Key Takeaways

• • • Since you’re a teenager, it’s time to start learning about money.
    • Earning your own money and figuring out how to spend and save helps you make the most of every dollar.
    • You’ll need a bank account to manage your money.
    • You can track your transactions and save toward your goals with digital banking.

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    Now that you’re a teenager, you’ve got lots of exciting things to look forward to—including more independence. Now you can decide how you spend and manage your money.

    Before you think about how to spend your money, take a minute to think about how you can manage your money. We think you’ll be glad you did. After all, making the most of your hard-earned dollars means they’ll go farther.

    Earning

    You’re probably earning some money by now—maybe babysitting, mowing lawns, or shoveling snow. Earning your own money emphasizes the value of things, especially when you add up what you’ve earned and compare it to what you want to buy. It also helps you understand the value of time. Time spent working means time away from other activities that may be more fun.

    Wants vs. Needs

    Understanding the difference between needs and wants helps you decide how to use your money. Very simply:

    • A need is something necessary in our day-to-day life, like food, water and shelter.
    • A want is a nice-to-have item, like a manicure from a salon or a pair of high-tops.

    Needs and wants might seem straightforward on the surface, but once you dig deeper, distinguishing one from the other can be difficult.

    Take food, for example—a basic necessity, right? But your choices can either save you money or drain your budget. Dining out, getting takeout, or having meals delivered can be much more expensive than shopping for ingredients and cooking at home. Figuring out your true food needs can help you create a budget that fits your lifestyle. By managing your food expenses wisely, you might be able to afford a monthly restaurant meal or an occasional takeout treat, as long as you’re willing to cook at home and search for grocery deals.

    To prepare for budgeting, list your needs and wants side by side. Start with essentials like food, rent, utilities and clothing. Include other necessities like transportation (if you have a car, include payments, repairs, gas and insurance). When listing your wants, look at categories like streaming services where you could consolidate or cut back. Recognizing wants as enriching but non-essential helps you decide what to keep on your list and what to drop.

    The 50/30/20 Rule

    The 50/30/20 rule helps quantify what to do with wants and needs. Think of the numbers as buckets. The rule suggests using 50 percent of your income for needs, 30 percent for wants, and 20 percent for savings. The 50/30/20 rule works well because:

    • It’s easy. You can quickly identify what expenses go into each category.
    • Saving is automatic. You don’t need to decide how much to save every month.
    • It’s simple to keep track. You can organize your expenses into categories each month.

    Budgeting

    Making a budget gives you a clear plan for managing your money. Start by listing your monthly expenses (write them down, use Excel, or try a budgeting app). Here is where your work determining needs and wants comes into play. Put your expenses into categories like gas (if you drive), clothes, food, entertainment, and savings. This is your budget. Each month, spend according to the amount you’ve set for each category. Track what you spend and stick to your budget. You’ll see if your budget works or if you need to make changes.

    Your budget also helps you save toward goals, like a large purchase, a trip with friends, or college. Seeing how your savings add up may mean you cut back spending in a category so you can reach your goal faster.

    Bank Account

    Earning money means you need a bank account (or if you have an account, you need to manage it more independently). Most banks have accounts designed specifically for teens. Look for an account with:

    • No monthly maintenance fee
    • Low minimum balance to open
    • Mobile/online banking at no charge
    • Debit card with no fee and daily transaction limits for responsible money management
    • No overdraft or non-sufficient funds fees
    • Easy links to savings

    Depending on the bank, these accounts are typically available to open in your early teens. For example, Lake City Bank’s StartSmart¹ account is designed to be the first bank account for teenagers and young adults ages 14–23 and can be opened without an adult as a joint owner of the account.

    Most accounts include a digital app so you can manage your money from your phone. With Lake City Bank Digital, for example, you’ll see what you put in your account and what you spend in real time. You can also track your savings, especially with Goals², which coaches you to your savings goals so you stay on track.

    Are you ready?

    Learning about money as you start earning sets you up for making smart choices in the future. Deciding what you really need and saving for what you want can be rewarding. Who knows? Managing money might even be fun!

     

    ¹See Personal Account Terms and Conditions, StartSmart Administrative Charges disclosure and the StartSmart product disclosure for details or call our One Call Center at (888) 522-2265.  

    ²Goals, as referred to herein, constitute the Goals Account described in Section E Investment Accounts of the Personal Account Terms and Conditions.