Money Management Education For Teens

Statistically, one of the worst groups when it comes to managing money are teens and people in their early twenties.

Banks know this very well and before the recent downturn in the economy, would tempt teens with various gifts so that they would sign up for a bank account or credit card.

They knew that a large percentage of these teens would mismanage their money, and as a result, the banks would make a lot of money from them by charging for credit card late fees and overdrafts.

So why are teens so bad when it comes to managing their money? Below are a few of the main reasons.

Lack Of Financial Education

Most teens know very little about money because they have not been taught about money at school.

They may have learnt about geography, maths, the sciences, media studies and art, but very rarely do schools teach their pupils the value of money and how to manage the money they will one day earn.

As a result, unless the student has studied economics, most leave school financially illiterate. Having little or no real knowledge about money, let alone what personal finance even means.

The Media

From an early age teens are constantly told to buy things from the adverts they see on TV.

This creates a “consumeristic mindset”, whereby the teenagers mind has essentially been programmed to want to buy things.

Instead of being taught to save their money, or at least spend it wisely, they are encouraged by the media to buy as much as they can.

And because there are so many items to choose from, the teen is always running out of money because they want more than what they can actually afford.

This is why young people always seem to be saving up for the next latest and greatest item they saw advertised on TV.

In addition to the media, there is societal pressure. If your friends have something such as a new computer or item of clothing, you will also want it so that you can be like them and fit in. A good example of this can be found with designer clothes.

Financial Freedom

When a teen first starts earning money for themselves, for the very first time in their life they are able to buy the things they want without having to beg their parents to get it for them.

This can be a very liberating experience for the teen, because it makes them feel independent and in control of their life.

So to the teen money often represents freedom and fun, something which was previously limited and controlled by their parents.

Should the teen begin to see money as a means of instant gratification (buy what they want now), their future attitudes towards money are likely to follow a similar path.

Later as adults instead of saving their money they will continue to spend it as they get it, with little or no regard for what the future may hold.

Easy Credit

Although less of an issue now, before the global economic depression money was easy to obtain for teens in the form of credit and loans.

I remember when I was at university how the banks would give you a £2000 overdraft, which at the time I thought of as free money.

What I failed to take into consideration was that eventually I would have to pay it back!

Although this was quite a foolish mistake on my behalf, it is an extremely common one amongst teenagers who are given money on credit so easily.

The ease at which they receive this money means that they are likely to spend it on things they do not need, simply because they have it.

Later in life this “easy credit generation” may not fully appreciate the value of money, and continue to mismanage what they have whilst getting themselves into debt.

I’m Still Young And Have Plenty Of Time To Save

As a teen you think you will stay young forever, and so don’t see any harm in spending your money now and having a good time with it.

This attitude is so common amongst teens that most of them see absolutely no point in saving their money now, because they think there will be plenty of time to save when they are older.

What they fail to realise however is that whilst they do have plenty of time in front of them, their current attitudes towards money will most likely also shape their future attitudes towards money.

So if the teen is wasteful with their money and does not bother to save anything, they are likely to follow a similar path when they are older.

By the time they do decide to start saving, chances are they will have a family, rent/mortgage and bills to worry about which will make saving even more difficult for them.

Start Saving When You’re Young

If you are a young person who is reading this, thinking about your finances now is going to save you a lot of worry in the future.

The good news is that because you are still young, saving even a small portion of your income each month will allow you to retire a very wealthy pensioner.

Even though that may seem like some time in the distant future, eventually that day will come. The question is, whether or not you will be prepared for it.

Don’t think you can count on someone else or the government to look after you, as many people have already made that mistake and are suffering the consequences as a result.

For example, there have been numerous stories in the news about elderly people who have died during the winter because they could not afford to heat their home.

This is just one of many examples of how failing to plan for your future can cost you big time later on. So make sure that doesn’t happen to you, by taking action now while you still can.