After attending numerous high school and college graduation parties recently, I was thoroughly amazed at how the guests of honor intended to spend the monetary gifts they received in congratulations for their achievements. When in school, I was always concerned with keeping my debt at the minimum level, and only then because of college loans. But these young people obviously lacked that notion.
Many of them seemed to have enjoyed themselves a little too often at the expense of a credit card while in school, and planned to pay off some of the debts from these crazy times. However, I never once heard them mention any plan to settle their vast amounts of student loans! While sitting through these parties I came to the realization that kids (and simply people in general) are becoming more unaware than ever about how to save money.
Because too many adults were never taught how to manage their own finances, they’re unable to teach their teenagers how to manage their personal finances. If people aren’t taught to do something about their finances when they’re younger, then chances are they won’t do anything about it later until when experiences teaches them. And trust me when I say that experience is a financially painful teacher.
So why aren’t children taught in school? Educational institutions offer diverse electives for their teenage students, including things like pottery, multi-media productions, and calligraphy; but that isn’t exactly going to help them learn how to balance a checkbook. Ignorance about managing personal finances leads to bad credit, which can later hold someone back from purchasing a house or a car, or even being hired for certain types of jobs. But with good credit, you are able to do virtually anything your heart desires.
Just because most teenagers aren’t offered ways to learn how to manage their personal finances in the school system doesn’t mean they’re a lost cause. Our own mistakes are sometimes the source of lessons that sink in the most, but a little research and common sense can help prevent those mistakes from happening in the first place. These tips helped me successfully manage my finances through high school and college, and hopefully they’ll help you too!
Balance Your Earning and Spending
You should know what you earn, and if you don’t then that’s the first thing you’ll need to learn. Teenagers don’t have a lot of expenses. Suppose you are a teenager who earns $1200 per month. Here are some things you might have to pay for:
- Car Payment ($400)
- Insurance ($150)
- Fuel ($160)
This totals $710 each month with $490 left over. Why would you spend $450 on a weekend at the beach with your friends? That would only give you $40 left for the rest of the month for things like lunches, clothes, and car repairs. When you find yourself working regularly, write out a budget for your expenses. If you have money leftover at the end of each month, put half into a savings account so that when it comes time for a vacation or to pay for an emergency, you aren’t running yourself short at the end of each month.
Open a Checking Account
Open a bank account. Personally, maintaining my checking account is one of my top priorities. I am always careful to be aware of how much I have in my checking account and before I go shopping, it’s important that I make sure there’s enough money to actually spend. Taking advantage of free features like online banking service and text message alerts sent to my smartphone when my balance drops below a certain amount helps me avoid going into the negative. And I can find less expensive checks at www.personalchecksplus.com than what's offered by my bank.
Overdrawing your account is easily avoidable by checking how much money is in your checking account before you spend money, regardless of why you’re spending the money. For instance, if you have $7 in your checking account and you spend $50 on clothes, $20 on dinner and $30 on fuel for your vehicle, then you’ve just put your account in the negative by $93. If your bank charges a separate fee for each overdraft line item, then those three charges could cost you upwards of $150 or more, adding that amount to the negative balance.
Earn the Maximum
Thankfully, the high school and college graduates I know are on the right track and teaching their younger siblings how to avoid making the some of their mistakes. One way to avoid those financial blunders is to earn the maximum income possible for your chosen career, and a college degree can certainly help with this. A degree could mean earning more over those who don’t have a college education, which allows you to pay your bills easier. Also, saving for college while in high school and then paying off student loans while in college or as soon as possible after graduation shows financial responsibility and helps develop good habits that will stick with you through your adult life.
I don’t think that financial stability is a lost cause, and as nice as it is to earn your maximum potential having more money alone isn’t a solution. Author Ayn Rand put it nicely when she wrote, “Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” As long as teenagers are taught how to responsibly manage their personal finances, how to earn their maximum potential as well as basic skills such as how to balance a checkbook, financial stability will increase. When people realize their full potential and begin to earn it, then they are that much closer to financial stability.
About the Author
Outdoor enthusiast Jason Monroe is always ready for adventure through activities such as hiking and mountain biking, but his real passion is freelance writing. Since first getting online in 2003 he's become a regular research hound, using information he finds to write about topics his readers otherwise might not consider, like using the internet to order personal checks with free shipping.