500 saved in an emergency are financially better off than higher-income families with little or no money saved for emergencies.

Saving at least $500 or three to six months worth of expenses should be your number one goal starting out. Not only does this provide a safety net in the event of an emergency, giving you peace of mind, it also will keep you from get financially wiped out. Don’t find yourself in a situation where you can’t afford to pay for an emergency.

2- Establish Your Budget

After you’ve set up your emergency fund, the next step to saving money fast is to figure  out exactly how much money is coming in and how much money is going out every month.

Start by breaking down all of your necessary expenses, like food, housing, basic clothing, and transportation, you’ll see exactly how much money you have leftover.

Next on your list should be saving, then giving, and continue adding necessary items to your budget. I just downloaded a free budgeting app to my phone, because updating an excel spreadsheet just wasn’t working for me. The app is called EveryDollar and is super easy to set up and update from anywhere.

Establishing your monthly budget down to the penny will make is easier to create a savings plan and stick to it, which leads us to our next money saving tip…

3- Make a Savings Plan

Did you know that people with a savings plan are twice as likely to save successfully?

To get started, take a look back at your budget spreadsheet or app – how much have you been spending each month?. Take note of all the non-essential purchases, like driving through your local coffee shop on the way to work.

Let’s say you stop to buy coffee on average, three times a week, and each time it costs $4. That’s $12 per week and $48 per month on coffee. Now look at how many times a week you bought lunch instead of bringing one from home. If you went out to lunch twice a week and spent around $8 each time, you’re spending $64 per month. Combine the two and you’re looking at $112 per month. That’s $112 you could be putting toward your savings.

Once you sit down with a list of your actual purchases, it will be glaringly obvious where all your money is going. You’ll also have a better idea about how you can change your habits to save more money, faster. See where you can cut unnecessary purchases and save that money. Don’t just spend less, put your money into investment accounts that are working toward your future goals, retirement, emergencies or college expenses.

4- Start with Short-Term Savings Goals

Whether you consider yourself to be a good saver or not, you’ll likely be more  successful by starting with short-term savings goals. Maybe start by saving $25 to $50  per week. While this isn’t a huge amount of money, it’ll help you begin creating better spending habits and build momentum toward your ultimate savings goals.

Also, saving and watching your money grow month after month, can actually be really motivating. Think about it like this – saving just $50 a week can make you $2,600 by the end of the year. That’s enough for an emergency fund AND maybe a trip to Europe (or whatever foreign country is calling you). Unless you have long-term goals for that money (buying a house, retirement, your kids college fund) or you have credit card debt to pay off first.

5- Get Out of Debt – Especially High Interest Credit Card Debt

If you’ve ever been in debt, especially high-interest debt, you know how quickly monthly payments eat up your paycheck. It’s like you’re constantly swimming upstream, sometimes making little or no headway, but just barely staying afloat.

Debt makes saving so much harder to do. If you’re currently trying to pay down your debt so you can start saving some real money, all of these money-saving tips still apply. In fact, they’re even more important to follow. A great option to get out of debt quicker is to consolidate your loans into one lump payment. Consolidating your loans can even get you a lower interest rate. Don’t get discouraged and know it is possible to become debt-free!

Conclusion

Teaching Teens About Money is the first step towards reaching their financial goals. The next step is knowing how to invest your hard-earned money wisely. After reading this article and putting in the time to educate yourself, you are already well on your way to saving, investing, and hopefully watching your money grow through smart investments.