April - Financial Literacy Month
Many teens agree that financial literacy should be taught in school and that it has been lacking as part of a formal curriculum for years. A 2020 survey by the Council for Economic Education found that only 21 states require high school students to take a class on personal finance. It sometimes feels like teens are expected to figure out the financial world all by themselves. But it doesn’t have to be that way. There are steps you can take now to lay a good foundation for adulthood.
For April, also known as Financial Literacy Month, the Teen Ink team has compiled a list of steps teenagers can take right now to start good financial habits. For more tips or to learn financial skills rarely taught in school, check out the Finance Summer Camps by Teach Me Wall Street.
Learn to budget
Budgeting doesn’t have to be a scary word. Simply put, you’re just balancing the money you have coming in every month with all your expenses. Whether it’s a job or an allowance, keep track of all your incoming funds and allocate that money to all your monthly purchases (expenses). This can include things like gas, car insurance and phone bills, as well as food, shopping hauls and gym memberships. Apps like Mint are great ways to keep track of your purchases and payments all from the handiness of your phone. And if you’re not sure how much to spend and save, moneyunder30.com promoted a 50-20-30 system, with 50% of your income spent on set expenses like car insurance, 20% in savings and 30% on whatever leisure item you’d like.
Avoid credit card debt
This should be a no-brainer, but credit card debt affects the majority of young adults. According to a 2018 survey by NBC News, at least 78% of young adults have some form of debt. While having a credit card may feel like a whole new world is opening up, not being mindful of your budget can mean years of trying to pay off your debts and build back your credit. Treat your credit cards like debit cards to avoid spending more than you have.
Build an emergency fund
“Save it for a rainy day.” It’s always a good idea to put away some money every month into a savings account, just in case an unexpected event occurs that requires some extra funds. You can even take it a step further and plan long-term savings goals for purchases like a car, a deposit for your first apartment, or even an Xbox One. Whatever you decide to do with your savings, always be sure to have some left over for a rainy day - you never know when you’ll need it.
Consider investing
Wall Street. Investments. Stocks. While these concepts seem complex, it’s fine to take it one step at a time. Annaline Dinkelmann, owner and president of Teach Me Wall Street, said many of her students start off with custodial accounts set up by their parents or grandparents. With that, you can start investing by adding more money and buying more stock. Dinkelmann suggests investing in companies you like, whether it’s Nintendo or Spotify.
Whatever you decide to do with your money, understanding your options is an important step in becoming responsible, independent and confident in your financial decisions.
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