5 Crucial Lessons about Money Every Teenager Should Know
Updated: Sep 14, 2019
5 Imperative Money Lessons for Teens
Money Is Not Handed to You
In today's generation of teens, money is thrown around like water. Kids always have money on them, or are given money whenever they need it. If you want new jeans, parents encourage you to go to the mall. If you want to go to the movies, they give you a crisp $20 bill. This is not the case in the real world. You have to earn your money, because your parents won't be there to hand it to you forever.
Budgeting in life is absolutely crucial. Having a strong and efficient plan for your money will help you feel more organized and in control of your money. In other words, you won't feel guilty about your spending. For example, let's say you make $3,500 a month. Counting all the bills such as utilities, mortgage, insurance, taxes, social security, employee benefits, you might have around $2,600 to spare. In the next year, you want to buy a new car that is $10,000. Well, while doing simple math, you can see that in 4 months, you can afford this car. This is called budgeting. Although this example was oversimplified, anyone is capable of doing it, and it is vital for teens to practice for adulthood.
The Importance of Having Good Credit
Having good credit is invaluable. It is something that can't be priced because it has so many different purposes. For example, a good credit score allows you to take loans from banks, have a lower mortgage on a house, lower insurance rate on a car, etc. These are all things that you will deal with in the near future. Simple things like paying your bills on time can go a very long way, and you will save loads of money.
Emergencies can happen any time, any place. In real life, things like car failure, theft, injury can all occur. It is important to know that emergencies happen to anyone, and you should prepare ahead. Emergencies happen to teens too. Your wallet could get stolen, your phone may crack, or maybe your class may have a mandatory field trip that costs money. Always save a little bit of money on the side in case something does happen.
Credit Card Dangers
Credit cards are perhaps one of the scarier things about money. People tend to forget that they don't have the money they are spending unless they have the physical money in their wallet. Credit cards were ingeniously designed to fool the average consumer into spending more than they have, as these companies do make capital gain off of people overspending. You need to understand that you still have to pay for the items you buy when using a credit card. Also, you need to understand that credit card lines charge exorbitantly high interest rates, which can eat away at your money supply. You can even consider ditching the credit card altogether, and go with paper money if you don't feel comfortable with a credit card. However, if you prefer this method of spending, it is imperative that you know how to use it properly.