Here's how teens and students can start saving money

CHICAGO (WLS) -- Understanding financial management is pertinent for all Americans, and getting an early start, could save teenagers a lot of time and money.

Roy Paul with Cents Ability, Inc. joined ABC7 to provide tips on how to talk with teens about saving, and ways to maximize your money.

Paul explains the '50/30/20 rule,' where 50% of your net monthly income goes to your needs like rent, car payments, essential groceries, and utilities, 30% of your income goes to your wants like subscriptions, dining out, shopping and more while 20% is for saving.

"Saving early can create long-term financial success," Paul said. "When you save early, you can accumulate more wealth even if you save more later in life."

Paul also recommended teaching teenagers how to develop a budget when students start their first jobs. He also emphasized the importance of understanding good and bad credit.

He said an important tip is learning about the financial impact of student loans.

"Know how much you're going to have to pay back before you take out student loans," Paul said. "Many students are shocked once they graduate & receive their first repayment bill."