The Complete Idiot's Guide to Money for Teen

Teens are targeted as consumers more and more. This gives them tremendous influence, but it also sets them up to be taken advantage of. "The Complete Idiot's Guide to Money for Teens" teaches them how to get money, save and invest it, budget it, spend it wisely, and keep track of it. Whether they're saving for their first car, trying to make sense of a checking account statement, or trying to establish a good credit history, this guide has solid information and teen-tested tips.

Why money is so important in our society, how one can go about earning money, and other topics such as budgeting, debt and investing. The author provides concrete information that is beneficial for any teen who wants to become familiar with the basics of financial management. Shelly writes on the level of a teen-ager, short and to the point. She leaves out the extra, useless information that would cause narcolepsy in most of today's teenaged population. Shelly goes into detail about how to "make your money work for you." She talks about the benefits and disadvantages of different types of savings accounts, checking accounts, and money market accounts. The Complete Idiot's Guide to Money for Teens is a great book for anybody who wants to be more financially savvy. The essential information it provides will send any teen on his or her way to a financially successful future.

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Personal Savings From the Right Perspective

What is the first thing that you must do in order to achieve your personal financial targets? In most cases, it is best to start with a new savings account. Financial management gurus emphasize the importance of taking a tight rein on both ends of your finance spectrum. You need to establish a realistic budget and manage your outflows and set up an emergency fund. In most cases, you will have a high yielding savings account as your emergency fund.

It is essential that you treat this emergency fund as money that you can afford to put away. You have to remember that you are not motivated by high rates of return when you set up your savings account. Your main goal in setting up your savings account is to have a standby fund which you can draw from during the "rainy days." There are other investment options which can give you the same benefits as that of savings accounts. However, the latter is tops when it comes to ease of use and flexibility.

But this is not the only reason why you are going to set up your savings account. There is more to it than meets the eye. In fact, you can adopt a more progressive approach in as far your saving portfolio is concerned. First, you may come up with three different and distinct savings accounts. You can have different saving accounts for each of the following purposes:

• Funds for emergency situations
• Funds for short to medium-term investments
• Funds for a long-term (loftier) goal

While each of these saving accounts has distinct purpose, they share something in common. All of these savings accounts contain funds which are not meant to be used anytime soon unless something really serious comes up. On top of this, you have to be satisfied with the modest yields that you will get in return for the security that saving accounts provide for your money.

This paradigm shift will bring you out of the usual mindset of looking at IRAs, 401(k) and stock investment to maximize returns of your investment. There is one thing that we want to avoid - higher risk. With savings account, you are able to manage the risks much better compared to high yielding investment instruments. High yield investment options do have the potential in delivering windfall profits. However, you can also lose your shirt if the stock market suddenly makes a nosedive, notwithstanding the careful and comprehensive financial planning that you perform before making your decision. When going for savings account, you have to be aware of the fact that your primary concern is to put in your money in a financial vehicle that is relatively more secure and stable. It is your veritable security blanket which you can rely on anytime.

Most Canadians, particularly those who belong to the under 50 age bracket, follow the same spending behavior as that of the Americans. In a recent financial study sponsored by Mackenzie Investments, results show that over 32% of respondents under age 50 exhibited overspending tendencies, while 24% were categorized as absolute of over spenders. One of the glaring revelations of the study was the tendency of more than half of the respondents (53%) actually resort to their credit cards to purchase items every time they don't have enough cash on hand or money in their savings account.

The results of the study show that Canadians have the general tendency to "spend first and ask questions later." It is for this reason why there is a need for us to overhaul our spending behavior and go the extra mile to improve our savings portfolio.

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Financial Freedom

When talking about financial freedom, different people can mean entirely different things. For some it means getting to do what they want because they have enough money. For others it means having enough income from investments that they are free of any financial concerns.

Of course, few people are actually unconcerned about financial matters regardless of how much income they have. Some even get more worried about their finances as they get wealthier. And few people get to do everything they would like to do no matter how much money they make. Time and health can limit us as much as a lack of money.

Nonetheless, if used properly money certainly can buy more security and more freedom, to the extent that those things are possible in this world. So lets look at how we can actually use money more effectively.

How do we actually achieve financial freedom?

This article is not about the "making money" part of the equation. That's covered in a thousand good books. Money does not bring the freedom automatically though, so this is about some of the problems we run into once we start making more, and what to do about them.

Freedom From Financial Worries?

First, if you want greater security you want it for the obvious reasons as well as to "feel" more secure. Setting up streams of investment income helps with the physical needs. Once you have enough income from enough sources you are free from needing a job. Of course that only happens if your lifestyle remains within the means of your income.

We often grow our lifestyles along with our rising incomes. This makes sense if you were eating cheap noodles and driving rusty old cars before. It resolves itself in time if income rises faster than the new expenses. But it's a lot easier to escape the "rat race" and relax with your investment income if your expenses are lower, so watch your changing habits.

If you notice that there seems to be no natural level of comfort where you are content, and that you just continue to "need" more as you make more, the problem might be one that requires some self-reflection and self-work rather than more money. Even millionaires go broke feeding their habits, tastes, and the needs of the ego.

Also, be aware that you can feel insecure no matter what your level of income. Often with more money you will feel more afraid of losing that money. The resolution to this is again not in money itself, which only buys the little bit of physical security available to us. To feel free of worry over money, you have to look beyond money to whatever psychological and spiritual practices help you.

Freedom To Do What You Want?

Money can buy a lot of freedom of choice in this world. With enough you can live how you choose, go where you like to, help who you want, and buy what you desire. But it only accomplishes these things if used properly.

Often people get so caught up in the process of making money that they forget why they wanted to make it in the first place. Meanwhile, they adopt a new lifestyle that eats up all the income which could have paid for their goals if they happened to remember them at some point. Some people really do want that big home and several new cars, but others just fall into that life as a consolation prize for a dream life they just couldn't figure out how to achieve.

If you want to travel the world, and for you that's what financial freedom means, you have to plan for that. You may even have to quit your job at some point if it gets in the way. And why not? If it is supposed to help you towards your goal, it better not do the opposite, right?

Whatever the term financial freedom means to you, think about it more specifically. Then start making plans. Money alone can come and go by the millions without offering freedom of any sort. You have to learn how to use it wisely rather than just chase it blindly.

Copyright Steve Gillman. Learn more about Financial Freedom, and get the free Money Matters Newsletter at: http://www.TheMeaningOfMoney.com

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Advertisements

Make it a point to know the advertisements that come up when your child is watching her TV shows.

Never under estimate the power of the advertisement that appear on TV. Explain to her how the products are heavily hyped and that what she sees is not always what she will get.

Needs and wants

Explain the difference between wants and needs. For example, food, shelter, clothes, electricity and transportation belong to human needs category. Designer clothes or designer coffee and soft toys in the shape of popular cartoon characters qualify as “wants”.

Never forget that the kids will be watching their parents spend money on themselves. Make sure that you do not tell the pleading child, “You don’t need that” or “That’s a waste of money” and then go and buy yourself something which clearly falls under the “wants” category.
Let your child know that your first responsibility is to provide for the family’s needs. Only when the “needs” have been satisfied can the family think about spending on other things.

Savings Account

Open a personal savings account for your child. This will encourage her to save since she can see the money growing when the passbook is updated. Some children’s savings account give free gifts and club memberships to their young savers.

“Pay Yourself First”

Children should see their parents putting away some more money (i.e. pay yourself first) when they get the pay check every month. It is much easier to save at the beginning of the month than at the end of the month.

If the children see the parents doing so every month, they many think it is the norm and pick up the same savings habit when they get their own pay check.

Grocery Shopping

Take your child grocery shopping with you to let her have an idea of how much things cost. Explain to her why you choose certain brands over others. Teach the importance of looking at the cost per unit of an item rather the selling price of the item.

Explain to her the savings that can be made during bargains and the importance of having shopping list.

BUDGETING

Overspending is also part of the lesson about managing money. If it happens repeatedly, there would be a need to find out why it happens. Where did your child blow their allowance? Does she know where it went? If not, this may be a good time to suggest keeping a simple record of her allowance. This is where budgeting comes in.

Budgeting will help her trace how she spent her money and determine whether the expenses are necessary or can be cut down