Few of us follow the experts' advice of saving 10 percent of our paycheck each month.

• Commit to a plan that will help you curb your spending and produce positive results.
• Start by identifying your spending habits. This will enable you to track your spending each month and begin to budget.

Keep a Spending Diary

• Record the date, item and amount of every purchase you make. This lets you pinpoint areas where you're spending more than you want, such as on impulse items or expensive restaurants.
• Keep your receipts.
• Review your spending patterns and look for ways you can cut costs.

Establish a Savings Plan

• If your goal is to save 10 percent of your paycheck each month, start by signing up for automatic payroll deduction. If you don't "see" the money, it's much easier to save.
• Limiting debt is also important. No more than 20 percent of your net income each month should be used to pay debts (this does not include housing and living expenses).

Exercise a Little Restraint

• Wait 24 hours before making a major purchase. Planning ahead of time helps you avoid impulse buying.
• Avoid shopping when you're hungry, tired or depressed. You'll be less likely to buy without thinking.
• Distinguish between wants and needs. Ask yourself: Is this purchase necessary?

Comparison Shop

• Shop around for the best prices.
• Avoid crowded stores. You'll tend to buy higher-priced items just to "get it over with."
• Make a list when you shop and stick to it.

Avoid Credit Card Debt

• Carry only one major credit card.
• Don't bring your credit card with you when you shop.
• Pay more than your minimum payment. A card balance of $8,000 at an 18% interest rate would take you 25 years to pay off with minimum payments ($15,000 in finance charges).

Don't Get Discouraged!

Teens With Checking Accounts

"Before young people open a checking or credit card account, financial education is vital," says Heckman. "No child should be allowed to use financial services without demonstrating that they understand their end of the bargain."

• For checking accounts, this means understanding:
• That it may take a few days for deposits to hit the account and the money to become available.
  More parents are introducing their teenagers to checking accounts, ATM cards, debit cards, and even credit cards.
• That with electronic processing, you can't count on a delay before checks hit the account--the money has to be there when you write the check.
• How to record checks in a register and reconcile the account monthly.
• That there are fees for overdrawing the account.
• That some checking accounts pay interest or dividends.

For debit cards, it means understanding:

• That the card looks and acts like a credit card, but withdraws cash from the checking account instead of creating a loan.
• The importance of safeguarding the card and PIN.
• What to do if the card is lost or stolen.

With credit cards, it's important to understand:

• How compound interest works.
• How to choose a low-rate, no-annual-fee card.
• How grace periods help avoid finance charges.
• That--with most cards--if you carry a balance, you lose the grace period and pay interest from the moment you make any new purchases.
• The cost of making just the minimum payment.
• That exceeding the credit limit or paying late results in significant fees, and possibly higher interest rates.
• That misuse of the card creates a poor credit history.
• What to do if the card is lost or stolen.

Many credit unions offer youth financial education classes to teach these concepts; other courses are available online. "Jemma took CUNA's online 'Guides to Independence' courses through a credit union before getting her checking account and debit card," says Sepich. "They covered how to open a checking account, how to balance the account, and other topics."

Did you know ...

• According to a recent Junior Achievement poll, Washington, D.C., that asks teens about personal finance and careers, more than 11% of its participants carry credit cards; some are as young as 13 or 14. Three out of 10 teenagers have checking accounts, many linked to ATM (automated teller machine) or debit cards.
• One out of three high-school seniors uses credit cards; half of those have the cards in their own names rather than being authorized users on their parents' accounts.
• Seventy-eight percent of college students have credit cards and the typical college student carries a balance of $3,200. One out of 10 college students carries a balance of more than $7,800.
• The proportion of bankruptcy filers younger than age 25 has risen from less than 1% 1995 to more than 5%.

Resource links

• Moneyinstructor.com--Ideas for teaching children or adults about money management. Free limited membership available.
• CNN Money's personal finance center
• The Jump$tart Coalition for Personal Financial Literacy's Money IQ Quiz lets teenagers assess their financial literacy.