Budgeting is a skill that can help teens avoid financial pitfalls in adulthood. Here, Derek Kyler, a support advisor at Coyle Financial, answers a series of questions for beginner budgeters. 

Q: At what point in their lives should teens start saving money?

A: The best time for teens to start saving money is when they begin earning their own income and rely less on their parents to cover most expenses.

Q: What are the first things teens should do when they start budgeting?

A: Teens should start by organizing their expenses into two categories: non-negotiables and negotiables. Non-negotiables are essential things that teens must have or cannot avoid purchasing, such as gas for their car. Negotiables are items teens can avoid purchasing or don’t necessarily need.

Q: What kind of bank account should teens use to budget?

A: A high-yield savings account is recommended for budgeting because unlike a normal savings account, it allows teens to save their money while earning up to five percent in interest every month.

Q: How should teens determine how much money to save and to spend?

 A: Teens can divide finances using the 50/30/20 rule. Teens can determine how much to save and spend by dividing their finances into three different categories: negotiables, non-negotiables and savings. Using this method, 50 percent of any teen’s income would be used for negotiables, 30 percent of their income would be used for non-negotiables and they would save the remaining 20 percent.

Q: How can teens ensure they are sticking to their budget? 

A: Teens can stick to their budget by reviewing it every couple of weeks to ensure that they are not straying from their budget.