As a teenager, you are probably interested in the latest entertainment, music and hanging out with friends. While it’s always good to have fun, you may want to start thinking about money and how it affects your life.
Paying Income Taxes
Once you start working, it’s highly likely you’ll be making minimum wage and have money to spend on movies, clothes or designer sunglasses. One important aspect you need to remember when you start making money is you will also need to pay taxes. Age isn’t a factor when it comes to paying income tax. It will be deducted from your paycheck. You’ll need to complete a W-4 form, which lets your employer know the amount of money to withhold from your paycheck. The government uses the income tax you pay to cover spending on infrastructure or the salaries of federal workers. You can do your own by purchasing tax software, which will walk you through the process of filing and paying your taxes each year.
How to Create a Budget
It is important to learn how to create a budget and live within your means. You can do this by following a few steps. First, you need to determine your monthly income and write that down. You’ll also need to calculate the monthly expenses you’re required to pay. This might include rent for an apartment if you have moved in with friends or a cell phone bill. Total these costs to know your monthly expenses, and then do a little math by subtracting your expenses from your income and see how much money you have left over. If you don’t have enough money to cover your expenses, you may need to work more hours. If you have extra money left over, you can save it or spend it on fun stuff like concert tickets or movies. Think about living within your means when you have extra money and spend it only on experiences are items you really treasure.
If you’re currently using an older smartphone, you may want to save money so you can buy a newer model in the future. It’s important to save part of your paycheck for emergencies as well as for items that are necessities or can make your life easier or give you pleasure. In the future, you may want to save for a trip to another country. By having patience and saving money for the future, you’ll be rewarded. You can figure out how much you want to save each month and put this in your monthly budget as an expense. This will help you build the funds required to spend it on something useful.
Borrowing money is a part of adulthood. One day, you may find yourself working with a mortgage lender, online installment loan lenders or buying yourself a new car and taking out a loan. While it’s best to pay for short-term unexpected expenses with cash you’ve saved first, it’s good to know there’s an option to consider when you are in an unexpected emergency. If you ever have a loan you need to pay off, try to do this as fast as possible so that you can begin saving money again for the future.
Money Isn’t Everything
It’s important to not let wealth define you or go to your head. Of course, you do need money to live, but you’ll be a lot happier if you treat it with respect. By having a monthly budget, it will keep you disciplined and less frustrated. You’ll know how your money is being spent, which can create less worry. Having control of your finances also allows you to save money for fun experiences or valuable items that you desire. Be sure to think about each purchase you make before you spend your money. Ask yourself questions to see if you really need what you’re buying or if you just want to spend money.
When you take the time to think about money and how it’s being spent and saved, you will have a happier life now and in the future.