I would like to know how to manage my money to start off in life good?

Hi Mason,

It's fantastic that you want to start saving your money for your future. This is an incredibly useful habit to get into. The first step to saving money is actually to start earning money, so you have something to save. If you get an allowance, that's income (you have an incoming source of money). You might be able to increase your income by earning it: doing chores around the house that your parents are willing to pay you to do, for example. Or you might be able to do odd jobs for neighbors (raking leaves, shoveling snow, weeding the garden, etc). Once you're older and have a job, that income is how you'll pay your expenses (clothes, music, movies, etc). Those expenses get bigger once you're supporting yourself as an adult (rent, electricity, food, etc), so saving will become even more important.

Assuming you have an income, the simplest way to start saving part of it is the old piggy bank approach. Whether it's a jar or a box or even an actual piggy bank, just put a portion of your money away every time you get some. You can pick a flat amount (if your allowance is $5, maybe you put $1 of it into the piggy bank each time). Or you can pick a percentage (maybe you want to save half, or 50%, of your allowance each week, so you put $2.50 in the piggy bank each time).

If you want to get a little more serious, you can open a savings account at your local bank branch. Your parents will probably have to help you by co-signing the account, but this will help you to learn more about saving and managing your money. Some banks have special saving accounts just for kids, so you don't need to have a minimum amount of money or pay any fees. Make sure any account you and your parents open for you does not have a minimum balance requirement ("balance" is the amount of money in your account).

Keeping your money in a bank account means it won't get lost, like a piggy bank might. It will also teach you how to track your income and expenses. Even better, some saving accounts earn interest. "Interest" is when the bank pays you a percentage of the money you deposit (put in) to the account. This means you're actually making money! If your account earns 2% interest, for example, the bank will add 2¢ for every $1.00 you deposit. Not bad for simply saving your own money! Not all accounts earn interest, so ask the bank representative if they offer that.

The best way to save money is to do it regularly. Every time money comes in, put some of it into your piggy bank or savings account. If you do this even before you spend any of it, you will find your money adding up over time into a nice little "nest egg."

Best of luck, and happy saving!

Hi Mason,

Great question. Start saving early and save as much as you can. Even small amounts saved over a long period of time can really add up.

Set goals for yourself - what are you saving for & how much do you need to save. A good long term goal at your age could be to start saving for a car. Even though you're years away from driving, those years will give you plenty of time to start saving small amounts. Before you know it, you'll be close to your goal. Be sure to keep an eye on your goals and know why you're saving. Once you get some money saved up, you'll be tempted to pull it out for something that caught your eye, you'll need to remember that you're saving that money for something really important.

Earn money - Look for ways that you can start earning money. That could be from chores around the house, or doing work for your neighbors. Try to find Babysitting & Tutoring jobs through your school PTA. In a few years you may be able to get a summer job. You'll find that one job will lead to the next. Every little job that you do will give you the confidence to take on more responsibility and it'll show your next employer that you're a capable, reliable and hard worker.

Mason,
Great that you are thinking about saving money in such a young age! Here are a few tips:

1) Set a goal: Having a clear goal helps keep you motivated
- Why do you want to save money (buy toys/trip to Disneyland/car/house/retirement)
- When do you want to achieve this goal? (setting a time frame helps you figure out how much you need to save each month)

2) Earn money: The higher the income the more potential for you to save.
- help your neighbor mow their lawn/babysit/ have a lemonade stand
- get a part time job/do more chores around the house for increased allowence

3) Save money: pay yourself first
- When you get the money you earned, put a percentage away FIRST(20% ? 50% ?) . Then plan to spend what's left over.
- If you spend first then save what's left over, you'll likely spend more than you intended.

4) Invest: Exponential Growth while you live your life
- If you are saving for the long term (more than 10 years), invest in the stock market so that you can sit back and just have your money grow.
- check out http://www.investopedia.com/video/play/what-is-compound-interest/
- Compound interest has your money working for you.

There are many books and blogs that cover this topic so continue to dig more into the topic.
Hope that you have a fulfilling life!

All fantastic answers, here! As someone that made quite a few missteps along the way (and continues to pay for them), I'll provide a bit of the opposite; what not to do:

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  Grants/scholarships for tuition - Later in your high school years, apply for grants/scholarships to help with tuition and the other associated costs of going to school (think: books, a computer, housing, food--assuming that your situation allows for it). Depending on what the tuition is at your school, you may end up with a large, left-over amount. Be mindful of how you spend any excess; a trip with friends/shopping spree sounds great, but there will almost certainly be a point during your education where you'll encounter unexpected costs--save it!

  
  


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  Credit cards - you likely receive credit card applications/offers in the mail, the day you turn 18. When I was in 6th grade, I knew nothing about credit cards, aside from them being 'things that adults carry around and use to pay for stuff.' A credit card is essentially borrowed money.

  
  

As an example: you swipe the card at a store to buy a $20 t-shirt. At the end of the month you pay back the bank/credit card company. The big catch is interest: you'll pay back more than what you spent on the shirt--that's how credit card companies make money. So that $20 shirt becomes $22 (or however much your interest rate is). Not so big of a deal with a t-shirt, but it adds up over time (especially with larger purchases).

Additionally, you'll likely be surprised at how much money a credit card company will make available to you (your "credit line"). Some may offer a few thousand, which is great, but you need to be responsible with how you spend that credit line.

If you pay late, miss a payment, or max out (think: spend $1,999 of your $2,000 credit line) it will count against you on your credit report (your report card for how much, how fast, how often you spend and pay back on time). Your credit report really comes into play later in life. Don't pay back on time? Don't pay back at all? Your next credit card offer will likely offer a lower credit line (less money) with a high interest rate (you pay $25 for that same t-shirt).

It may seem like buying your very own car, or house is a million miles away right now; but if you're mindful of how you use credit, it can be a huge benefit to you later on.

Live below your means.