How to save money as a teenager in 5 simple steps
Saving a lump sum of money isn’t easy, especially as a young adult. Our guide gives you a few pointers on how it can be done.
6 min read
Looking to become financially independent and save up for something big? Money management isn’t a subject taught at school, but you don’t have to work out the basics of banking completely alone. To help you along the way, this article will guide you through the process of learning how to save money as a teenager in 5 simple steps, from opening an account, to achieving more ambitious saving goals.As a kid, a piggy bank probably helped you to stash away a few coins from time to time. However, if you’re serious about saving money as a teenager or a young adult, you’ll need to open a savings account. These accounts differ from standard checking accounts, and it’s all thanks to interest. In a nutshell, interest is what a bank pays you for keeping a certain amount of money in your account. To learn how to save money, and choose the best savings account for your needs, the following financial terms and abbreviations are important to get to grips with:Once you’ve got your understanding of interest down, it’s essential to know the exact amount you need to save. This’ll provide clarity around how much you need to put aside—daily, monthly, or yearly—and makes reaching your target much easier. Yes, a little math is needed to set specific goals. But don’t worry; knowing how to save money as a teenager only requires basic calculations.Putting together a basic budget is another step you can take towards successful saving. Once you’ve tracked where your money goes for a while, you’re able to categorize finances into needs and wants. To put it simply, to save money as a teenager, you’ll need to prioritize your needs and reduce spending on wants. Calculating a savings goal is worthwhile as it allows you to include the specific amount in your budget. For example, if your goal is saving €100 per month for a summer vacation, you may need to spend less on new clothes or eating out. And while the discounts and deals you get with your student ID can help you spend a little less, it may not be enough. To make sure you stay ahead of the savings game, learn to say “no” to going out or costly social plans—as difficult as it feels in the moment, these skills will be useful for the rest of your life. Saving is a form of financial discipline, and the long-term results are worth it.Another way to save as a teenager is to earn money and then deposit it directly into your savings account, where it’s tucked away safely out of reach. Chores such as cleaning the house or washing the car are worth considering when you want to earn small amounts from your parents. However, if you’re looking for regular income, consider a part-time job, such as working in a cafe or at a local grocery store.This is also a time to get creative and find interesting ways to earn extra money. You might consider selling items you no longer need, such as clothes or gadgets. You can also earn a pretty penny by offering your services to others—such as tutoring, house sitting or dog walking.Saving can feel a little overwhelming, especially if you’re setting goals and budgeting for the first time. But remember, the beginning is the hardest part—studies show that on average it takes 66 days for new behaviours to become automatic habits. The good news is, over time, each step will become a part of your day-to-day, and saving will become second-nature. Not everyone makes it through the tough 66 days to form new habits. Starting new behaviors around money, setting goals, regularly putting money aside, all require effort and consistency. Below are additional tips to keep you on the right path:Learning the basics of banking, making short-term sacrifices, saying no, putting money aside consistently isn’t an easy task… that’s why it’s important to remember to celebrate the achievement once the hard work pays off. And, most importantly, enjoy your extra special purchase.
Forming new habits when it comes to money can be a struggle. Thankfully, N26's free bank account makes it easier, letting you track your spending with Statistics and to set aside funds for personal goals with Spaces. And guess what? All you need is a smartphone and a form of ID to get started.
Step 1: Open a savings account and start earning interest
The different types of interest you can earn
- Simple interest
- Compound interest
- APY (annual percentage yield)
- APR (annual percentage rate)
Step 2: Learn how to save money as a teenager by calculating a specific savings goal
How to calculate your specific saving goal
- Calculate the total cost of what you want to buy
- Divide the savings goal total by a specific time period
- Adjust the duration to find a manageable sum
- Split into daily and weekly goals
Step 3: Track what you buy to see where you can cut back
Step 4: Earn extra money
Step 5: Save money as a teenager by transforming new behaviors into habits
How to build healthy money habits
- Start small.
- Avoid perfectionism.
- Be accountable.
Finally... enjoy what you’ve saved for!
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