Knowing the best ways to manage earnings from an after school job helps achieve your financial goals. The fact that you have financial goals as a young adult is commendable. At this point in life, many teens are more interested in spending cash on clothes and entertainment. But as you'll see, the sooner you establish a financial foundation, the easier it will be to reach long-term goals. Here are seven ways to manage earnings from an after school job.
1. Open a Checking Account
Opening a checking account is one of the best ways to manage earnings. With a checking account, you can easily deposit funds into a bank, plus sign up for online banking and manage your account from any location. Although you can visit your employer’s bank to cash your check, the bank’s location may not be convenient to your home.
2. Open a Savings Account
Checking accounts are financial must-haves, but you also need a savings account. A savings account is an excellent tool for planning for the future and building an emergency fund. As a young adult, now is the perfect time to start saving your money. You probably have few financial responsibilities; and typically, it’s easier to save as a young person than an adult.
3. Watch ATM Usage
With your cash in the bank, you might hit the ATM when you need to make a withdrawal. Just know that using an out-of-network ATM can be costly. The ATM may charge a $2.50 usage fee, and your personal bank may charge another $2.00. In total, one trip to an out-of-network ATM can cost $4.50. Download your bank’s mobile app and use the ATM locator tool to find in-network machines.
4. Budget and Cut Expenses
As a young adult, you might be responsible for your cell phone bill, gas for your car and clothes. Therefore, you need to prioritize spending. If you need help creating a budget or spending plan, speak with your parents or research tips online. When creating a budget, write out your monthly expenses and compare these with your take-home pay. To meet all your expenses, you might need to reduce spending in certain areas. Also, don't forget to deposit a percentage of your check into savings each week.
5. Plan Ahead for Large Purchases
It's tempting to blow an entire check on a large purchase, but is this wise? Sometimes in life, we have to delay instant gratification and save up for major purchases. So, if you want a high ticket item, set aside a certain amount from each check and save up. Learning financial patience at an early age can help you avoid debt later in life.
6. Set Aside Taxes
Some young adults have an entrepreneurial spirit, and they look for ways to generate their own income. This can be a babysitting business, a lawn care service or another type of business. If you fall into this category, make sure you set aside money for taxes each year.
7. Use a Prepaid Card for Entertainment
Not only should you establish a budget for entertainment and recreation, consider getting a pre-paid debit card and depositing a limited amount on this card for entertainment. This way, you avoid overspending in this category.
Some teens and young adults don’t care about personal finance. But adopting a financially savvy attitude has long-term financial benefits. If you learn how to manage your earnings early, you'll make wiser choices in the future. What are other ways to manage earnings from an after school job?