Smart Management of Money for Teenagers

Saving for a rainy day or a large purchase is not that exciting but is a valuable habit to learn as a teenager, the FDIC recognizes this and decided to create this guide to help young adults learn good decision-making skills that can affect their future finances.

  • Simple Daily Tasks You Can Do to Save Money – Setting goals for saving money helps when tackling larger expenses, start small by contributing a minimal monthly amount to form good routines, develop a strategy of putting away a small sum when every you receive money (e.g. allowance, gifts or summer employment), and cut out those daily costs (e.g. snacks, coffee, or magazines) that you can live without.
  • Growing a Savings Account with Minimum Contributions – Small amounts of money surprisingly accumulate into larger amounts when leaving a bank account alone for several years thanks to compounded interest, making regular monthly deposits add to that growth and increase your savings at an even faster pace.
  • Making the next Step by Getting a Checking or Savings Account – Saving cash and coins in your piggybank when you are a youngster is a great first step but when you start receiving checks or bigger amounts it might be time to open a savings or checking account in order to protect your money against home loss or theft, earned interest, and accessibility to your funds (e.g. checks and debit card).
  • Risks and Reward When You Are Ready to Start Investing – Looking for a bigger ROI on your hard-earned savings seems appealing over bank deposit accounts until the realization of risk, each investment (e.g. stocks, bonds, and mutual funds) requires thorough research prior to choosing in order to determine if the risk is worth the reward.
  • Invest Affordably and Securely with Savings Bonds – Backed by the federal government, a U.S. Savings Bond is one of the better ways for a teen to safely accumulate interest, acquire electronically for as little as $25, and have the guarantee that you will get your money back unlike other risky investments, for more information go to TreasuryDirect.
  • How to Cut Spending and Still Have Fun – Cutting back on spending does not have to be no fun and no games, carrying out a little self-control, performing product research prior to purchase, tracking money spent, look for the used equivalent of that new item, and taking care of what you buy will allow you to purchase what you like without losing sight of your long-term goals.
  • Do You Actually Need That Product or Service- A need and want are two different things and confusing the two is easy when facing social pressures that a young person might encounter, understanding the significance and training yourself mentally will go a long way in preparation of unexpected expenditures you will have in the future.
  • Take Those Loan Terms Seriously – Getting a loan may seem like a great idea to a teenager but that money comes at a price, interest fees can compound resulting in additional costs and failure of repayment based upon the notes schedule will damage a young borrower’s credit and ability to obtain loans in adulthood.
  • What Lower Payments Really Cost a Borrower – Low monthly payments sound amazing but if you had the cash, would you buy that new computer for double the sale price, obtaining financing with small monthly payments can result in this vary situation and you could end up making payments on a product well after the new has worn off.
  • Identity Thieves Are Always Looking for New Victims – As magical as the internet might be it has a dark side with criminals looking for ways to separate you from your money or take advantage of you, one of the popular crimes is identity theft in which another person assumes your identity with the purpose of opening credit accounts, phone services, or even automobile purchases. Guard against becoming a victim online by not relinquishing your personal information (e.g. address, date of birth, social security number, bank account numbers, and your mother’s maiden name) to any requests received by telephone, email, or websites.
  • Learn More about the FDIC – There is no doubt that you have potentially heard of the Federal Deposit Insurance Corporation from ads, banks, parents or teachers but did you know that the FDIC was created by congress after "The Great Depression" to protect against loss of deposits to families and businesses in the event of bank closure up to the insurance limit under federal law.
  • The Purpose for Banks and Credit – Banks, simply put, are for-profit organizations that provide the public a place to store money in savings and checking accounts that are FDIC insured and generate income by lending those funds to qualified borrowers while ensuring depositors can still access their money. The opposite of, but similar to, a bank is a credit union, which is a non-profit institute owned by its members and has its deposits insured by a federal government agency known as the National Credit Union Administration (NCUA).
  • Charitable Giving and Other Good Uses of Your Money – The primary goal for money management is to take care of yourself but what about the satisfaction of assisting the less fortunate by donating portions of allowance, joining or organizing within your community to help others, participating in local aid events, volunteering to help elderly neighbors, or partaking in a walk or run to raise money for charity.
  • Beware of Gift Cards and There Terms – Receiving a gift card seems like the perfect present but unexpected costs (e.g. usage or non-usage fee charges or entire balance loss due to expiration) can be associated with them, make sure to read and understand the stipulations, report lost or stolen cards to the issuer, and contact the store when you experience problems.
  • First Jobs and Working While Going to School – Your individual talents are a great way to get started at earning money while still attending school as long as your parents agree, there are many things a teenager has the ability to do such as mowing lawns, babysitting, piano lessons, tutoring or dog sitting and these beneficial experiences help when you are ready to get a summer job.
  • Helpful Resources about Money for Teens and Families – In addition to all the resources provided by the FDIC there are many others as well like and provided by the federal government, the JumpStart Coalition for personal finance literacy, financial education websites provided by banks, personal finance classes or investment clubs at school, and of course your parents.

"Consumer News Summer 2006." FDIC. Federal Deposit Insurance Corporation, . Web. .

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