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Building a Budget in High School

Learn why a budget is important and how to implement one.

 

High school might seem like the last time in your life when having a budget isn’t that important. Your expenses are all pretty well fixed, and you’re not making much anyways. Anything left over is your weekend fun money. It isn’t that simple though, or it shouldn’t be that simple.student with a piggy bank

The fact is, after high school, life can start to get expensive. Whether you go to college or not, there are unavoidable costs coming down the pipeline that you’re going to want to have a budget in place for. And some savings in case of emergencies. But how do you build a budget? It’s easy once you start.

Track your expenses. Write down each time you earn or spend money. Collect about a month of data on what you spend your money on, how much you’re spending, and how often you’re buying/earning. How you track your expenses is up to you—some people like apps, while others use notebooks. Pick a method and stick to it; this data is important!

Set your goals. Maybe you’ve already been saving a bit here and there. If you want to save more, now is the time to do it. Does the amount you spend eating out shock you? Set a goal to roll back that expense. No matter your goals, build your budget to achieve them. If you want to save more money, look at where you could cut back on spending.

Establish your plan. Once you have data about your spending and earning and the goals of your budget, you can start to plan. Look at where you can cut expenses or earn more money. The plan all depends on what your end goals are. If you want to make more money, you’re also going to have to budget time.

Tips and tricks.

  • Underestimate how much income you’ll have.
  • Overestimate your expenses, then save and invest the remainder.
  • Use the buddy system: encourage a friend to budget too, and hold each other accountable.

The magic of compound interest. Saving now will make you money. As interest compounds over time, you’ll make money by letting it sit in a savings account. Before you need to use that money, you’ll have saved enough to cover whatever those expenses are without touching your seed investment.

Compound interest is evil. Having a budget in place and knowing what you can spend each day, week, or month will help you avoid putting too much on a high-interest credit card. Those cards compound the interest each month on whatever you didn’t pay off. And that can get out of hand quickly.

Avoid college debt. If you save early enough and work through high school and college, you can avoid debt. Obviously, there’s a lot of things that have to go in your favor—scholarships, maybe a local school where you live at home—but it’s doable if you want it.

All in all, it’s never too early to start saving and budgeting your money. It’s a habit that will help you through every stage of your life. If you have any questions, contact your credit union. They’ll have someone on staff who can help fill in any blanks and help you plan your budget.

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