Having your own money and managing your finances are big steps towards independence. You may feel excited about being more self-sufficient or a bit nervous about the responsibility. Or, you may feel a bit of both! This section contains some helpful hints about managing your finances.
Bank accounts
If you don’t have a bank account yet, talk to your parents/caregivers about opening one. Setting up a bank account is easy. It just requires making an appointment. You will be able to deposit your money into the bank and then use a bank card to withdraw it or make purchases. The bank representative will be able to answer any questions you might have about your account.
These days, you can either go to the bank in person, check your account online or use an app on your phone to see details about your account (such as the balance). Your banking information is private, so do not share this with anyone who is not directly involved in your banking.
Managing money
Being able to manage your money is an important skill that will benefit you throughout your life. It is best to learn money management skills early, even if you are only working with small amounts.
Here are some basics to get you started.
- Your income is the money that you receive.
- Your expenses are the amount that you pay out.
The trick to managing money is to balance your income and expenses so that you have some money left over to put away in savings.
How do you achieve this balance? Create a budget! A budget helps you organize and keep track of your income and your expenses.
Write down the sources and amounts of income and then add them all up. Do the same with your expenses.
Tip: This is easiest if you keep receipts or make a list that you add to each day. You will be able to see how much you are spending and on what.
If you have more expenses than income, you will need to look at cutting down on your spending or increasing your income. The goal is to have more income than expenses. Practice saving for something you really want, like some clothes, tickets to an event, your education, or even a vacation!
Credit cards
Credit cards can be useful; but if you do not use credit cards responsibly, they can lead to financial trouble. Credit cards allow you to spend a certain amount of credit, which means borrowed money.
You get a bill each month that outlines how much of the credit you have spent and the amount you need to pay that month—your minimum payment. Using your credit card responsibly means paying your whole bill each month, not just the minimum payment.
Credit card companies make money by charging interest. When you leave money owing on your credit card, interest causes that amount to grow and you will end up paying the credit card company much more than you actually borrowed! Smart use of a credit card means knowing your budget and spending within it.
