Money management for young people

“What other life skill is more important than managing money?” This is the question Financial Studies teacher Helen Westwood frequently asks students, parents, adults and fellow teachers. “The school curriculum is already packed but this has surely got to be at the top.”

Helen has been teaching Financial Studies to 14-18 year olds since 2004. “The students feel so much more confident when they leave school - they’re often in a much better position than their parents were, who perhaps had to make mistakes to learn.”

Together with her students, Helen looks at budgeting, managing income and comparing different bank accounts.

Building financial independence

Most of Helen’s students already have a bank account when they start her classes, often with the same bank as their parents. “Even so, students know that they should be prepared to switch providers,” says Helen.

Once you turn 16, some banks allow you to apply for a bank account without the consent of an adult. For example, you can apply for Starling's app-based bank account without an adult, or a visit to a branch.

“It’s important to let young people take responsibility,” says Iona Bain, founder of The Young Money Blog and author of the book, Own It.

Managing income from the start

“Digital-first accounts are really effective in teaching us about the world of money and helping us manage income,” says Iona. For her own finances, she uses Starling, partly because of the app’s built-in money management features.

Starling’s real-time notifications mean that whenever you’re paid, whether it’s pocket money or money you’ve earned from working in a shop or selling something online, you’ll know right away.

You can then easily set a portion aside as savings with the Spaces feature, and look at the Spending Insights screen of the Starling app to check your spending by category, and total monthly income, and use that to create a budget.

Controlling spending and learning how to save

Part of budgeting is about controlling how much you spend so that you can save up for what you really want. Helen says: “As part of the course, students consider how actual behaviour compares to estimates about spending in different areas.”

With Starling, the app automatically categorises outgoings and calculates total spend for each to help you understand where your money is going.

“Young people have a high level of awareness of how easy it is to spend money,” says Iona. “The most common concern is: How do I protect myself from myself?”

This is where Starling’s Spaces feature can help. When you put money into a savings Space, it’s ring-fenced from the rest of your account. You can set a target amount, and add or withdraw money whenever you like. “It’s about putting those little barriers in place,” she says.

You can set up multiple Spaces and add a photograph of whatever you’re saving for, whether it’s a holiday with friends or a new laptop. To boost savings, you can also switch on the Round Ups feature. Every time you spend money, the amount is rounded up to the nearest pound and the change is added to a Space of your choice. Think of this as savings on autopilot.

Long-term thinking

One topic Helen covers with her students is investing. Even if you can’t invest yet, either because you’re under 18 or you can’t afford to, it’s always helpful to get a headstart on understanding investment options.

Iona says: “If you invest £10 a week, that sum could grow into enough money to help fund your... first business. It could help you own your financial future.” Though do be aware that the value of investments can rise or fall and you may get back less than you contributed.

The above article is intended as general information and does not constitute advice in any way. You should take independent legal advice if you have any questions about your specific circumstances. Remember, the value of your investments can go both up and down, and your capital is at risk.