Having written about teens jobs, I felt the next step would be to write about how to handle your money. Whether you are earning a lot and don’t know what to do with the extra cash or if you are making very little, saving money teaches discipline, responsibility, and frugality. It also allows you to work your way to something big, like a computer or a car. Besides, you really don’t want to get a job for the summer only to find that you have a small fraction of what you earned because you spent much of it on meaningless items.
In the last few years, teens have been becoming more independent, making more money, and spending more money. A Merrill Lynch survey found that teens spent $122 billion dollars in 2001. Wherever you look, there are hundreds of advertisements for things that you would really like to have. It’s easy for a teen to spend a lot of money and hard for a teen to save a little money.
You don’t have to keep everything you earn, especially if you are just beginning to save. You can begin by putting away only half or a fourth, it all adds up in the long run. You’ll also have to begin thinking about where your money goes.
Start examining what you are buying and how much it costs. Do you really need another yellow sweater? Is it really worth $50? How long will that fashion trend last before that sweater ends up in the corner of your closet?
Do you really need to buy dinner at the mall when your parents are at home cooking your favorite meal? Do you really have to see the movie in the theater for $8.50 or could you rent your favorite movie for $2? Constantly asking yourself questions like these can help curb radical spending. The best thing to ask is, “Do I really need this?”
When it comes down to things you actually do need, like a new backpack or a jacket, it gets trickier. Hopefully parents are willing to pay for the necessities. That’s not always the case. I recommend that you make a list of everything you will need in the near future, then prioritize. Maybe you can use your old jacket a little longer and get the backpack first; at least you wont have to carry all of your books around in your arms. Another good idea is to keep an informal record of how much you earn and how much you spend. This helps you better organize your money and lets you see where it goes. Speaking from experience, it used to drive me insane when Id make tons of money baby-sitting, then not know where any of it went two weeks later.
As for actually storing your money, the most common ways are piggy banks, savings accounts, and CDs (not the kind that play music). Piggy banks are quite obvious. You keep a pig or a jar in your room filled with all your money. These are the least burglar proof, i.e. siblings. Also, the amount only increases when you yourself add money. Savings accounts and CDs are opened in banks. The bank pays you to keep your money in it, through interest. Savings accounts usually offer a very small percentage of interest, around 1%. CDs offer much more, but the catch is that you must lock your money in the CD for a certain period of time, from a few months to a few years. During that time, you cannot add or withdraw any money. You should determine for yourself which is best for you. You can discuss the matter with your parents and go with them to further learn about it at a bank.
Parents are a good source of advice for any money related questions, after all 72% of surveyed kids said they learned about money matters from their parents; so don’t hesitate to ask them!