Smart Money Management Tips for High School Students

As a former struggling student with firsthand experience in navigating financial challenges, I'm eager to share essential money management tips with you. Many adults have made mistakes regarding money, and by starting early, high schoolers can avoid some of those mistakes and set themselves up for long-term success. It’s never too early to begin learning about money.

Why Money Management Matters for High School Students

Learning to be responsible with your own money while still in high school is crucial because it helps you build strong habits early and gives you more financial freedom. Poor money management skills can have a disastrous impact on one's life, affecting credit scores and the ability to make important purchases. Learning how to create and use a budget as a teen is a positive first step toward avoiding reckless spending. By learning to allocate and save money before and through college, one can establish good money habits that will last a lifetime.

Earning Money in High School

Everyone likes to have their own money because it generally means more financial freedom and less reliance on parents. When you’re in high school, balancing homework, sports, and a social life, working a full-time job isn’t always an option. Whether you have $5 or $5,000, it’s never too early to start adopting smart money habits. One of the best ways to earn money in high school is by working a part-time job or starting a side hustle. A part-time job involves working scheduled hours for a company, such as lifeguarding, scooping ice cream, or working retail. A side hustle is something you do on your own time, offering more flexible hours. This could include selling your artwork online, mowing lawns, or tutoring classmates.

Part-Time Job: Working scheduled hours for a company.
Side Hustle: Doing something on your own time for income.

Creating a Realistic Budget

Creating a realistic budget is a key aspect of effective money management. It's not just centered on managing money and living restrictedly; it involves assessing your income and expenses to see how much money you have coming in and how much you are spending. A budget not only keeps you on track with your goals, but it will help you save money, as well. Creating a realistic budget also means knowing yourself, your spending habits, and your lifestyle. One of the goals for creating a realistic budget is to allow you to save money while still staying true to your personal wants and means. That is, if your weekly, bi-weekly, or monthly income allows, I recommend setting aside some personal spending money for you to enjoy your life. While it's important to have savings goals, maintaining a good and realistic balance between saving and spending money is a way to avoid financial stress.

Tracking Income and Expenses

The first step of making a budget is knowing how much money comes in every month. There are many ways to earn money as a teen. Income can come from working part-time after school, doing weekly or monthly tasks for neighbors, or getting a monthly allowance. After figuring out how much money is available, it's important to keep a record of how that money is being spent every month. Keeping track of where or how money is being spent can be as simple as creating a chart or spreadsheet to document every item that's purchased. Another option is to use a money management app.

Fixed vs. Variable Expenses

Most expenses are either fixed or variable, and it's important to differentiate between the two. Some expenses are the same from month to month, and others are inconsistent and change monthly. Fixed expenses are expenses that do not change. While in high school, fixed expenses may include a car loan or cell phone bill. A fixed expense is often an important and more expensive expense. Variable expenses are expenses that change. Knowing the difference between fixed and variable expenses is an important part of budgeting because it helps in knowing how to distribute one's money.

Fixed Expenses: Expenses that do not change from month to month.
Variable Expenses: Expenses that change from month to month.

The 50/30/20 Rule

The common method of allocating one's income is to use a 50/30/20 rule. This means that 50% of one's income should go to fixed expenses and things that are needed, like buying gas. Next, 30% of one's income goes to wants or unnecessary spending. Wants are often entertainment or activities. While in high school, most of one's money is spent on wants. The final 20% should go towards savings and debt repayment. For adults, a large part of their savings is often meant for retirement or emergency expenses.

50%: Needs and Fixed Expenses
30%: Wants
20%: Savings and Debt Repayment

Setting Savings Goals

While in high school, retirement isn't relatable, nor is saving for a home emergency. To make saving money easier, it helps to establish savings goals for more relatable desires. These goals can help one purchase high-ticket items they want. A saving goal may be to purchase a car, for post-graduation travel, or to cover expenses while living independently in college. It's possible to reach one's savings goals faster than simply saving 20 percent of one's income can accomplish.

Budgeting Methods

Start learning how to track what you earn and spend-even if it’s only $5 a week. Budgeting is meant to get you in the habit of tracking how much money comes in and goes out, as well as where it goes. There are plenty of ways to budget-through apps, notebooks, or spreadsheets. From there, start breaking it down further. You might set up specific categories like saving for college vs. saving for sneakers, or budgeting gas money vs. weekend fun. There’s no “perfect” way to budget.

Differentiating Savings Goals

Not all of your savings goals operate on the same timeline. Some might be for this month, while others might be years down the road.

Read also: Comprehensive SMART Guide

Short-Term Savings Goals: These are typically smaller goals that you want to reach in the near future. This could include concert tickets, holiday gifts, or even being able to cover your phone bill.
Long-Term Savings Goals: These are larger goals that take more time and more money to reach. This might be buying a car, saving for college, or planning a graduation trip with friends.

Practical Money-Saving Tips

Saving isn’t always just putting money in your savings account and calling it a day. There are other ways to cut down on spending costs that add up fast. It might not seem like it makes a big difference now, but these little costs do add up over time.

7 Money Management Tips for College Students

Managing your money as a college student opens the path to a successful financial future. College life is already hectic enough; there's no need to add more stress by spending money unnecessarily on things like impulse purchases, expensive takeout, or simple wants vs essential needs. Undergraduate students usually have the most difficult time adapting to being in control of their finances-apply for these undergraduate scholarships to expand your budget where you can.

And if there is one thing I needed as a college student, it was financial guidance. This is why I came up with a list of 7 money management tips for college students that can help you through your college years.

Learn to cook and eat out less - with inflation hitting all markets, the cost of a simple, fast food meal can dig holes in your pockets, especially if you eat out every day. Learning how to cook can not only save you money but also promote wise spending habits. The money you spend on takeout can be spent at your local supermarket for meals that can last you the entire week!
Prioritize Your Spending - When it comes to creating a budget, prioritizing your spending is crucial for financial success. By focusing on essential expenses like tuition, rent, groceries, and utilities, you cut out things that only drain your finances, like take out, shopping, partying, etc. Make sure your budget prioritizes your essential needs vs. your wants.
Budget Wisely - I might have already said it, but budget, budget, budget. It is truly life-changing. Not only does budgeting help you manage your money wisely, but it also instills a sense of discipline you may not have had before. However, the key to budgeting is being realistic with your money plan. You want to make sure you create a financial blueprint that helps you reach your financial goals and allows you to enjoy your personal endeavors.
Limit Credit Card Usage - Credit cards typically come with high-interest rates, so it's extremely important to use your credit cards wisely. This doesn't mean never use them, but I suggest using them as a last resort. And if/when you do use them, make sure you pay more than the minimum balance, if not in full, to avoid the interest once your billing cycle closes. And don't forget to look into our Bold Debit Card to help you get more bang for your buck!
Seek a Part-Time Job or Gig - Looking for a part-time job or gig is also a smart way to manage your money. I know how difficult it can be to squeeze a job into an already full college schedule, but part-time jobs can be flexible and work around your school schedule. Not to mention, you'll be bringing in the money you need, especially remote jobs. So, before you exclude this option, do some research and see if you can make it work!
Avoid Unnecessary Costs - One of the biggest ways to lose money is to spend it unnecessarily. You want to make sure your expenses are centered around what is important and needed. It's easy to get lost in weekend plans when it usually means weekend spending, so make sure you're managing the costs of your plans to ensure they align with your saving goals.
Plan For the Future - Start saving early--I cannot stress this enough. Even if it's through small amounts here and there, everything counts. Opening a savings account may motivate you to start saving and contribute regularly. Also, explore scholarship options that are available to you. This can also help you manage your finances in the long run.

Banking Basics for High School Students

Opening a Bank Account

Opening a checking and savings account is a great way to help you manage money. Money that you use for everyday spending will go to your checking account, while money you’re not planning to spend right away will go into your savings account.

The Benefits of a Savings Account

If you have a checking/bank account, you should definitely have a savings account. A savings account will allow you to set aside the money you're going to save for the week or month and adhere to your monthly budget. A savings account may also keep you on track to having a stable financial future. Not only will you see your money grow, but it will also help you create a savings plan you can stick to.

Read also: Requirements for SMART Scholarship

In my opinion, the key to keeping your savings account growing is acting as though the money isn't there. Once you've created your weekly or monthly budget, you're able to start setting aside the money you plan to save in your savings account. The second you transfer the money into your savings, try to ignore that it's there. This money should solely be for rare and important occasions like emergencies, your future, or as a last resort. If you want to see your money grow, pretend it's not there. Before you know it, you'll have more money than you thought.

Direct Deposit

Bank accounts offer the ability to set up direct deposit, a secure electronic payment method that allows funds to be transferred directly into your bank account. Not only does it remove the need for physical checks, it provides a fast and convenient way to receive payments automatically. With direct deposit, students can move their money to different accounts, like their savings and checking accounts, or split the deposit between multiple accounts. It is a great way to be flexible with managing finances.

Debit Card Usage

Using your debit card for purchases also has its advantages for college students. It's easy to lose track of how much you're spending when you use cash, but debit card transactions are recorded in your bank account. Debit cards may make it easier to track your expenses and see where your money is going. It also reduces the chances of you losing money, which is something no college student wants to experience. Imagine leaving your house with $100 and losing a portion of it throughout the night through misplacement or carelessness. Debit cards keep your money in one place, sparing you the stress of a financial loss.

The Bold Debit Card

Some debit cards also come with rewards, like the Bold Debit Card for college students. For every $1 spent on your Bold Debit Card, regardless of the category, students gain 1 Bold Point. Once you accumulate 2,000 Bold Points, you can redeem them for either $10 cashback or $15 towards a student loan payment.*This kind of debit card not only allows you to benefit from personal spending but also helps you track your spending in your dashboard† so you can find ways to budget or view your Bold Points. Not to mention the uncompromising security features and ability to set up direct deposit.† It can potentially help you avoid taking out student loans.

Bank Benefits

A key component to creating a budget is having a bank that supports your financial goals. Aside from having a checking account, there are certain perks banks offer to college students that encourage them to save money and spend money wisely. For instance, some banks offer students free checking/bank accounts with no monthly fees or interest charges, as well as online banking capability that allows students to check and keep track of their credit history. These benefits only help to push your financial situation forward in the right direction.

Maximizing Your Budget

Aside from bank benefits and debit card perks, setting up a budget will change your life! Let's take a look at some key points when it comes to setting up and maximizing your budget.

Tracking Spending

Tracking your daily, weekly, and monthly spending is a good way to maximize your budget. At the end of the month, you're able to see where you're spending money the most and find new ways to limit that kind of spending. It can also create some wiggle room for personal spending. For example, if at the end of the month, you have some money left over from your budget, you can take what you didn't use and treat yourself to something you want. The sky is the limit when you track your spending!

Lowering Expenses

To maximize your budget, you have to lower your expenses. This doesn't mean you shouldn't spend money; it simply means spend money on your everyday needs vs unnecessary wants. This includes but is not limited to, buying groceries to make food at home vs. ordering takeout. Not only can fast food drain your pockets, but it also promotes an unhealthy lifestyle. The same thing goes for unnecessary shopping sprees. You want to make sure your budget is centered around what you need, ultimately lowering your expenses.

Saving for the Future

Save, save, save! If you start saving now, you are only setting yourself up for great budgeting and managing. Whether it be a couple of bucks here and there or a set amount every paycheck, by saving money now, you are building your financial future. So, don't be afraid to throw pennies into your savings accounts. Every penny, nickel, dime, dollar, and quarter counts! Scholarships can also help students get ahead financially. Apply for these merit scholarships and turn your good grades into money!

Wise Credit Card Usage

Now, credit cards can be tricky because of the way they're set up. Unlike debit cards, you are obligated to pay back your credit cards at the end of each billing cycle, plus, depending on the card, potentially an additional high interest rate. Using your credit cards wisely for certain occasions like rainy days or as a last resort will not only help you build your credit but also keep credit card usage to a minimum. Having a positive repayment history with your credit card can also help you in the future, so make sure your credit card spending is at a minimum to help you achieve financial success.

Limit Credit Card Usage

Credit cards typically come with high-interest rates, so it's extremely important to use your credit cards wisely. This doesn't mean never use them, but I suggest using them as a last resort. And if/when you do use them, make sure you pay more than the minimum balance, if not in full, to avoid the interest once your billing cycle closes.

Growing Your Money

We know managing your money is key, but making your money grow is even better. With a hectic and packed college schedule, making money can be difficult at times, but I'm here to tell you it's not impossible. Here are some ways to help grow your money while in college without taking time away from your studies:

Start an emergency fund
Buy used textbooks (and sell yours when done)
Prioritize spending
Look into an investment account
Find a debit card with perks
Find a side hustle (i.e., tutoring, freelancing, food delivery, etc.)
Apply for scholarships
Take surveys
Create a blog
Find remote work

Luckily for students, technology brings accessibility to all of these money routes right to your phone. With some research and careful planning, you can start growing your money today.

Investing

Think you can’t start investing your money? Think again. We recommend starting with the basics: What is investing? What’s a stock? How does a Roth IRA work? Teen-friendly apps can be extremely helpful as you start out. You don’t have to start big with thousands of dollars-just start learning.

Avoiding Unexpected Debt

Now, though growing your money by saving is important, let's not forget how equally important debt is. Unexpected debt is something no one can foresee, but it can be something you can manage by being cautious of your spending. Take it from someone who didn't know a thing about debt: you don't want to find yourself living outside of your means and in a debt hole with high-interest rates that can leave you drowning. So, here are some ways to avoid unexpected debt.

Use your debit card
Avoid using your credit card
Budget wisely
Be realistic about your budget
Limit your subscriptions to streaming services

The Role of Parents

Every parent plays an essential role in teaching their kids good financial habits. As adults, many of us have made our own mistakes in terms of money. By starting early with our kids, we can help them avoid some of the mistakes we made and do our part to set them up for long-term success. While conversations with an 8-year-old may differ from those with an 18-year-old, there are opportunities to teach kids and teenagers money management skills at every age.

Intentional Teaching

We’ve created intentional ways to teach our children about two important financial concepts: spending and saving. We start by asking our kids a few questions about what they’d like to save for and - most importantly - how they will plan for it. Find out what motivates your child and help them plan for it. For my son, it’s video games. My daughter, on the other hand, loves to save for fidget toys to trade with her friends. We regularly help our kids track their savings via digital banking apps, monthly statements and other fun visuals. As a family, we enjoy seeing movies together in the theater. We're currently planning a family movie day where each of our kids will plan and budget for a portion of the expenses. They feel a sense of pride in contributing to this special outing.

Responsibility and Value

We’ve used simple household chores, like taking out the trash or feeding the dog, to teach our kids responsibility and the value of the dollar. As our kids get older, we will help them look for ways to earn money outside of the house. We also talk to our kids about what Mom and Dad do at their jobs.

Responsible Use of Money

While we’ve enabled our kids to earn their own money, it’s just as important to teach them money is a tool to use responsibly. We often talk to our kids about necessary expenses like electricity, groceries and other household items. As parents, we need to remind our kids that life isn’t always fair and that’s certainly true in terms of finances.

Planning for College

Help your children prepare and save for upcoming college costs by researching financial aid and scholarship opportunities. Establishing a credit history in a responsible manner can put your child in the best position possible when they are ready to buy a car or home. One way to establish credit is through a credit card. Upon eligibility, consider opening a joint checking account or savings account with your teenager. As a parent, it’s up to you to determine the most appropriate timing for this milestone. At a young age, your child may have accompanied you to the bank to meet the bankers or count the coins from their piggy bank.

Instilling Generosity

We’ve tried to instill a spirit of giving in our kids. Beyond practicing generosity with family and friends, we demonstrate examples of giving back to our community.

FDIC Resources

FDIC Money Smart for Young People features four free age-appropriate curricula that promote financial understanding and are specifically designed for pre-kindergarten through 12th grade educators. FDIC Money Smart News for Kids was based on the Money Smart for Young People, grades 3-5 curriculum. It includes nine chapters, which introduce basic banking terms to young people, who are perhaps just beginning to learn about finances. Each issue builds upon the next and introduces two characters, Isabella and Noah, who try out different financial concepts along the way. The Money Smart Parent/ Caregiver Guides summarize key lesson concepts and exists as standalone resources. Money Smart for Elementary School Students introduces key personal finance concepts to children ages 5-8. This resource features a coloring/activity book for the students accompanied by a companion manual for use by anyone leading a discussion with a group of youngsters. The Student Activity Book and Instructor Guide are available for immediate download (catalog.fdic.gov).

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