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| Money Management for Teens By: Emily Long You may have heard that the world financial system is experiencing a bit of a tough time. If the complicated relationships between the stock market and banks and the huge sums of money have your head spinning, here’s a brief summary of the issues. Put simply, the downward spiral began several years back with the subprime mortgage crisis, which is basically just a fancy way of saying that U.S. banks gave money to people who wanted to buy houses but then didn’t have money to pay the loans back. In addition, many financial organizations were more focused on their own personal wealth than the financial needs of their clients and therefore made some bad investment decisions. The banks gave out so many loans that they were unable to stay in business, and over the last few months, many have declared bankruptcy, been bought, or required government money (from the recent “bailouts”) to stay afloat. As the U.S. market continues to struggle, other economies around the world are also starting to hurt. You are probably thinking, “How are the inner workings of the global economy relevant to my everyday life?” First, a struggling economy means that fewer entry-level and summer jobs exist for students or recent graduates, and the products you shop for everyday are more expensive. With the holiday season quickly approaching, gift shopping may seem especially overwhelming. For some inexpensive yet fabulous options, be sure to check out AMG’s guide to gift-giving. Beyond the next few weeks and months, it is also important to know some basics to making and managing your own money. Here are a few ideas for saving (and spending) your money wisely (courtesy of the Federal Deposit Insurance Corporation, or FDIC). 1. Set goals: Instead of hoping to have $500 to buy a new camera next summer, plan to set aside $5-10 each week from your allowance or after- school job. Achieving manageable short-term goals will help you reach a larger goal. 2. Have your own strategy: If Grandma gives you money for Christmas or you receive cash each week for babysitting, immediately set aside some of this money into a savings jar (or even better, a savings account, where the money will earn interest and grow over time). You will be less tempted to spend money that isn’t in your wallet. 3. Cut back, not out: Don’t completely stop going to your favorite café for lunch. Simply go once a week instead of every other day. You can still enjoy yourself, but doing it less often can make it even more exciting. 4. Practice self-control: Similar to cutting back, this means setting limits on what you will spend when you go to the mall or out to eat. Stick to that limit. 5. Do your research: Before purchasing something, talk to knowledgeable people, a friend who already has the product, or read an online review. Compare prices at different stores, or check out online price comparison sites like www.pricegrabber.com and www.mysimon. com. 6. Keep track of your spending: To stick to your limits, grab a notebook, set up a simple budget, and record how much you spend on each item you buy. 7. Buy “used”: Use the Amazon or Barnes & Noble Used Book features to order cheaper books (and look at second-hand stores for gently used clothes, etc). Better yet, go to the library to borrow books and DVDs. 8. Take good care of what you buy! |
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