Adolescence is a time of significant change and growth, when children transition from childhood to young adults and prepare for the future. Among the many skills they need to develop to navigate the adult world, is financial literacy. Understanding how to manage money prudently enables adolescents not only to navigate the present but also equips them for longterm success. Here are some important money management nostrums teens should familiarise themselves with:
Understand the basics
Financial literacy begins with understanding the basics of money management. This includes knowing how to earn, save, spend, and invest. Teens should start by familiarizing themselves with concepts such as income, expenditure, budgeting, and saving — the foundational concepts of financial literacy.
Income. This is the money you earn, whether it’s from a part-time job, pocket money, allowance, or gifts. Understanding where your money comes from is the first step in managing it effectively.
Expenses. These are the things you spend money on. Expenses can be fixed (such as a monthly subscription, house rent) or variable (shopping, dining out with friends). Tracking your expenses helps you understand what items you are spending your money on.
Budgeting. A budget is a plan for how you’ll spend and save your income. It enables you to live within your means and set aside some income for future needs.
Saving. Saving is about putting money aside for future use. It’s important to save for emergencies and future goals such as funding college education, a car, or even purchasing a home.
Create a budget
Budgeting is a skill every teen should learn. Here’s a fivestep guide to create a monthly budget:
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