A guide to budgeting for teens

Budgeting is basically just making a plan for your money before you spend it. Many adults budget, but is a budget for teenagers a thing? 

It sure is — and it can really help you get the most out of your money.

Let’s break down how to start budgeting money from your allowance, side-hustle, or part-time job. And don’t worry, you can get started no matter how much money you have or how much you make.

How to build a budget for teenagers

Ready to get down to business? Here’s a rundown of the steps you’ll take to create a budget:

1. Figure out how much money you make (from jobs, allowances, etc.)

2. Figure out how much you normally spend

3. Separate required spending from optional spending

4. Determine your money goals

5. Make your budget

6. Track your spending and look at your budget again

Making a budget for teenagers doesn’t need to be complicated! We’ll break it all down below.

Step 1: Figure out how much money you make 💡

Do you know how much income you have from all sources? This could include a part-time job, a full-time job, a side hustle like babysitting or mowing lawns, an allowance from your parents, income from your own business, or a combination of these.

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Just total up every dollar you make in a typical month. If your monthly income varies, try to estimate the average.

For example, this might look like:

• Allowance: $120 per month ($30/week)

• Part-time job income: $600 per month ($150/week)

• Mowing lawns: $80 per month ($20/week)

• Total: $800 per month ($200/week)

Take note of this amount, and then move on to the next step.

Step 2: Figure out how much you normally spend 🥡

Do you know where your money typically goes each week or month? How much do you spend on food, activities, gas, or any of your other expenses? 

On average, teens tend to spend the most on clothing and food — but your spending patterns might be different! 

Taking a look at your spending habits can help you set up your budget and also give you important info about your financial situation.

If you’re not sure, you can start tracking your spending for a few weeks to find out. Or, you can estimate what you spend, and then double-check later with real amounts.

It’s helpful to use a debit card for teens so that you can easily track your spending. With the Greenlight debit card, you can even earn cash back along the way, while learning about how to manage your money.

Step 3: Split up wants vs. needs 🧁

There are basically two categories of monthly expenses: “Needs” (required spending) and “wants” (optional spending).

Required or necessary expenses might be things like your cell phone bill, car insurance, gas money, and any other expenses that your parents have asked you to pay for directly.

Optional expenses might be things like takeout, activities with friends, and shopping.

First, figure out the budget categories that you typically spend in, and then decide whether they’re optional or required. This will help you build your budget in step five.

Separating expenses like this can also help you cut back on optional spending, if you need to in order to reach your goals.

Step 4: Determine your money goals 💸

Next up, consider what your actual goals are. Do you want to be able to have more spending money when you go out with your friends? Do you want to save up for big-ticket items, like your first car or an upcoming trip?

It’s a good idea to think about your goals first, so that you can line up your financial habits with those goals. If you use Greenlight, you can set and track Savings Goals right in the app. 

When you make your monthly budget, you can make sure to set aside money for your short-term and long-term goals, whatever they may be.

If you’re not sure what your goals are, that’s OK too. Maybe you just want to get a handle on your money. If so, building a budget is a key step in your financial education, and a great money goal to start with.

Step 5: Make your teen budget 💰

Now you have all the information you need to make your budget: Your income, expenses, and savings goals.

From here, you could use a budgeting app, a worksheet, or just a note on your phone to build your budget. Start writing down your planned spending in each category, and make sure your total spending is less than your total income. Whatever you have left, you can assign to savings or adjust your budget categories.

Let’s look at an example of a budget for teenagers.

Aleesha works at a coffee shop part-time. She earns $800 per month from her job and gets paid right to her Greenlight account via direct deposit. Here’s how Aleesha builds her budget:

Total income: $800 per month

Total expenses: $600 per month (see the breakdown below)

• Car insurance (required): $150

• Gas (required): $50

• Cell phone (required): $50

• School supplies (required): $30

• Apps and subscriptions (optional): $50

• Takeout and restaurants (optional): $150

• Coffee and treats (optional): $50

• Unexpected expenses (optional): $20

• Miscellaneous (optional): $50

Savings: $200 per month (see the breakdown below)

• Savings for a car: $75

• Savings for trips: $50

• Savings for college or your first apartment: $50

• General savings: $25

In this example, Aleesha has around $800 per month coming into her checking account and $600 per month going out for regular expenses. Of those expenses, $280 are required, and $320 are optional.

Aleesha then has $200 per month going into a savings account to build toward her money goals.

Step 6: Track your spending (and look at your budget again) 💳

Now it’s time to actually implement your budget. One of the key money lessons you will learn is that you can plan things out — but if you don’t actually track your spending and make sure you’re staying on track, you probably won’t stick with your budget.

To track spending, it’s easiest if you make purchases using a debit card. That way, you can just look at your bank account records to see how much you’re spending in a given month or week.

If you have the Greenlight debit card, you can ask a parent to set Spend Controls so there are limits on how much you can spend in a certain category or at a specific store.

Start by tracking your spending for at least a month. Then, check to see if your actual spending is lining up with the amounts you planned for in your budget.

If you’re off-budget, you might need to adjust your spending, your budget, or both.

Finally, keep in mind that your financial situation will change a lot in the coming years. Once you’re out of high school, you’ll have more time to work and make money — but also likely have more expenses to budget for. So be sure to check back frequently and adjust as needed!

Budgeting is a key financial literacy skill

If you want to set yourself up for a brighter financial future, learning how to budget is an excellent first step. It’s never too early to get started, and by following the steps above, you can create a budget for teenagers. Your budget can help you understand your money better, control your spending, and start working toward your goals.

The Greenlight app makes it easy for you to budget, save, and manage your money. Besides setting you up for success, it comes with a debit card of your own, up to 5% on savings, investing, and so much more.

Ready to learn about the world of money? Sign up for Greenlight today!