Three Tips for Managing your Money and Increasing Financial Literacy

Teens who learn how to manage their finances put themselves in a good spot for now — and the future

It’s almost summer vacation! Time to get a part-time job or find ways to make some money with your entrepreneurial spirit (Think: mowing lawns or walking dogs)! But how's your financial literacy? What do you do with all that money? Do you give it to your parents to keep it safe — or spend it all so you don’t have to keep track of it?

Hopefully, you answered "neither" to those questions. Financial literacy means different things to different people and is hard to define easily. However, understanding the basics of your own finances and how to manage them, no matter how flush or broke you are, will set you up for short- and long-term success.

Using the available resources, like online websites  (check out College Consensus) or college and university summer programs, helps you to take agency over your personal finances. The following ideas will expand your knowledge and help you develop smart habits about budgeting.

Follow the 50/30/20 rule, but adjust accordingly

Learning to budget is a great first step, but practice makes perfect. One guiding principle you need to know about saving money is the 50/30/20 rule. This principle dictates that 50% of your paycheck should go toward ‘needs,’ 30% should go toward ‘wants’ and 20% toward savings.

If you pay for your own car or car insurance, for example, or your own cell phone, you’d allocate 50% for those expenses. See a new pair of shoes you can’t live without? Check your 20% ‘wants’ budget to see if you can afford them. That final 20%? Send it right to your savings account!

However, it’s possible that you have minimal needs and can afford to spend more on wants. But don’t neglect your savings, either. So, you could still use the 50/30/20 rule but adjust it to fit more realistically with your lifestyle. For example, you could allocate 50% into a savings account, 30% to wants, and 20% to needs, like your cell phone bill or school lunches.

One thing to keep in mind while you create a budget that fits your preferences — defining the difference between a want and a need.

You need transportation to get to school and work. But a need would be your public transportation pass versus a want — taking Uber or Lyft. Food is obviously a basic need —

but getting a Starbucks refresher daily is more of a want.

The 50/30/20 rule isn’t a hard stop, either, but it is a great place to begin budgeting. If you have leftovers in one area at the end of the month, you can add that to your ‘want’ budget next month or funnel it into your savings.

Set up a budget

Now that you have the 50/30/20 rule down, there are a few different ways to approach developing a budget, some providing more personalization and some more convenience.

There are apps that you can connect to a bank account — like Mint — where you can see exactly how much you spend on certain amounts, and input purchases manually.

The other option is to open Google Sheets and Excel, find a budget template, and make your own! Many online resources, such as Pinterest, have budget templates that you can adjust as needed.

If you lean toward making your own budget, the first step is creating categories. The two main categories? Saving and spending. Some that could go into savings are college savings fund, a bigger purchase (like a new laptop for college!) and a general savings account.

For spending, break things up into those ‘need’ and ‘want’ categories. Include necessary expenses like gas money, a phone payment, food, and other ‘needs.’ For wants, include subscriptions, entertainment, and your daily Starbucks. These categories are completely personalizable, and you can add things like utilities, car payments and more if needed.

Credit Karma has more tips for budgeting here.

Take advantage of college-level courses and financial institutions

There is a wealth of information accessible online at your fingertips. Colleges and universities often offer online pre-college summer courses or enrichment programs in multiple subjects, including entrepreneurship and personal finance. Financial service institutions like Fidelity have many resources about financial literacy and best practices. Fidelity curates individual posts about topics varying from making money to understanding investing.

Cornell University offers three and six-week online undergraduate courses for both business and social entrepreneurship to high school students in grades 10-12. Some summer programs, like Illinois Tech’s, offer day, residential, or online courses for middle and high school students with topics ranging from personal financial literacy to leadership skills for aspiring entrepreneurs.

You can take courses at the Global Online Academy in a variety of subjects, including business problem-solving and personal finance. The academy also offers summer programs where you can learn more about these fields.

Search for more pre-college courses here. Remember, any financial literacy habits are great, especially when you apply them to your future saving and spending habits!

Put your financial literacy knowledge to use!

Now that you've improved your money management skills, it’s time to use them and make some money! If working a 9-5 fits your schedule, check out tips for securing that job here. If working at the checkout lane isn’t your jam, you’ve got other options.

You might associate entrepreneurship with a groundbreaking idea, but if you’ve got a great hobby, consider turning it into your money-maker!

Etsy has revolutionized the ability to design, make and immediately sell. If you have an artistic touch and already create something that people may want to use, wear, or display, monetize your hobby.

If you enjoy reading or have old clothes you’ll never wear again, sell those used items online. Start with Facebook Marketplace, but don’t discount other websites — like Poshmark or PangoBooks — that specifically sell previously owned items, like clothing, shoes, books, and more.

If you want to brainstorm more, check out Medium’s list of small business ideas for high schoolers.