Most teenagers, receive pocket money, allowance or gifts from their parents, grand-parents, or other elders from their family. Most often these funds are used for immediate gratification such as snacks party, movie, latest trending shoes or a gadget.

On the other hand, consider a possibility that they save a part of money received for future. By doing this they can work towards specific goals such as buying a bicycle or purchasing gears for sports. Alternatively, they can keep that money for some unexpected needs such as an impromptu class trip to exotic location.

Habit of savings is like planting seeds for future security. The more you sow more the harvest you reap which would provide sustenance in times of need.

How to Save?

It’s very simple – earn more, follow budget, and spend less.

Earn More:
First teens should have regular source of money which as stated above could be allowances from parents or gifts. They can do some part time assignments on stipend/honorarium basis to increase the money available for saving.

Follow Budget Discipline:
Teens should create a budget based on their spending history. Further, they should religiously stick to the budgeted targets. Retune the budget for next cycle based on budget vs actual expenses.

Spend Less:

  • Differentiate needs (necessary expenses such as stationary) from wants (discretionary expenses such as movies).
  • Delay the expenses on Wants. It can be treated as reward on some accomplishment.
  • Avoid impulse purchases. Delay the purchasing decision by about 48 hours so that decision can be more rational and less impulsive.
  • Avoid peer pressure. Don’t buy or spend on something just to sound cool among your friends. The expense could be irrational.
  • Look for bargains & discounts. For example: Amazon & Flipkart come up with discount deals every now and then.
  • Avoid debt or buying on credit cards. Interest expenses can cause pressure on your earnings/savings.

Learn Investing

The money which is being saved should be parked in various investment options such as Fixed Deposits, Bonds, Mutual Funds or Stocks. Understand the risk and potential reward from each of these options. Mix and match these investment options so that you can generate additional income from your savings while not sacrificing base amount and liquidity (need for withdrawing money as and when you want). 

Well, these investing terms might seem intimidating to teens at first, and hence they should seek guidance from parents, teachers, or some family members for knowing more about them. There are awesome online resources tailored to help teenagers learn these concepts.

Understanding the power of compounding at a young age can be empowering for the financial well-being of teenagers as they grow in age.

Just as we take great care after planting seeds, nurture them well so that they can grow into a full-fledged tree with great yield in terms of fruits/flowers, we should treat savings same way.
Every Rupee saved is an equivalent to a seeded plant which after parking in right investment option can grow and bear fruits in terms of ROI with ability to fulfil young aspirations.

“Though I do not believe that a plant will spring up where no seed has been, I have great faith in a seed. Convince me that you have a seed there, and I am prepared to expect wonders.” — Henry David Thoreau

(The author is CEO & Founder of Funngro)