Unfortunately, most of us become aware of the terms ‘financing’ and ‘financial discipline’ only after we graduate and start earning through a job, in our 20s. While financing will be a very important aspect of your life even then, you are required to be aware and start practicing it as young as possible to gain the maximum benefits in your financial life. Considering that you have gone through the previous blog (Income sources for students) and have analysed and found out the best income source for yourself, it is very important that you now get acquainted with do’s and dont’s of your money. As a beginner, there are many things that you need to know, before you start handling your money in your own way. So, we present to you the most useful financial tips that a teenager may need as beginner.


1. Start Saving

Sounds boring? Indeed it is. But let me tell you that you are going to benefit a LOT if you start saving your money right from this age, however small the amount.

  • It will inculcate saving habit in you at a young age, which will help your future counterpart to manage better.
  • It gives you a sense of financial relief and comfort as you feel like you have money always. Fully spending your money saddens you at the end of the month.
  • Saving small amount every month will aggregate into a large amount in a year. What would you prefer: fulfilling your pizza desires every month or a new branded watch at the end of year?

You should visit a nearby bank and open a savings bank account immediately if you haven’t done yet. Also, your saved money should not be kept idle. It must be invested, with proper knowledge, to fetch extra income. We will discuss about investing more in the upcoming sections.

2. Make a Budget

What amount then should be saved from your income? Given that this probably is your first income, and being a young student, you may have lots and lots of desires to fulfil, it is extremely necessary that you budget your expenses. As you are free from any sort of responsibilities, this is the only time that you can use your money as you wish to, without being tensed about the rent of your house or electricity bill.

Budgeting your expenses will help you control your money, so that it is not spent unnecessarily on worthless things.

  • Make a proper plan. Make three classifications named ‘needs’, ‘wants’, and ‘savings’, and specify the proportion of your income that you will spend under each head. Decide the proportion yourself, however, the 50-30-20 formula is widely famous. It says that 50% of your income should be spent on your needs, 30% should be spent on your wants and 20% should be saved. So, if your income is ₹1,000, 500 should be spent on needs, 300 on wants and the rest 200 must be saved.
  • Use any expense tracker app to manage your expenses. It will make your work of classifying and budgeting easier, and you can always look at the amount of money spent and left under all the heads.

3. Start gaining Financial Knowledge

This is the most important of all the advises mentioned here. Financial knowledge is the simplest thing to learn, with the highest return on investment, and yet most of the people in our country ignore it as if they know everything. Earning money is the easiest thing to do, growing and managing it and making it work in your favour isn’t. It is extremely important to know how money works, how it grows over time and how you can easily handle your financial life if you have proper knowledge.

  • Read financial books and news. There are hundreds of books that are considered as masterpieces in terms of finance. Rich Dad Poor Dad, Psychology of Money, Think and Grow rich, etc. are a few to name. Also, start reading financial news and try to understand the concepts and terminologies.
  • YouTube videos in present times are one of the richest ways to grow your knowledge in any field. Watch and learn about investing, listen to podcasts of successful people and try to analyse what would be the best for you.
  • At this stage, investment knowledge is the most important thing you must aim to gain. Do not just jump into investing. Understand the market, the risk and profits involved, different ways of investing, SIP, mutual funds, stocks, indexes, cryptocurrencies, NFTs, etc. Identify your risk aptitude and invest accordingly.

We will be discussing more about teenage investment and investment strategies in upcoming blogs.

4. Build an Asset

There are mainly two ways to earn money. The first one is by lending your time, where you get paid for investing your hours in someone else’s work. This is a method for immediate earning. You will get paid every month, or week, as the case maybe. You will get paid till the time you work, but once you stop working, you will not get any income. Freelancing or working for a company/person are some examples of this method.

This brings us to the second method, which demands more patience, more hard work, and ensures no fixed income. Why would anyone want to earn this way? Because, once done properly, it will become an asset and earn for you lifetime, even when you are sleeping. Publishing books, blogs, business, etc fall under this category.

  • Considering your young age and available time, it is highly recommended that you focus more on building an asset for yourself, instead of lending your time. Writing and publishing an E-Book, and earning through ads are the least difficult ways to do so.
  • It will demand more time and patience initially. You may not earn anything for months. But if you stay consistent and keep patience, the results will be overwhelming and beyond your expectations.

Moreover, this will inculcate in you the precious traits of patience and hard work.

5. Be Aware of Frauds

Do not fall for any kind of traps or frauds. Online transactions, on the one hand, have made the work easier and smoother, but it has also increased financial frauds and scams on the other hand.

  • You must know that any offer that claims to multiply your money within a very short period of time is generally a fraud. Money grows slowly and gradually.
  • Never share your passwords, CVV, pin, etc. with anyone. Not even your bank will ask for such information.
  • Make online transactions only through secured websites. Do not click on any random unsecured link sent to you via mail or message.
  • If your passwords or pin has leaked anyhow, or you have lost your debit card, contact your bank immediately to block withdrawals.
  • Do not save or write your personal and financial details at a place which is easily accessible.

We have discussed here the best five financial tips that a teenager may require. Let us know in the comments if we missed something. All the best for your financial journey!

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