Talk to any financial expert, and they’ll likely tell you there should be a mandatory budgeting for teens class in every American high school curriculum. Learning to manage your money is one of the smartest moves you can make. You may not have rent or bills to worry about yet, but mastering money skills early sets you up for financial success later. Whether you’re earning money from a part-time job, a side gig, or an allowance, figuring out how to spend (and save) wisely can make life so much easier.
Here's a mindset to remember: Budgeting isn’t boring—it’s empowering. You’re in control of where your money goes! We’ve got you covered with some simple steps, helpful apps, and a few pitfalls to avoid. Let's go over how to budget as a teen.
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The importance of budgeting for teens
It might feel like you’ve got all the time in the world to worry about finances, but there's really no downside to starting young. Teen budgeting means learning how to manage your income and adopt smart money habits that will impact your future. It also teaches discipline, encourages saving, and helps avoid normalizing overspending. It’s an essential life skill—and once you get the hang of it, you'll feel like you’ve unlocked a superpower.
“To many teenagers, money, and in particular credit, just doesn’t feel real,” says Adem Selita, CEO and co-founder of The Debt Relief Co. “The gamification of finance has led many to devalue money and treat its management as a game.”
As a finance professional who deals with debt on a daily basis, Selita highlights the importance of budgeting for teens. “Money will occupy a very large percentage of their lives,” he says. “Mistakes in personal finance are quite costly! Teenagers should be prepared for it and its real-world implications.”
Mismanaging your money can lead to tremendous hardships in both personal life and financial life. Here’s how to manage it the right way while you’re young.
How to budget as a teen
There’s no one-size-fits-all when it comes to budgeting, especially as a teenager. But the key to successful budgeting is understanding what works for you and sticking to it. Here’s how to get started:
1. Know how much money you have coming in
Figure out how much money you’re working with. Do you have a part-time job, earn money from a side hustle, or get an allowance? Write down exactly how much money you bring in and how often. The more detailed, the better.
If your income is inconsistent (maybe your part-time job only offers shifts every other weekend), look at your earnings over the course of a month to calculate an average. This will give you a better picture of your finances.
2. Track your spending
Now it’s time to see where your money is going. Keep track of every dollar you spend for at least two weeks, if not longer. Again, be detailed with this—every bubble tea counts! You might be surprised by how much goes toward things like food and drink.
There are plenty of great budgeting apps for teens that can help with this step—we'll get to those soon. You can also create a simple spreadsheet or use the notes app on your phone to keep tabs.
3. Divide your money into categories
Once you’ve tracked your spending, divide it into categories like food, entertainment, clothes, and savings. Understanding where your money goes can help you make better decisions about how to allocate it in the future.
4. Set savings goals
It’s never too early to start saving, and it doesn’t have to be for anything massive. Maybe you want to save up for a new phone, a trip with friends, or even college. Setting a savings goal makes it easier to stay motivated and avoid unnecessary spending.
“Budgeting isn't just about the future; teens make lots of purchasing decisions now,” says budget coach Zach Whelchel. “Learning how to be intentional with your money is a skill that enables you to get what you want.”
Set a specific amount aside each week or month and stick to it. Many budgeting apps can help automate this process, so you don’t even have to think about it. The 50/30/20 rule is one of the most popular saving methods for adults. As a teen, it would look like this:
- 50% of your money goes toward essentials (as a teen, this might be more like school supplies and transportation)
- 30% for fun (like movies, new clothes, etc.)
- 20% should go into savings for the future
But if you have the chance, your teenage years would be a good time to save even more than 20% of what you have, since these will be the years with fewer essential costs in your life.
5. Use budgeting apps for teens
Since you spend so much time on your phone, you might as well use it to help manage your money, right? Budgeting apps are an excellent tool to keep track of your spending, savings, and goals. Some of the best budgeting apps for teens include:
- Greenlight: Designed specifically for teens, allows you to manage your allowance, earn money through chores, and save for the future
- GoHenry: A great app for younger teens, with parental controls and personalized savings plans
- Mint: Tracks your spending, creates budgets, and helps you set savings goals
- YNAB (You Need a Budget): Helps you allocate every dollar and gives you insights into where your money goes
Common budgeting mistakes to avoid
Budgeting is simple in theory but can be tricky in practice. Here are a few common mistakes we all tend to make in our teenage years:
Not valuing money
“Teenagers often see money as something that is here and gone quickly, so you might as well spend it while you have it,” Whelchel says. “This can be especially true when they get excess money from their parents, which removes a feeling of agency.”
We encourage you to openly talk about money with your friends and parents. This will help you understand different financial situations and set the importance of money in obtaining the life you want to live.
Spending without tracking
It’s super easy to swipe your debit card or tap “buy now” without realizing how much you’re spending. If you’re not tracking your spending, it’s easy to run out of money without knowing where it all went.
“When spending is more closely accounted for, you’re a lot less likely to impulsively buy,” the finance expert says. “When you have a plan in place, you’ll at least attempt to hold yourself accountable for it.”
Not prioritizing savings
When you’re not used to saving, it can be tempting to spend everything you make. But if you get into the habit of saving even a little now, it’ll pay off later when you want to make bigger purchases. Trust us, this will be the least expensive stage of your life. So take it as an opportunity to boost your savings and start building your future comfort and security.
Overspending on small purchases
An in-app purchase here, an order of wings there—it all adds up. Make sure you account for those smaller expenses in your budget. “Try to avoid spending on meaningless things that you yourself know are of little value,” Selita says. “Ask yourself about the purchase and question your reasoning for any given purchase.”
Not setting realistic goals
It's great to be ambitious, but setting too big or unrealistic goals can set you up for disappointment. Make sure your savings goals are achievable within your budget and your lifestyle.
Relying on credit card debt
Whatever you do, always avoid debt. “Relying on debt at an early age is a surefire way to build bad financial habits and could very well be detrimental to their financial success in the long term,” Selita says. “Avoid debt, especially credit card debt, at all costs!” Yes, that includes a credit card your parents control. Being responsible with your money means being responsible with any money you have access to.
Bottom line
Overall, budgeting for teens is a powerful way to set yourself up for your near and far future. If your phone breaks, you'll be able to replace it. If you want to study abroad during college, it will also be possible due to your commitment. If you made it to the end of this guide, you're already off to a great start.