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Did you just land your first job as a teenager? Not sure how to budget your money? How much should a teenager save on their salary? Let’s find out!
How Much Money Can You Save In A Year
If you’re finally earning a decent income as a teenager, you’re probably interested in a reasonable savings goal.
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Each teenager will have different financial situations that you absolutely need to consider when deciding how much to save.
Regardless of your age, saving will always be a recommended strategy for financial success in life.
It’s more than just saving up for that new gaming setup or makeup set. It’s about teaching you financial literacy for future success!
Again, everyone will have different goals. You may not care about building a financial foundation at such a young age.
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I get it…it sounds boring and you probably just want to have fun as a teenager. Keep in mind that people with less savings were on average more stressed.
There is definitely a way to have fun with friends while saving money. Plus, you can adjust your budget to fit these things into your lifestyle!
It is recommended that a teenager save at least 20% of their money on a paycheck. Open a savings account and automatically transfer 1/5 of your money each time you get paid.
The rest of your money should be placed in a checking account which you can use to pay for any expenses you may have.
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Ask your parents to open these accounts (if they haven’t already) so you can start managing your money as a teenager.
Some teenagers will not be able to save 20% while others will be able to save almost 80% of their salary.
You should adjust your savings percentage according to your necessary expenses. These expenses generally vary depending on your age.
Going from 15 to 16 and from 17 to 18 are the biggest jumps due to major life changes such as car costs and college expenses.
How Much Money You Should Save Every Paycheck
You probably won’t have a lot of expenses as a high school student, so you can get by with a higher savings percentage.
Keep in mind that your $100 budget for car expenses is actually $200 per month (because the $100 is only for 2 weeks).
If you consider yourself a thrifty person, you may want to reduce your other expenses to offset your car expenses.
If you really like having that extra cash for food, shopping, or anything else, you can cut your savings down to 40% (for example) to offset your car expenses.
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You might also have more categories to split up, which is why it’s normal for teens to have wildly different budgets!
You’ll probably be the most broke you’ve ever been, especially if your family won’t help with expenses.
Knowing how to save money in college isn’t easy, but with the right practices and budgeting, it’s totally doable.
Try to save about 20% of your salary after taxes. This will be enough to build up a stable emergency fund while covering other expenses.
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At 18 and 19, you might have a slightly better job which can certainly help offset the extra expenses.
As a student, you are almost guaranteed to have a different budget than the person right next to you. It is crucial that you adapt according to your expenses!
Luckily, as a teenager, you don’t have too many expenses that will eat away at your paycheck every two weeks.
You may have never done this before, so use these next 30 days to write down everything you spend money on and exactly how much it costs.
How To Balance Savings Priorities
Once you add them up, you’ll find that you’re barely spending any money, OR you’ll find that it’s time to start cutting back.
Dividing your expenses into different categories will help you understand where you are spending the most in order to reduce those expenses.
Make it your own and divide whatever you can think of. For your first month, try listing each expense separately, then putting them into categories later.
I preferred option #2 as a teenager and so will you if saving money is fun for you!
How Much Of Your Paycheck Should You Save?
For example, you could subtract your expenses from your monthly income and simply treat the remaining money as savings.
At first, option 1 may seem more admirable, but keep in mind that every month can be different.
If one month you wanted to spend $300, you now have $200 left in savings (or 40%), which is less than the fixed rate of 50% in option 2.
The choice is really yours, but try to limit your spending to save at least 50% when possible.
How Much Should A Teenager Save From A Paycheck
A budget spreadsheet will help you stay on track, manage your spending, and know where your money is going.
Fill it up each month as you go and set goals to save more and more when you can. That’s it!
As you continue to fill out this spreadsheet, you will become familiar with your finances and ultimately budget your money!
A teenager shouldn’t spend more than 50% of their money on the things they want. A good rule of thumb is to save at least 20%, spend 50% on necessary expenses and 30% on needs.
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Save as much as you can and you’ll slowly get better at making decisions about the things you want to buy yourself.
If you don’t have an emergency fund yet, work on it first! You want to save at least 3-6 months of expenses in a savings account.
Saving for a car or other big purchase? Set a savings goal each month and try to reach your end goal by a certain date.
Do the math to figure out how many months you’ll need to save to potentially spend on a major purchase.
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Investing your money in the stock market is by far my favorite way for a teenager to save on their salary!
You can create a ton of wealth from an early age, especially if you have decent savings to invest regularly.
Ask your parents to set up a deposit account so you can start investing as a minor. If you are over 18, you can create your own brokerage account.
I highly recommend the Acorns app to anyone over the age of 18, especially in college, who wants to invest but doesn’t know what stocks to invest in!
How Much Money Should You Save Each Month?
It basically invests your money for you without having to do any stock research. Additionally, you can choose how aggressive your portfolio is.
Hope you learned more than how much a teenager should save on a paycheck and can start building wealth right from the start.
Be sure to consider your personal situation. Everyone will have a different pace at which they can save, earn, or spend their money.
Hey, I’m Daniel! I’m the founder of Modern Teen! I like to share all that I have experienced and learned during my “young adult” years. I designed this blog to build a community of young adults around the world so we can grow together and share our knowledge! Enjoy and welcome!
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How To Save Money As A Teen (with Or Without A Job)
We did the math to calculate how much money you need to save monthly to buy a house by 35
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Saving for a down payment to buy a home can seem daunting. Compared to baby boomers who bought their first home in the 1980s, millennials buying their first home today could pay around 39% more on average, according to a study by Student Loan Hero.
We’ve calculated how much you’d need to save monthly to have enough money for a down payment on a home before age 35, based on the age at which you start saving.
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We looked at eight price levels, from $250,000 to $1.5 million, and two down payment rates, 10% and 20%.
Ultimately, your target home price — and the down payment you choose — depends on a variety of factors, such as location, income, and other recurring monthly expenses.
Assuming that aspiring owners would need a
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