From Pocket Change to Paychecks: Mastering Money Early

By Ahuva Chaitovsky

Disclaimer:  I am not a certified financial advisor, and this article does not constitute financial advice.  Instead, this article reflects my personal views as a student of saving.

As a teenager, it can be very hard to save money, even when you’re working toward a larger purchase. You may have asked yourself, “How can I even earn that much money, let alone keep it?” That’s where I come in. Managing your money isn’t easy, but it’s far better to make it a habit now—when it’s helpful but not strictly necessary—than to learn the hard way later.

How do I earn the money?
There are plenty of ways to make money as a teenager; you just have to be willing to put in the work. One pretty dependable option is babysitting, but other ways include selling crafts or baked goods, doing yard work, or running errands for people. In addition, if you have a specific skill or hobby, it can probably be monetized if you think creatively enough (or ask ChatGPT for ideas).

How do I manage my money once I’ve earned it?
There are a few basic financial principles that are especially useful when you have little to no expenses. I like to think of every dollar I earn as being split into five jars (either physically or mentally).

The first jar is savings, meant for long-term goals (one to five years), such as a car or a new video game console. The second jar is for donations, because giving to causes close to you can be extremely fulfilling. My favorite is Project Ezrah, but anything meaningful to you works. The third jar is the spend jar—this is where a coffee or a mall purchase comes from. These are usually smaller, less-planned expenses.

The fourth jar is my favorite: the experience jar. This includes vacations, concert tickets, or even a game of laser tag. It can also cover spending money for experiences, like gift-shop money on a cruise or merch at a concert. The final jar, and the largest one, is the investment jar. Investing is especially powerful as a teenager because time is on your side. Thanks to compound interest, even $50 can turn into $2,500 over 50 years.

The way I split my money isn’t even—it’s a little wonky, but it works for me. I do 20% savings, 10% donations, 10% spending, 5% experiences, and 50% investments. This approach ensures that I take advantage of compound interest while still separating ma’aser, or tithing. The best part is that you still have 35% of your money available for spending. That 35% is your “easily accessible” money, and if you go on a trip to Disney with friends, it would likely come out of several of those jars.

You could keep your money in jars or under your mattress, but that isn’t secure and definitely isn’t smart. Ideally, investments should go into a Roth IRA, which is a tax-free retirement account that grows through compound interest without being taxed on gains. However, this only works if the money is earned income, meaning you receive a paycheck. If that’s not the case, or if you reach the contribution cap, investing in an index fund like the S&P 500 or another low-risk option is a solid alternative.

Savings can either be invested or placed in a high-yield savings account, ideally one earning 3% or more annually. Spending and experience money can sit in a high-yield savings account or a high school checking account, such as one offered by Chase.

Remember: money is a tool, not a goal. But like any tool, it only works if you know how to use it correctly.