Joel Gibson's Top 14 simple ways for teenagers to save money.

Ever heard of Charles Dickens? You might know some of his 20 classic books, including Oliver Twist and A Christmas Carol. One of his most famous quotations was this one:

“Annual income 20 pounds, annual expenditure 19 [pounds] 19 [shillings] and six [pence], result happiness.
Annual income 20 pounds, annual expenditure 20 pounds [no shillings] and six [pence], result misery.”

In other words, spend less than you earn and you’ll have the recipe for happiness in life! A lot of money gurus throughout history have said pretty much the same thing.

Saving money won’t guarantee you happiness, of course, but it will probably mean less stress and more financial success - and the earlier you start, the better. So let’s look at what you can do as a teenager.

1. Have a savings plan:
Savings don’t just happen. They take time and you need a plan. First, you need to generate some income. Then you need to have a plan for what you do with it. Whether it’s physical jars where you divvy up your money, bank accounts that allow you to do the same, or a budgeting app, there are plenty of options and you can choose the one that works best for you. There’s no one-size-fits-all answer. The main thing is that you have a plan, because doing nothing will probably mean you save… nothing.

2. Use jars to organise your money:
This is the most basic strategy for saving some of your money. Once upon a time, people used to divvy up their weekly pay into envelopes marked ‘household expenses’, ‘holidays’ and so on. These days, you can do it electronically with bank accounts but Scott Pape, author of The Barefoot Investor for Families and Australia’s best-selling money guru, recommends kids start out using physical jars to establish their strategy.

He recommends kids have three jars to divide their pocket money into - they must put SOME money in each jar each time they get paid, but how much is up to them:

• SMILE JAR: This is for something you’re saving up for. It’s good to have goals and learn how to reach them.
• SPLURGE JAR: This is your day to day spending money. Everyone needs this, and noone should feel bad about spending some of their pocket money.
• GIVE JAR: This is money you’re going to give away to charity or a good cause. Because there’s always someone worse off than you.

3. Open several bank accounts to organise your ‘buckets’:
One way of making saving easy is to automate it. It takes a lot of effort and discipline to split your money into jars every time you earn it, but it takes very little to do it if you don’t have to think about it. Some banks such as ING and Bankwest allow you to have multiple free accounts so you can give each one a name - “spending”, “saving” and “emergencies” maybe - and set up an automatic transfer into each account each time you get paid or get pocket money. It might just be $5 or $10 a week into your savings, but it all adds up over time.

4. Discover the miracle of compound interest:
Albert Einstein was a smart fella and he called compound interest “the 8th wonder of the world”.Blog Post Body

You would have learnt the formula in high school if you’re old enough, but do you understand the real power of it? Put it this way: if a generous relative had put $100 in a savings account for you earning 5% per annum compound interest the day you were born, you’d have:

• $163 by the time you’re 10,
• $208 by the time you’re 15, and
• $265 by the time you’re 20!

That’s money for nothing, and the smartest savers know how to make the most of it.

5. Get extra interest from bonus saver accounts for young people:
An even better place for your savings is a proper savings account, which pays extra interest if you make regular deposits and don’t make lots of withdrawals. The good news is: some of the BEST interest rates available are on savings accounts for young people. Here are a few examples from September 2022 (note that the rates will probably have changed by now):

Source: RateCity.com.au - Monthly conditions apply for max rate.

6. Use a money-saving app or budgeting app:
There are dozens of these. Some banks now have these features integrated in their apps, while non-bank examples include Spriggy (now owned by NAB bank) and Bankaroo for younger kids. Most of them show you what you’re spending your money on, some suggest ways to save, and others allow you to ‘round up’ each purchase to the nearest dollar and transfer it into a savings account earning interest. I like to compare technology like this to the slingshot in the famous story of David and Goliath. David was tiny compared to the giant Goliath - and that’s how you can feel when it comes to managing money. But he had a secret weapon and that was enough to level the playing field and give him a chance. So use technology to help your savings strategy - there have never been more secret weapons out there.

7. Get a job:
You can start doing a bit of part-time or casual work at any age in most states in Australia. Getting a job does more than just generate some income and future savings for you: it also starts to build your CV so you’ll have some experience and referees for future job applications. There are almost no age barriers for part-time or casual jobs, or for teenagers working in family businesses or the entertainment industry. But there are some rules and they differ from state to state. In most states and territories, Australian businesses looking to hire those under 17 must have a Child Employment Permit.

It can be hard to know where to start applying for jobs if you’ve never had one before, so I’ve suggested a few ideas below.

8. Do some babysitting and dog walking:
These are often ad hoc jobs, not regular sources of income, but they can be a good way to get started. Ask neighbours and family friends, put up posters at the local dog park, or post in local Facebook groups. Once you find some work, if you do a good job, you’ll get more through word of mouth - parents and dog owners often give each other recommendations. You could even join dedicated apps such as Pawshake or Sittr, if you’re old enough.

9. Look for local delivery jobs:
Many teenagers used to start out by delivering newspapers, but ‘paper runs’ are few and far between in the digital age. Most letterboxes are still full of advertising material, however, and it needs to be distributed so delivery jobs still exist and they’re a good way to start out. Check job ad websites and maybe look on Airtasker to see if anyone is looking for a delivery boy/girl.

10. Try coaching, tutoring or refereeing:
If you have a passion or a hobby, sometimes you can turn it into an income. Soccer-mad? See if there’s any work refereeing kids games at your local club. Love dancing? Maybe a nearby studio is running school holiday sessions and needs some help. Ask your own coaches, teachers and tutors if they know of any opportunities.

11. Work in retail or hospitality:
These industries hire a lot of young people, from Maccas to cinemas to the local newsagent or cafe. Check the job ad websites such as Seek.com.au and indeed.com, or go to the business’s website if it’s a big chain and see if they’re advertising. Ask local shopkeepers. If you’ve got a friend with a job and they like working there, ask them how you can apply too.

12. Cash in on student discounts:
From public transport to movie tickets, Spotify and even mobile plans such as this one offered my amaysim, students usually pay less. So make sure you’re getting every possible discount you’re entitled to. Go to Services Australia and see what’s available for students in your age group. Check out apps such as UniDays, Student Beans and others that specialise in student savings. Google ‘student discounts’ and you’ll get dozens of results such as this list of 18 student discounts you might not know about. There’s also a list of money-saving tips for students on the amaysim blog.

13. Stay on the family plan if you can: 
Even though students get discounts, it will still be cheaper to stay on the family’s plan for most things while you can: from health insurance to streaming services, NBN or groceries, it pays to “buy in bulk” so going it alone isn’t the cheapest option.

14. Sell some stuff:
Haven’t ridden that bike in months or years? Never even opened that weird gift aunty So-and-So gave you for Christmas? The second-hand market is a great place for teens to make a few bucks and it’s also good for the environment - it’s a form of recycling! Make sure it’s ok to sell something with your parents first, in case there’s some sentimental value or someone might be offended. If not, try Gumtree, Facebook Marketplace and other platforms such as SwapUp, an online ‘op shop’ which specialises in second-hand clothes.

Joel Gibson is amaysim’s “Money-Saver in Residence” for 2022. He’s a money-saving expert who wrote the book KILL BILLS! He shares his best tips and hacks regularly at the Sydney Morning Herald, The Age, The Today Show, 2GB, 4BC and ABC Radio.

#savings #saving #tips