Better budgeting and management of personal finances is a popular new year's resolution. But just like many other resolutions, sticking to these plans can be tricky in the new year. Especially as a teen, there may be many distractions along the way that can lead to missed financial goals. So, how can you succeed in practicing good money management in 2022?

The start of a new year is an exciting time. You may be starting a new school year, enrolling at a college or university, or starting your first job. You may still be living at home but as adulthood approaches, it’s important to make sure you have the financial know-how needed to avoid costly mistakes in the future. Now, at the start of the new year, it’s a great time to learn about conscious money management.

What does conscious money management mean?

In simple terms, conscious money management is mindful money habits that encourage you to think about your income and expenses and help you to grow your money in the future without going into debt.  

How to start and follow through on good money habits 

Differentiating wants from needs

As a teen, you may want to buy many new things in the new year. But are these things really needed? Differentiating wants from needs can help you to better manage your expenses, create a more realistic budget, and avoid going into debt one day. Needs are those things that everyone needs to survive such as housing, transportation, clothing and food. Wants are things that are great but we can definitely live without such things as designer shoes or handbags. If you’re in a fortunate position to have your needs taken care of by your parents, it’s a great opportunity to start saving in your teens, much before you’ve even started a full time job. 

Creating a realistic budget

One of the most important steps in conscious money management is creating a realistic budget. This can be a tricky task. First, all income must be considered. Thereafter, a list of all your expenses must be set up. It may be easy and tempting to cut corners, but it is important to work out every expense to the last dirham or fil. This will offer a bigger picture of the amount left for extras.

One of the more popular budgeting strategies is the 50/30/20 rule where 50% of your spending goes towards needs, 30% towards wants and 20% towards savings. 

Tip! Remember that it’s also important to add savings as an expense to a budget! 

Learning about taking care of debt first 

It's essential to understand that not taking care of debt can become a big problem fast. So, it’s crucial to pay off debt as quickly as possible. While you may not have debt yet, it’s important to know that paying off any owed money should always be your main priority when setting up a budget.

Opening a savings account

The start of a new year is a great time to open a savings account. Saving money is not just important for emergencies, but it can also help to set aside money for goals like holidays, college tuition and more. 

Tip! What is an interest rate?
The interest rate is the amount that a bank pays you for holding your money with the bank.

Keeping track of progress 

Managing personal finances doesn't have to be a hassle, even at a young age. There are many great mobile apps (such as Cashee!) available that can help you stay on track with your income and daily spendings. 

Making smart money management choices in 2022

At first, taking care of your money may seem like a big and complicated task. However, the earlier you start, the easier it becomes. Remember that planning carefully, tracking progress, and avoiding overspending are key points to keep in mind in the new year.