Teaching Teens the Importance of Financial Planning – Updated

Believe it or not, teens want to stay in the know for everything. They are way smarter than we think and with evolving days, their concept of money isn’t just limited to asking for more allowance from the parents. Teenage years are quite likely that phase where one hardly realizes the toil of earning money. Hence, learning money management is important. You will only bask in the glory to find yourself channelize and make the best use of every penny in the future, right from the very first day of receiving your pay-cheque.

Money management or financial planning takes into its grip every bit related to budgeting, saving, and spending wisely. Other things that are of equal importance are decision making, valuing time, maintaining records, and balancing expenditure. It is always good to start early so that there’s no regret later. Here are a few financial planning tips for the teens:

Be Conscious of Time

Yes, it’s one of the most precious aspects, and one better be wise enough to make the best use of it. Being a teen obviously means you aren’t doing a full-time job. But quite possibly you might be doing several stop-gaps during those seasonal offs from the academic schedules. Whatever you might be bagging, start saving even if it’s a micro, right away. Now the most important part is that you got to keep that untouched, whatever it takes, for quite some years. Roth IRA is one of the best options if you wish to lock your money for a long time. Investment in Roth IRA is tax-free if you withdraw it after 59.5 years of age. So, you see how important it is to conceive the value of time.

Turn on the Money-saving Mode

Well, what do you call a habit? Getting up at a fixed time in the morning? Brushing the teeth twice a day? Taking a bath every day? Checking your mobile phone every now and then? (sure it is!) so basically a natural act that you are inclined to performing over and over, becomes your habit. Teens prefer wearing fancy outfits, eating out, visiting clubs, and partying to the brim. And of course, all these make for a lot of spending. How about keeping a check on these and turning on the money-saving mode? Be it a gift, an allowance from your parents, a job-payment, a stipend – it just a good habit to save a portion of it – no matter the amount. Also, the teenage is ideally the time when there’s hardly any responsibility or liability, hence saving money at this stage is a wiser option. Trust us, the older you get, the harder it may become. How about saving a half out of the money you have in hand? Saving in a high-yield savings account is also a great option. Most often these banks encourage savings, discourage withdrawals, and use of ATM cards. So your money will be right where it should be!

Keep an Eye on Spending

As a teen, one could be getting cash as stipend or payment from temporary involvements. Here’s an advice – bank them and most importantly separate the cash that’s meant for saving from the one that’s meant for spending. And yes, use plastic money for any transaction. It’s kind of an established fact that the more a wallet is visibly loaded, the sooner you burn a hole in the pocket. Having said this, it is also important to cut down on unnecessary spending.  

Inherit the Education

Just like no recipe can beat mom’s cook-book, similarly, no advice can be as worthy as that coming from the parents. It will be awful if a teen has to start a financial journey without the right piece of ‘use the card responsibly’ from the parents. As a teen, you might unknowingly invite a lot of suggestions (of course free) from who not! But hey, think before planning your finance, if at all those advice can get you sailing smooth. You might come across a lot of printed stuff too, to add to your knowledge. But, you know what, a personal touch from those two who know you top to toe, can make the most difference. They are never going to thrust you into the mad race, without sharing all the wisdom for good. Get the downloads about maintaining the records, checking the scores, budgeting the expenses, and what not. This tit-bit advice can be really beneficial.

It’s Never too Early

If you think it’s too early to start, it’s the right time! Your teen years are just the threshold of attaining maturity for a lifetime. This is undoubtedly the most powerful phase in a person’s life. You would often come across older people repenting about the fact that they didn’t hear the calling at an early age. Start saving and planning your finance in the right direction, right at the tender age and not a decade down the line, so as not to regret later.