Thursday, August 25, 2016

Smooth Out Lumpy Income To Help Teens Save More, Spend Less

Smoothly Spread Peanut Butter

Teen income is notoriously lumpy.

A summer paycheck here, a payment for babysitting there. Money shows up in fits and starts.

When a teen’s lumpy income is all dumped in one account, spending has a way of following the same inconsistent pattern. Which means saving rarely happens.

Here’s a simple system for teens to follow that fixes the lumpy income problem:

  1. Deposit the inconsistent income from odd jobs and part time work into a separate savings account.
  2. Calculate a rough weekly budget to cover discretionary expenditures not covered by parents.
  3. Set up an automatic weekly transfer from the savings account to the everyday spending account. Make the amount match the budget.

The two account setup removes the temptation to blow money on mindless spending as soon as the occasional paycheck or odd job payment rolls in. (Extra credit: sweep any unspent weekly budget back to savings.)

With smooth weekly funds flowing into spending, your teen will have a much better shot at accumulating a big lump of savings.

Want to turn these tips into action? Check out

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