Helping Your Teen Understand the Value of Money.

Teens love to spend money. They love to shop, go to the movies, or spend a day exploring a theme park with friends. They can't wait to take day trips to a concert or new attraction. But where exactly do they get all of this money? Do they know where it comes from, or does it seem to grow on trees?

In this modern day and age, teenagers are often provided with money as a simple commodity by family members. They get money as Christmas presents, and for our birthday. They get an automatic allowance at the end of each week, often regardless of work or behavior. So how are we surprised that teens no longer recognize the value of money?

teaching money value

Jobs.

Now, I'm sure there are other teenagers, like I was, who have gotten a job just to annoy their parents - but that's not very common! In order for teens to understand the value of their cash, they need to know where it comes from. Even if you make allowance contingent on doing a certain amount of work each week, that can help your teen realize that money requires work and dedication.

Taxes.

My parents did this with me when I was a teenager, and I hated it. However, it not only taught me money requires work, but it also taught me that our choices can affect that amount. If a teen does something inappropriate, they owe money. Every time I would do something rude to a sibling, I owed 5$ in fines. I'll tell you - I worked extra hard on the weeks I was grumpy, but otherwise behaved. Now, I am grateful for it because I understand exactly how things like tickets can affect us and how important it is to follow laws. To this day, I use this concept for purchases as well – if I know I’ll be losing money to a purchase, I make sure that I work harder and make that money back!

Budgeting.

Sit down with your teen and make a projected budget. Let your teen know how much they will have to make a month in order to live the lifestyle that they prefer.  While this may seem simple, it can be a real eye-opener. While you're at it, calculate how many hours they would have to work at minimum wage to make that much. It may just convince them that college or advanced education may be a necessary idea - or at least spur some research into careers that will sustain their desired cost of living.

Teaching a teen the value of money is surprisingly easy. You may find it difficult at times, but by taking a few extra minutes to go over a budget, or help fill out an application, you can easily help your teen build a respectful relationship with money and grow into a confident, independent adult!

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Should You Save or Invest Your Money?

Should You Save or Invest Your Money

Choosing what to do with your hard earned money can be a frustrating choice. After all, you could invest it, and possibly earn millions, or you can save it, which seems like the safer bet. But which choice is better for you?

 

Saving Benefits

If you save your money, it gets put into a savings account, where it happily sits accruing interest until you need it again. It’s a safe bet, because no one else can take that money but you. And if you put it into a retirement account, it has a higher interest rate, and larger tax breaks. You’ll be able to see it grow nicely through the years, and you’ll have a large sum for when you retire. But why would this be the better choice? Simply for the security of it. You’re relying only on the bank, not the entire stock market, to keep your money safe. If you’re not much of a risk taker, it’s better to save your money in the best savings account you can find, and help it grow over time.

 

Investing Benefits

Now, investing may seem like a huge undertaking. And in some ways, it is, but there are options. You can try the new online trading sources, such as Etrade and ShareBuilder, which will simplify things for you and allow you to take control of your own money, or you can get an investment broker. They’ll take your money and invest it for you, nurturing your investment into higher returns. With investing, you’ll be earning a higher percentage on average than you ever would with a savings account. For instance, if you earn 2% interest in a savings account, investing could earn you on average 8% interest, multiplying your retirement money into a nice six digit number in a fraction of the time.

 

Saving Drawbacks

While choosing the safe bet is sometimes the better option, with saving you’ll get a lower interest rate. Your money will not grow as much as it could when being invested, and you’ll have to save a lot more money in your thirties and forties to live on when you’re seventy. In short, you’ll be saving all your life to be living frugally in retirement.

 

Investment Drawbacks

Nearly everyone has heard of Bernie Madoff, even if they don’t quite know what he did. But men like Bernie are a dime a dozen, and these unscrupulous investment brokers make their living off of taking your money and leaving you behind. It’s a gamble, choosing which broker to trust, and an even larger gamble to give up your money to the stock market, which can rise and crash within minutes. This sort of risk scares off many people, since just the thought of losing every dime you’ve invested can send some people into a panic.

So, should you save or invest your money? In the end, both sides have their benefits and drawbacks. What’s important is what you think is best for you. It’s recommended to invest some of your money, but to keep a portion in savings, just in case. That way you’re not risking every penny you own, but you still have the chance to earn more than enough money to live through your retirement with a smile on your face. Start looking into investing today, and don’t forget to save every month!

 

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