Money plays a vital role in our day to day life. The importance of money has to be taught to children right from a young age. Teens generally receive money from their parents, so it is often possible that they might not understand the value of money in terms of saving and spending. Therefore, they have to receive a quality financial education in order to tackle the present or the upcoming financial issues. Financial education plays a major role in making financial decisions.
The following are the predominant entities that every teenager has to know about money:
You are never too young to save
If you wish to get rich, save what you get. A fool can earn money, but it takes a wise man to save and dispose of it to his own advantage.
― Brigham Young
Saving plays a major role in money management. It has got a myriad of benefits. Every teenager needs to know why and how important saving money is. So that they will cultivate a healthy habit of saving money as early as possible. If the importance of money is not informed beforehand then they might end up spending ruthlessly. It’s good to have a savings goal in order to reach your target. It doesn’t matter if you plan a short term saving goal or a long term saving goal. Saving will help you in infinite ways.
Know the banking terminology
“Formal education will make you a living; self-education will make you a fortune.”
It is important to know about credit scores, debit card, credit card, student loans, cheque book, savings account, current account, etc. This will help the teenager to make wise financial decisions whenever required. Also, a teenager cannot be deceived under any circumstances. Even if there is anything that goes wrong, they can deal with the matter legally.
Check: Reasons to save money
Planning and Analyzing your budget
“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”
In order to analyze and plan your budget, you will have to be aware of your expenses and savings. Know how much you earn and spend. This will help you in cutting additional expenses which in turn increase your savings.
Check: Tips to manage your Debts
Know your debts
“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.”
One has to know their own bills, debts, fines, etc in order to pay them as early as possible. A teenager has to know the difference between good and bad debt for him to initiate or avoid debt. Once you are aware of your debts you will know how much to save and how much to spend.
Importance of Emergency Fund
“Your emergency fund is not an investment, it’s insurance with one purpose – to protect you and your family.”
Times are unpredictable. It is always recommendable to have a certain amount aside as an emergency fund. This fund can be used for medical emergencies, car repairs, losing a full-time job/part-time job, etc. This can help you avoid running into the last moment debt for higher interest in case of urgency.
Know about Investments
“Investing money is the process of committing resources in a strategic way to accomplish a specific objective.”
― Alan Gotthardt
Whatever the little amount you hold, it can be invested. Investments will let your money grow. They are many options to invest your money. Some of the available options are education, investing in a business idea, share market, stocks, bonds, mutual funds, etc which will have a good amount of return and turnovers. Through investments, you are indirectly planning to grow your money automatically.