Personal Finance Guide for Teens

Learning to manage your money as a teenager will help you to succeed throughout your life. The habits that you form now will follow you into adulthood. As a teenager, you will likely work at your first job, make your first big purchases and open your own checking account. The choices you make now will affect you as you get ready to make bigger decisions like home ownership in the future. Managing the basics like budgeting will help you to make choices that will benefit you in the future.

Budgeting

The most important tool you can use to manage your money is your budget. Your budget allows you to make a conscious decision on how you want to spend your money. Each month you should set up a budget and decide how much you want to spend on each category. If you have a car payment, or you need to cover your own car insurance or cell phone bill that will be part of your budget. You should also plan money for clothing and for entertainment like going to the movies or to a concert. Try saving a little bit each month.

Banking

Most banks will not open a checking account for a minor without a parent’s signature. If you are ready for a checking account, you will need to have your parent sign for you. Many teenagers can get by using a savings account with an ATM card. Once you do get a checking account, you will need to balance it on a regular basis. You cannot trust the balance that you get at the ATM since not all of your transaction may have cleared. It is important to handle your account correctly now because it can affect your ability to open a new account in the future. ?

Investing

Investing is an important part of building wealth. You can begin investing as soon as you make money. One easy way to do this is by opening an IRA. You may want to take an investing class or follow stocks for a few months to learn how the stock market works. Mutual funds are a good initial investment since they spread the risk over several different stocks instead of purchasing just one stock.

Consumer Debt

Debt can hold you back from doing the things that you want to do later in life. It will limit the amount you can spend or save each month. You will need to pay back all of the money you borrow with additional interest. Most people know to avoid unnecessary credit card debt, but you should be careful about any money that you borrow. Limiting the amount you borrow for a car or other items will make it easier to manage your money in the future.

College and Student Loans?

Many people consider student loans a necessary evil, but even if you do need to borrow money to attend school, you need to limit the amount that you borrow. When you apply to schools be sure to look at tuition and living costs. Working while you are in college can help limit the amount that you borrow. Additionally, you can start saving for college now by putting away money from each paycheck you get in high school.

Are You Ready for a Credit Card?

Credit card debt can be particularly difficult to handle. Credit card interest rates are very high, and if you pay only the minimum payments it can take you up to thirty years to pay off the credit card. You can avoid this by not using your credit card or applying for one until you have a full-time job. You will need a cosigner’s signature to open a credit card account until you are twenty-one or you can prove that you are working full-time. A credit card can help you build your credit, but you need to keep the balance low, pay it off quickly and make sure you pay all of your payments on time each month.

Related Articles:

• Start Smart: Money Management Guide for Teens: This pamphlet provides detailed information about managing money, how to save money and where to save money. It has several articles on each of the topics listed.

• Money Matters Make It Count: This website provides detailed information on money for teens. It covers several different aspects of money management.

• In the Mix: On Money: This is a detailed show designed for teenagers about managing their money. In addition to information about the show, it provides resources on money management.

• MyMoney: Youth: This site provides several resources you can use to learn to manage your money while you are a teen.

• High School Financial Planning Program: This website offers resources to help high school student learn how to manage their money now.

• Minted: The Young Person’s Guide to Managing Money: This website and pamphlet outline the basics to help teenagers learn to manage their money.

• 40 Money Tips Every College Student Should Know: This resource can help high school students who are getting ready to attend college.

• 9 Indispensable Money Tips for Teens: This article outlines nine things you should do as a teenager and young adult to get started out on the right foot financially.