As a teen, you probably don’t have the financial worry of your parents, but you still may have to keep somewhat of a budget, even if it’s just making your lunch money last for the week.
I know many adults who have no financial common sense and a lot of it is because they’ve never had any financial sense at any age! In some cases, it’s because they lack impulse control. But, in most instances, they were never taught about finances. Here are four reasons why teens should care about managing money. This applies to adults too.
Wealth Is About Spending Too
Most people think being rich has to do with how much you earn. That’s certainly a part of it (the biggest part). But, being wealthy is also about how you spend money. A rapper who makes two million a year, but spends three million isn’t rich. He’s just as poor as the guy in the bad part of town who makes a few hundred and then goes out and spends it all.
If you want more money, you’ll have to spend what you have wisely. While this post isn’t about money spending tips (that will come later), if you can cut essential costs, you’ll have more money for fun things you enjoy.
Adulthood Is Becoming More Expensive
Once you turn eighteen, the world changes rapidly. While most teens aren’t totally shown the door by their parents (and with it the numerous bills independence brings), there is still an expectation that you become more financially independent the older you are. And, being an adult is costing more money.
Gas prices go up and down (and could be “up” as you read this). Rents have increased. The cost of college has nearly doubled in less than fifteen years. Food prices are high. Your parents likely are absorbing those costs or cutting back for you. Once you go out on your own, you’ll have to make ends meet too because…
Adulthood Creates More Temptations
Most teens, short of breaking the law, can’t get many opportunities to spend more than they take in. If mom and dad give money and they spend it, short of begging other family members or getting a job, the money just won’t be there. This isn’t true for adults thanks to credit.
Credit cards are the main culprit and young adults in college are constantly offered credit cards. I went to school with a girl who had ten thousand dollars in high interest credit card debt at age nineteen. To put it in perspective, she had to pay around three hundred dollars a month, just in interest, to the bank. She had fun at the time, but it crippled her later in life.
Those Who Can’t Budget Rarely Get Rich
Remember how I mentioned earlier that spending is a part of wealth too? Well, those who can’t manage their money rarely end up wealthy. If all your spare money goes to video games at age seventeen it’s not a big deal. If it goes to similar things when you’re twenty-five, that means you’re not saving, you’re not investing, you’re not starting a business, promoting yourself, etc.
Author and multi-millionaire M.J. Demarco, author of Millionaire Fastlane, calls these types “sidewalkers.” They’re not in the slow lane to wealth. They’re in the “no-lane!” If you can learn about money young, then you’ll have more money later to invest and then make even more money down the line. However, if you never have any spare money now (or ever), you’ll never make any more. It takes money to make money.
In the future, we’ll be looking at tips to manage your money. However, one thing is for sure: if you want to be rich down the line, you’d best start caring about money management right now.