Money Management for Teens - NBECH SAVID

Name ______________________________________ Date _______________________________ Period ___

Money Management for Teens

Wants Vs. Needs

It is not uncommon to hear teens and even adults use the terms wants and needs interchangeably. You might even hear a child say, "I need a candy bar." In reality, a candy bar is not a need ? it's a want. Wants are things that you desire that may enhance your life, but are not necessary for survival. Needs are things that are, in fact, necessary for survival. Knowing the difference between the two is the first step in managing your money. To be financially responsible, one must make sure that needs are taken care of before wants. Financial problems occur when wants come before needs. On the chart below, list several examples of needs and wants. An example of each has been provided.

NEEDS

Food

WANTS

Video Game System

Budgets and Savings

One of the best ways to get what you want and need is to come up with a budget. A budget is simply a plan for how you will spend your money. As kids, you may have separated your money into containers. Essentially, this is a budget.

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Currently, you may have a savings account or checking account with some money in the bank. You may also have spending cash, so your "budget" may look like this:

This is also a very basic budget. As you get older and have more financial responsibilities, a written budget is a good idea. In the previous two examples, you created two or three categories (i.e. spending, savings, and giving). A written budget takes into account what you are specifically spending money on. The following example is a budget for a high school student who lives at home, has a part-time job, and takes home $400 per month after taxes.

Expenses

Budgeted Amount

Cell Phone

$40.00

Savings for College

$60.00

Car Insurance

$120.00

Gas

$100.00

Spending (Food, Clothes, Entertainment)

$80.00

Total:

$400.00

On the budget below, pretend that you are in high school, you live at home, and you earn $400 per month after taxes. You may spend the $400 any way you choose, but you cannot spend more than $400 total.

Expenses

Budgeted Amount

Total:

$400.00 2

Savings Goals

A good budget typically has savings as one of the categories. But, what will you save money for? Setting specific goals for your savings will help keep you motivated to save. As a high school student, you probably have several things that you would like that you cannot currently afford. Some of the items that you would like may require saving for several months (video game system, new cell phone, tablet, computer, etc.). Other items may take several years (car, college, etc.).

On the table below, list several things that you would like to save money for. List the items in order of importance to you (#1 is the most important and #3 is the least important).

Short Term Savings Goals (several months)

Amount

1.

$

2.

$

3.

$

Long Term Savings Goals (several years) 1. 2. 3.

Amount $ $ $

Savings Accounts

Pretend that you put money into a savings account that pays you interest every month. After the first month, the interest payment will be calculated based on the money you put in. At the end of the month, when the bank pays you interest, it will calculate the amount based on your original deposit plus the interest you earned in the previous month. Later, that larger, combined amount will earn more interest, and after many years it becomes a much larger sum of money. The earnings are the result of compound interest. You can earn even more in compound interest if you make deposits regularly and stretch to put in as much as you can and leave it untouched. Let's say you put $50 in a savings account earning interest at a rate of 3.5 percent each month. If you add just $10 each month, the account can grow nicely to $714 after five years.

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Comparison Shopping

The best way to stretch your money is to spend it wisely. Comparison shopping can help. When purchasing products or services, it is worth spending some time researching which company has the best deal. There are several ways that you can comparison shop. The first way is by comparing the exact same item and selecting the lowest price.

$1.29 at SaveCo Market

$1.19 at The Bargain Basket

Store Brands

Store brands are often similar in quality but less expensive than name brand products. Consider trying store brands to save money. In the example below, the pear halves were packaged at the same warehouse. The pears are the same. You are just paying for the name brand label.

Go online to research two different manufacturers of cell phones. Make sure the price is the same or almost the same for both cell phones. Record your findings below.

Name and Description of Cell Phone #1:

Prices:

New Price: $____.___ Used Price: $____.___ Features of Cell Phone #1

Name of Website:

Name and Description of Cell Phone #2:

Prices:

New Price: $____.___ Used Price: $____.___ Features of Cell Phone #2

Name of Website:

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