If you have a teenager, you know that they’re not exactly the most frugal creatures on the planet. Most have not had to work for their money while growing up, so they may not appreciate money as much as adults who know how hard it can be to come by. And with the peer pressure they face today to have all of the latest and greatest clothes, gadgets and entertainment, it’s no wonder that money seems to burn a hole in their pockets.
It may be tempting to let them carry on with their carefree spending habits. But doing so would be a disservice, as these habits tend to stick with them into adulthood. It’s much better to help them set up a financial plan during the teen years so that they may learn responsibility before they are out on their own.
Saving and Investing
One of the most important things a teenager can learn about money is the importance of saving a portion of her earnings. This will allow them to build up an emergency fund. It can provide a way to buy big ticket items without having to go into debt. And it gives them money to invest.
Investing isn’t usually a top priority for teenagers, and it’s even a foreign concept for many adults. But getting started early is the best way to ensure a comfortable retirement. It can also provide some passive income in the years to come, reducing worries about unemployment or failing health.
Teens need to be encouraged to save and invest a certain percentage of everything they earn. Doing so before putting money toward anything else, even bills, will make it easier and more consistent.
Paying Bills and Buying Necessities
Once your teen has put some money into savings and investments, the next order of business is to pay monthly bills. Teens do not generally have as many of these as adults, but they may have a cell phone plan, car insurance or other recurring bills. These should be paid before any other spending takes place.
Next, teens can buy the things they need. Parents often cover some of their teens’ needs, but they may leave expenses such as school lunch, clothing and gas for them to pay. This provides good practice for the day when they start buying everything for themselves.
Discretionary Spending
Once the savings, bills and necessities are taken care of, it’s time for the fun part: discretionary spending. This tends to be the favorite part for most teenagers (and adults, too). But it’s important not to let your child get too carried away with it.
There’s nothing wrong with kids having some fun with their money while they’re young, but try to discourage them from spending every penny just because it’s there. Making a list of the things they want to buy can help. If there’s not enough money to buy them all and have some left over in one month, they can always be carried over to the next.
A realistic financial plan for a teenager contains all of these elements. This will give them some freedom with their money while also providing structure. And it will build the framework for responsible money management as an adult.
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Experiencing a drop in income can send us into a panic and our budgets into a tailspin. Unfortunately, it can happen to just about anyone. You or your spouse could be laid off, work could dry up if you’re self-employed, or you or someone in your household could fall ill. Times like these call for drastic money-saving measures.
If you have adequate savings, you will be able to live off of that for a few months. But whether you have an emergency fund or not, spending as little as possible is the key to making it through such tough times. You often don’t know how long your income will be reduced, so it’s crucial to stretch the money you have as far as possible. Here are some ways to do that:
1. Take a look at your bills and see what can be eliminated. Things like housing and electricity are hardly optional, but there are other things you may be able to live without for a while. Possible candidates include cable or satellite service, cell phones, long-distance plans, Internet access and gym memberships. Unless there is a pressing need for these things, consider getting rid of them until things are better.
2. If you or your partner is still working, make sure that you’ve claimed as many exemptions as you qualify for on your tax withholding. You won’t get as large a refund as you would with fewer exemptions, but you will have more take-home pay out of each paycheck.
3. Cut your phone bill down to a bare minimum. It’s a good idea to have a phone in case of emergencies, but we often have lots of extra features that we could live without. So cancel the call waiting, call forwarding and other such features, and get the cheapest possible long-distance plan (if you really need long distance).
4. Conserve electricity. Turn down the thermostat and wear more clothes when it’s cold out. Turn the lights off when you leave a room, and don’t leave the computer or television on when they’re not in use. These measures may not seem to matter much, but when used in conjunction with each other, they can knock a noticeable amount off of your bill each month.
5. Spend as little as possible on groceries. Coupons are good, but they don’t always save you more money than buying a cheaper brand. Try to combine coupons with sales for maximum savings, and don’t be afraid to buy store brands. They’re usually just as good as the big names.
6. Avoid eating takeout, and cook meals from scratch as much as possible. It takes more time than preparing convenience foods, but it can save you a great deal of money. If you’re short on time, cook large batches when you have a chance and freeze the leftovers to eat later.
7. Get help if you need it. Food pantries, thrift shops, churches and other organizations make it their mission to help those in need. If you truly can’t afford necessities, swallow your pride and ask for help. You can always repay the good deed by making a donation when you’re able.
When you’re dealing with reduced income, it’s easy to feel hopelessness. But there are ways you can stretch your limited funds further. By cutting out all but the essential expenses, you increase your chances of making it through your financial crisis until you find a way to replace your lost income.
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No matter who you are, an emergency of some kind will affect you at some point in your life. Unfortunately, few people are prepared when disaster strikes. And that’s especially true when it comes to financial emergencies.
Financial emergencies come in all shapes and sizes. Job loss is a big (and increasingly common) one, as is disability. The need for car repairs is not as devastating, but if you count on your car to get back and forth to work, it’s something that must be taken care of immediately. Even the death of a major appliance can strike a severe blow if you don’t have an emergency fund.
We all know that it’s smart to have some money socked away for a rainy day. But we don’t all make an effort to do so. A common reason given for lack of an emergency fund is that one can’t afford to save money. But if you think about it, you really can’t afford not to. If something were to happen and you didn’t have any money to take care of it, your only alternative would be to use credit. And that’s not always an option.
Finding money to put toward an emergency fund is not as difficult as most people think. If you eliminate unnecessary expenses from your budget, you should be able to find at least a little money to set aside each month. Even if it’s just $10, it’s a start. But how much should one aim to accumulate in an emergency fund?
Experts have differing opinions on how large an emergency fund should be. Some say you should have three to six months’ salary. Others say enough to cover your minimum expenses for three to six months. And still others argue that you should not work on an emergency fund until you’ve paid off any credit card debt you have.
The truth is, there’s no one-size-fits-all answer. How much you need in an emergency fund depends on a number of factors. If you’re single and in a high-demand profession, you might be able to get by with less than a family man in a less dependable occupation. If you’re self-employed, you may need more than most people because you won’t be able to fall back on unemployment if you run low on work. If you’re retired, you might need more than someone who’s still in the workforce. And if you don’t have adequate health and disability insurance, it’s very important to have a large financial cushion.
Still, the guidelines provided by financial gurus are helpful. It is certainly a good idea to have at least enough money put away to cover necessities and minimum payments on bills for a few months. And if you have accumulated a large amount of high-interest debt, it might be wise to save up $1,000 or so and then work on paying off your balances before continuing.
No matter how much money you make, having an emergency fund is essential. Even if it’s only a month’s salary, it will help prevent small emergencies from striking a crushing blow to your finances. And it’s okay if building up an adequate fund takes a while. With each little bit you put away, you become a little more financially secure.
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