Generation Z students enjoy going out and spending their money on popular treats such as Starbucks drinks, Chick-fil-A nuggets, or other trendy food or clothing items. This is fine as long as teens spend their money in moderation; however, today’s teens seem to be spending more and more money weekly than they really should. Why is it so important for teens to save money and focus more on budgeting?
Before I could drive, I felt I lacked the freedom to buy whatever I wanted, but now that I can drive, I tend to splurge sometimes when I go out with friends. I feel as though I am better at spending too much money on unnecessary items, such as fast food, when I can choose to eat at home or a trendy, new water bottle when I already have five, but I know people my age and younger struggle with this concept. Knowing this, the Courier wanted to ask Lewis Cass’s Personal Finance teacher, Mr. Temme, some integral finance questions. When asked why he believes it is so hard for most teens to save money, he responded with, “Many teens think about today and not the distant future. Having short/long term financial goals would give motivation for teens to save.” The main problem for teens is that they do not think about how saving money benefits them in the future. Teens can motivate themselves with a short-term saving goal, such as saving for a new watch, or even a long-term goal, such as saving for a car. A good motto I learned in Personal Finance class is, “It is never too early to start saving.”
There are many reasons teens should start saving early. Whether it is saving to buy a video game, saving up for college, or just saving to gain smart saving habits for the future. Mr. Temme was asked what advice he has for teens saving. He responded with, “As soon as you have any form of income, save 10% plus set aside an additional 10% for giving. Develop the saving behavior early in life to make it a life-long pursuit.” This behavior on saving will help set students up for future success.
The less fun, but very important future topic to talk about is saving for retirement. Someone might think they do not have to consider this topic today, but this is actually the best time to think about retirement, early in life. Mr. Temme had some great advice on retirement as he stated, “Saving for retirement is best done early. Time is your best advantage in saving for retirement, due to compound interest. Invest in mutual funds via a Roth IRA. This is very smart advice that not everyone follows, but if someone wants to have enough money for retirement, this is the best way.” If a teen is not aware or educated about these terms, he or she can also ask a parent or guardian, or do research online. Research is always important when learning about financial terms and definitions.
There are many ways for teens to budget their money. According to Piscataqua Savings Bank, a step to start your savings and budgeting journey is to get a part-time or summer job. If a student is able to, they should get a job to teach themselves the kinds of work they might enjoy. They will also enjoy the feeling of earning their own spending money instead of relying on their parents for everything. Students might also realize it is not as much fun spending all of their own money at once.
Another tip from Piscataqua Savings Bank is tracking your spending. Students can do this the old fashion way-with notebook and paper, or by using an app that automatically tracks how much they are spending on a variety of categories. This will help students figure out where their money is going. Students may end up surprised at how much they spend on certain categories.
A tip I personally have learned that has worked for me is to use cash instead of my debit card. As stated by the OneAz Credit Union website, in 2007, Carnegie Mellon University published a study showing that “credit cards effectively anesthetize the pain of paying.” In other words, paying with cash hurts more than paying with plastic. It is much harder to hand over physical money than to hand over a plastic card.
No matter how a teen decides to spend their money, hopefully, they can also learn to save some of it, and develop good spending habits to use later in life.
