Money and Teens
Did you know that the average teen in the United States spends approximately $3500 each year? This is a sizable amount of money for many families. Many teens earn their money through employment while others rely on their parents to provide the spending money.
What is the money spent on? Teens (and adults) often have trouble distinguishing wants from needs. Needs are basic for survival while wants are desirable to make life more comfortable. Teens often think that they need the latest CD or that they need a new outfit for the upcoming dance. In reality, it is usually that they WANT these items, not that they NEED these items for survival. Deciding what is a want and what is a need can be hard and frustrating. Developing a spending/savings plan is a good way to learn to manage money. A spending/savings plan is a working tool that will help set goals and take control of your money. How do wants and needs fit into the financial goals? Goals can be short term (this week), medium term (6 months) or long term (4 years or more). Saving towards a goal is an important life skill and should be treated as an expense when setting a budget.
Learning to manage money is a life skill. Regardless of how much money is available, it still needs to be managed. Learning to manage a small amount of money as a teen builds money management skills for a lifetime.
Decision Making in Financial Management Financial planning of any kind requires making many important decisions. Decision-making is the process of considering and analyzing information related to personal or financial goals to make a plan. It requires looking at alternatives and consequences to those alternatives.
Whenever a decision is made, there are consequences. These consequences may be positive or they may be negative. One of the financial consequences is if I buy this one item, then I won't have money for the other items. Or, if you do buy the other items without having enough money, there can be serious consequences. Owing large amounts of debt is not something to strive for and making bad financial decisions, even as a teen, can lead to years of headache.
Sources:
About Money and Children (NebGuide, G93- 1164) High School Financial Planning Program, National Endowment for Financial Education.
This issue of Ups & Downs was contributed by Susan Hansen, Extension Educator, Colfax County, Nebraska, University of Nebraska Cooperative Extension. Ups & Downs is edited by Stephen T. Russell, Ph.D., Assistant Youth Development Cooperative Extension Specialist, University of California, Davis.