You have plans, and that takes money. As hard as you work, you may not make progress toward your goals unless you are financially savvy. That doesn’t happen overnight, but learning more about the basics will give you a solid foundation to build on, and you can avoid costly mistakes that will set you back.
Investing
The best way to get started investing is with your employer’s 401k plan. Most employers will offer to match what you have deducted from your paycheck. Most plans allow you to choose investments that match up to your risk tolerance and stage in your career. Check stocks vs stock options if you are planning to invest
If you’re not working full-time, you can still open an investment account with a bank or brokerage, and several apps will let you do that. Many of these work by allowing you to round up your expenditures on a debit or credit card. The extra money is then invested in stocks. Look for no-fee accounts.
Credit Cards
You don’t want to waste more money than you earn, and that can easily happen if you don’t use credit cards responsibly. If you charge more than you can pay off in a month, you’ll be hit with high-interest charges that can snowball over time into serious debt.
Another risk is identity theft. Using a third-party payment app when buying online can help. Also learn to monitor your credit reports. Strange credit report activity might be a sign of identity theft. Your bank app may link you to a credit report.
Budgeting
The key to managing your finances is to make sure you have more money coming in than you have going out, and that takes making a budget. A good rule of thumb is the 50-30-20 rule. That means 50% of your income goes for needs, such as expenses like your phone bill and gasoline, while 30% goes for things you want, like entertainment. The remaining 20% is for investments.
Several budgeting apps are available to help you. Many let you link your account to your debit card or credit card so you can track your spending. Most of these have free versions.
As you learn and understand more about finances, you’ll find that good financial decisions will come more easily. You’ll also gain confidence in managing your spending and investing. Over time, you may encounter some setbacks but overall, you should see steady financial progress.
Check out this article on how to start investing as a teenager!