Financial Literacy is Key to Effective Money Management for Teens
March 31, 2022
At new Tripoli Bank, we understand the importance of helping our community's youth build a strong financial foundation so that they better understand basic concepts like budgeting, simple interest, and establishing and maintaining good credit. I recently read that currently only 21 states in the U.S. require high school students to take a course in personal finance and found it surprising that such a necessary life skill is not a top priority of our education system.
Financial capability education and financial literacy improves the financial health outlook for our youth, better preparing them to tackle unexpected financial situations or be ready for significant life milestones like paying for college, purchasing a home, opening a business, or building a nest egg.
For Gen Z and their parents looking to shore up money management skills and prepare for life in the real world, I'd like to offer the following tips to start you on your journey to good financial literacy.
Set SMART goals
In this case, SMART stands for Specific, Measurable, Attainable, Realistic, and Trackable goals. Choose selective, realistic priorities—whether it's saving for your first automobile or building an emergency fund—and make sure they are achievable. Create a plan of action and measure your progress over time; being able to visualize your progress can motivate you to continue your saving journey.
Start a Savings Account
Did you know you can now open a savings account at New Tripoli Bank completely online? New Tripoli Bank's online and mobile banking tools offer automated money management services for our customers, so you can set up automatic monthly transfers from your checking account to your savings account. Utilizing automated functionality to handle these transfers makes reaching your savings goal less of a hassle.
Consider Seasonal Employment
If you are a student of working age, you should consider filling your free time between school years with part-time or seasonal employment. A job helps you learn more about personal responsibility and provides an opportunity to manage expenses.
Track Your Spending
Take the time to track your monthly spending, then use that information to create a budget. Make sure to review it periodically and make necessary adjustments. Regularly tracking your spending will help you avoid impulse purchases that act as obstacles on your savings journey. New Tripoli Bank's online banking tool has money management tools that help you set monthly budgets and track your spending compared to your goals, so you can adjust your spending habits effectively.
Understand Risk & Reward
For older students with a comfortable financial situation, consider dipping your toe in the wide world of investment. Knowing how stocks, bonds and mutual funds can affect a portfolio shows you how financial decisions can grow—or shrink—your savings. Some high school classes and financial literacy-based websites provide simulations of how investments work in the real world.
Build Your Credit Score
Your credit score is a representation of your financial past, present, and future. A good credit score makes it easier for you to finance the purchase automobiles or homes, rent an apartment, and get a credit card with a good rate. Parents should consider adding their children to their credit cards to help them build credit while being able to monitor their spending.
Gaining knowledge about how to best manage your money is just the start. When young adults practice proper money management techniques early, they're more inclined to make effective financial decisions throughout life. The sooner your children start to grasp these concepts, the more apt they'll be for a better financial future.