Managing money is something that everyone has to do, and there is no better time to start than during the teenage years. The financial skills that a teen learns will carry through into adulthood and have a significant impact on your financial future. Things such as saving, budgeting, and banking are important to know about. Expanding that knowledge to credit, investments, and major purchases is equally important. It is wise to begin the process of learning these skills early when funds are limited so that when you have more income, it can be dealt with wisely.

Credit Cards

Some teenagers don’t begin using credit cards until after they have gone off to college or even later in life, while others are given one by their parents at an earlier age. Although there is no right or wrong time to gain access to these cards, there is a right and wrong way to handle them. These cards can be both beneficial and dangerous. When used correctly, these cards help build your credit, which allows for bigger purchases such as cars and homes in the future. However, many teens abuse credit cards by making impulse charges for items and then lacking the ability to pay the debt, which can ruin their chances of being able to get those larger purchases in the future. So before you rush out to get your first credit card, you need to understand how it can impact your life.

Budgeting and Money Management

From the moment a teenager begins earning an income, you need to learn how to manage your funds. Managing funds is the act of knowing where the money is coming from and where it is going. An excellent way to accomplish money management is to learn how to budget. Budgets can be as extensive or as simple as you like, but they all need to include income, expense, and balance tracking. While the idea of budgeting may seem overwhelming, knowing what funds are available for spending makes it a lot easier and less stressful to spend within your means.

Checking and Savings Accounts

A big part of learning to be financially responsible includes opening a checking and savings account. Most banks offer excellent teen services, including accounts that do not require a minimum balance and have no monthly service fees. In addition to making teen products available, many financial institutions also offer training on balancing a checkbook and managing money. In some cases, banks require minors to have a joint account with their parents to ensure that you are learning proper financial skills. No matter what the banking situation is, all teens should be introduced to checking and savings accounts.

Buying a Car

Buying a car is typically one of the first major purchases a person makes. However, before you can buy the car you have been dreaming about, there are lots of things you need to know. For starters, how much can you realistically afford? What will insurance cost? What other expenses will there be, such as fuel and maintenance? The list of things to consider goes on and on, which is why you need to do your research and seek the advice of adults who have been through the car-buying process before.

Investing

Most teenagers don’t ever think about investing, which is too bad. Once a teen has mastered saving their money, the next logical step should be learning how to invest. There is no reason funds should sit in a savings account accruing a tiny amount of interest each month when that money could be rapidly growing in an investment account. Although many adults put off investing until they are older, it would benefit them much more if they started young.

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