Saving money early is one of the best ways to develop strong money management skills that will help you throughout your life. Whether you’re saving for a bigger purchase like a mobile phone, laptop, or even preparing for unexpected costs, it’s essential to have a plan for your money.
How to start saving
When you’re saving for something specific like an iPad or tablet, it’s important to know how much you need and how long it will take to reach your goal. Setting clear financial goals can help you stay motivated. You don’t need a lot of money to start – small, consistent amounts can make a difference over time.
You can start by collecting loose change in a jar or ask an adult to help you open a regular savings account. Many banks offer special tax-free accounts like Junior ISAs to help you grow your money over time. For long-term savings, a Cash ISA could be a good option, but you’ll need an adult’s assistance to open one.
Current accounts vs. Savings accounts
It’s important to understand the difference between current accounts and savings accounts. A current account is used for day-to-day transactions, such as making payments using a debit card or transferring money. A savings account, on the other hand, is where you can put your money to grow and earn interest. Some savings accounts even offer cashback or rewards, which can help you reach your financial goals faster.
When deciding on an account, it’s a good idea to discuss your options with an adult to make sure you choose one that suits your needs.
Setting short-term goals
Short-term goals are those you want to achieve within a year or so, like saving for a trip or a special event. For example, holidays or Christmas can be expensive, so setting a deadline for when you want to reach your target amount can help you stay on track. Tracking your progress regularly and adjusting your plan if needed can ensure you stay focused on reaching your goal.
Consider opening an account which offers a reward scheme
Some savings accounts offer cashback or other rewards for opening them to help you grow your savings. Different banks and building societies offer many different reward schemes. Shop around to help you get a deal and one that fits in with your savings goals.
Cutting back on spending
When you’re working towards a bigger purchase, like a new phone or laptop, reducing unnecessary expenses can free up more money for your goals. Look for ways to cut back on things you don’t need, for example, instead of spending money on expensive outings, consider doing fun, low-cost activities with friends. The more you can cut back on spending money, the more you can put towards your financial goals.
Shopping smarter
The internet has made it easier than ever to compare prices on everything from electronics to clothes. Taking time to shop around can help you find the best deals and save more money. Always look for discounts or sales, and make sure you’re getting the best value for your money.
Becoming a critical consumer
Consider if the item is genuinely necessary before making a purchase. Impulse buying can be a trap, but you can break the habit by pausing before making a purchase. Next time you feel the urge to buy something, ask yourself if it’s necessary. If it’s not, put that money into your savings account instead, helping you stay focused on your financial goals.
Putting your money to work
As you start putting your money into a bank account, you’ll be able to see how even small deposits can grow over time. If you have a regular savings account, you may also earn interest, which helps your money grow even faster. Consider opening an account that offers a reward scheme or higher interest rates to help you maximise your savings.
Planning for long-term goals
For long-term saving, consider investing in options like a Junior ISA, which provides a tax-free way to grow your money. While it’s a good idea to have money set aside for immediate needs, thinking about the future and planning early can help set you up for greater financial freedom later on.
More money tips for teens
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