Money

Ideally, children will learn about money management from their parents. After all, unless a student majors in finance or economics, the finer points of money management are not covered in the classroom. Begin with a stable personal money management system and teach it to children early. Teenagers will always want something; teach them money management by making them earn their next cell phone, iPod or other electronic gadget.

Selling Before Buying

Video games, toys and clothing are all famous for being new every single year. Owning the next best thing is important to teenagers for social status and can be a source of enjoyment. Acquiring a massive amount of possessions should not be the goal for teenagers. Before starting the process of buying a new gadget, focus on the importance of downsizing. Sell an old cell phone, assuming it’s not broken. Donate old clothing and re-gift old toys. This will cut down on clutter and help teenagers realize what things they really need or want to have in life.

Spending Wisely

The concept of wise money management does not apply solely to buying useful things. Applying this to how money is spent, regardless of the purchase, is crucial. Teenagers should not just buy the first item that fits their requirements. Shopping around and comparing prices or quality often means a more satisfying and prudent purchase.

Secondly, sometimes spending is, surprisingly, more efficient then saving. A fifteen year old may think that saving up for gas money when they can drive the next year, is more efficient than buying that new bike. However, the new bike offers useful enjoyment now. Saving up gas money will not amount to enough cash to last very long with gas prices today. Taking a part time job to fund a driving habit is a smarter idea. The difference between cash flow and saving is intrinsic to understanding lifetime financing.

Giving Back

Celebrities are often lauded by how much they give back to the community. Teenagers should be as well. Instilling a charitable attitude in teenagers will give them the tools of compassion and discernment. It may be more fulfilling in the end to sponsor a child in a third world country, or give to the SPCA then buying that brand new video game.

Educating teenagers about money will not be an easy process. Giving in and just giving them what they want instead of making them earn it will often be easier. However, this disservice will harm them down the road. Stay firm and kind while educating them, because the bank will not treat them that way when they begin making mistakes with a credit or debit card. It is up to parents to facilitate financial responsibility in teenagers.

The value of money is hard to define. It is even harder to define as a teenager when funds from flipping burgers at the local diner are not paying for the brand new video game console. Ask yourself the following questions to help prepare and save as a teenager.

What are my financial responsibilities?

From car payments to birthday gifts for friends, you will have responsibilities to save for. Make note of these responsibilities and plan accordingly. You may need to spend more money around the holidays or when going back-to-school shopping. It is important to plan for unexpected costs as well. Your car may need a new battery one day or you may want to go out for the baseball team and need to pay the registration fee. Financial responsibilities could also include clothing, hygiene products, admission to social events, gas, and car insurance. As a responsible individual, be aware of the cost of your needs and wants.

What is my budget?

When determining your budget, think of all your expenses. Consider how much you want to spend on each expense a month. Consider if you need another job to help pay for your expenses. Think about future expenses and how you will be able to cover them. Reevaluate and adjust your budget on a month-to-month basis. Keep track of what you spend in order to be prepared for the future.

Do I have set goals?

With the responsibility of saving and budgeting, it is also important to think about the future. Every teen should set financial goals for themselves. Many teens save for going to college or for moving out of their parents’ home when they turn eighteen. Other common expenses of a teenager include: buying a car, recreational activities like sports and video games, clothes, and books. It is important for you to consider the long term effect of saving as you set financial goals.

How am I using my bank account?

Benjamin Franklin once defined savings as “a penny saved is a penny earned.” Bank accounts are a great tool to help teenagers save. With a bank account, you can manage your own money, learn about the value of interest, and gain the responsibility of a bank relationship. Many banks offer special savings accounts for teenagers; although, some require a parent to co-sign the account.

Are my parents helping too much?

Parents are a great resource for advice on how to save and budget money. Talk to your parents about ways to save and what financial plan is best for you; they may offer help and financial assistance. Accept their help but know when to say no. Take advantage of any jobs parents have available around the house. It is easy to get comfortable spending your parents’ money, but as a growing young adult, do not rely on them too heavily.

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