As New York City students, and families alike, prepare for yet another Nor'easter, both groups also find themselves finalizing upcoming Spring Break plans. Thus, as NYC public school administrators and educators equally jump for joy courtesy of a week dedicated to R&R (rest and relaxation), some parents/guardians are scrambling to make the upcoming week as inactive yet productive as possible. As such, one solution to this oxymoron is steering away from academics. While minds will be at rest from in-class lectures, utilize such downtime to restart financial literacy lessons. Therefore, slowly introduce your teenager to the lessons by way of a popular topic: The Dynamic Duo of Personal Finance (checking and savings accounts) if you have not done so previously.
Checking and savings accounts are financial terms that your teenager should be familiar with, regardless if they currently possess an account, or will open one soon. In the end, learning the basics can help to avoid potential pitfalls. Thus, information to include in your notes should center on the relationship between checking accounts, debit cards, and store purchases. To start, when a debit card is used as a method of payment at stores, the money paid is withdrawn from your checking account. Therefore, it is important that account alerts are synced with primary email accounts so as to keep track of spending. Remind your teenager that failure to keep an agreed upon amount in their checking account can result in monthly overdraft fees and additional costs. Because both checking and savings accounts are held in equal esteem, the damage incurred to checking accounts is similar to that of savings accounts. Adequately savings is a lofty goal for a majority of adults. Just when it appears that progress has been made, and you have saved more than expected, life happens. As a result of unforeseen events, accounts are drained to cover damages, repair costs, quick fixes, and more. Thus, when examining the rate at which teens save, the percentage is low. For a large number of teens, funds saved are minimal to non-existent because they inconsistently receive income. While there are teenagers who can recall overhearing parental discussions of a 529 College Savings Plan, there is still very little awareness. To increase their knowledge, learning must begin immediately. Comprehending the gravity of the situation, another concept to include in your notes is budgeting. Before the detailed conversation commences, it is advised to be prepared. Preparations can be both abstract and literal, such as possessing: elementary math skills, patience, paper, and writing utensils. If your 21st century teenager views utilizing pen and paper as “outdated”, upgrade to computers, phones, and tablets (heavy consideration taken for those who lack access to these costly devices). Nonetheless, with your tools in hand, the conversation can finally begin. Budgeting is a pivotal component in achieving financial success although the practice is tedious. Likewise, while many perceive budgeting as “financial dieting” (scaling back on pleasures), it is not synonymous with deprivation. Instead, budgeting promotes adopting proactive approaches to properly managing finances, as it requires that one spends less of their revenue and saves it for either the short or long-term. Moreover, budgeting is not exclusive to those with sizable incomes -- individuals with varying income levels can participate. As such, the goals of budgeting are to improve financial decision-making skills, as well as enable people to successfully save for emergencies and financial goals (both specific and arbitrary). Furthermore, creating a solid budget allows one to track where their money is stored, the exact dollar amount present, and where funds are being dispersed. Thus, when examining budgeting further, we see how both a checking and savings accounts are intertwined. Additionally, utilizing monthly bank statements from either, or both, account is optimal in the quest to budget. In a nutshell, bank statements have been effective in tracking withdrawals, overdraft fees, and the number of deposits made for many. If your teen does not have a checking or savings account, and as a result receive no monthly statements, encourage them to record their daily purchases through the use of a journal or “money diary”. Journals and money diaries are a great way for your teen to visually track what was purchased, and the cost, which will invoke reflection and conversations regarding needs vs. wants and worth vs. cost (two concepts previously blogged about!). Likewise, recording their spending will help in the creation of goals. Whether financial or personal, goals set by teenagers are often farfetched and slightly unrealistic. Therefore, help your teen map out their prospective goals. Documenting their goals allows them to outline specific goals, the timeframe such goals will be achieved, and the work needed to accomplish it all. Thus, whether your teenager’s goal is to budget and save for concert tickets, electronics, new clothes, or school supplies, the groundwork has been made for their success!
0 Comments
Leave a Reply. |
WhitneyEducation enthusiast whose mission it is to see Financial Literacy receive well-deserved shine. Archives
September 2020
Categories |