Michael Costigan is a 17 – year-old from Orange County, CA. He is a social entrepreneur, public speaker, and truly enjoys helping other’s better understand teen related issues. You can follow him at www.SpeakingofMichael.com
As a teen myself, I can say from first hand experience the joys and pitfalls that money can bring. The habits that teens develop in regards to money are the same ones that will exist in their adult lives. For this reason, money smarts are essential to navigating the adult world as well as the teen world. Money is a leading stressor and cause for personal and family issues – it has the power to bring out the worst in people and cause unbelievable arguments. It would be nice if money weren’t an issue, but especially in these economic times, it’s an ever more apparent issue for most families and individuals. If you’re lucky enough to be in a position where you aren’t struggling, then don’t overlook these points; they can be applied to any financial situation – good or bad. And if you’re looking for financial literacy education, for either your teens or if you’re an educator your students, I strongly encourage you to check out the National Financial Literacy Council for curriculum and other resources.
1 .Parents shouldn’t be money trees — but they should give you money advice.
Parents want to give their children the best, and their kids always seem to expect the best. It’s important that you don’t let your kids fall into the cycle of asking for money and you handing it to them. More important, is setting a system up early on before this pattern can even begin to develop that most closely simulates how the real world works. Kids need to learn the value of money, but they also need to learn how to be considerate of their own, and when they’re empowered to do so because it’s out of their own best interest, they’re more likely to do so. Whether you set up an allowance system or you give your child a specific amount of money once a week or month there should be expectations pre-attached to this money. For example, the money you give themay be for lunch at school and any thing else they want to buy. It’s important that they know ahead of time to allocate the money needed for lunch, kids should be instructed to
budget their own money and to take into account what expenditures they know they will have, versus looking at an allowance as a free sum of money to do what they want with.
2. Whether it’s your allowance or your paycheck or even Birthday money – Save!
This is something I really wish I had started doing when I was younger. In fact, I even wish I did it consistently now. Having an income, whether it be allowance or a job provides a stable stream of money. It’s then what you do with that money that’s so vitally important. If your kids are in their late teens this is even more important, especially if they ere driving and out doing things with friends. Putting away a portion of this money every week or every month will prove to be very useful when unexpected expenses arise, and they do so quite frequently. For example, when I first got a car I underestimated how much maintenance and repair would be – big mistake. I found
myself scrambling to pay money back to my parents after what I thought would be a 150.00 repair turned into a laundry list of repairs. Setting up some sort of percentage per check or of one’s allowance is best; perhaps you will vow to put away 20% each month.
3 .Credit cards are bad news. Debit cards if not used responsibly can be too.
By their very definition credit cards imply spending more money than you have. That’s the very first step to becoming over your head in debt that you either have to pass on to your parents or get into a fight with the bank about. There really isn’t a good use for credit cards unless you’re purchasing something very expensive, are using it to purchase something like a car, or jumpstarting a new business. I would recommend staying away from them at all costs. They seem great on the surface, you have twenty- dollars, and the item you want to buy is thirty. Perfect, I’ll just put it on my card and I have the next money to find/earn/somehow obtain…the rest of the money! That is until you calculate interest and the overall balance of the card. Soon your bill will be for fifty dollars and that initial luxury of being able to buy what you want at any moment won’t seem even half as attractive as before. Debit cards are at least better in the sense that
you’re actually spending your money, but avoid getting into a situation where there is a parent on the other end making weekly bank transfers for over drafted accounts. A checking account and debit card is a good idea though for older teens and they should utilize it to their experiential advantage – being able to manage their own bank account online and setting up savings plans, maybe even a little investing!
4. Really consider getting a job.
Everyone says this – get a job. So it’s no surprise I’m saying it. I will say however, that the benefits of having a job are so many more in number than simply the money you will earn. For teens a job can be the first dip into the adult world and actual reality. Two extremely important responsibility impositions. Jobs are invaluable for teaching teens the value of money. If the opportunity and ability is there, it is highly recommended that teens get work experience before going off to college. It will teach them the valuable lessons they will need when living away, and it will prepare them so that any mistakes made happen before they’re off on their own where the consequences can be more severe.
Spend frugally, save extravagantly!