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Managing your money: who wouldn't like more money? Here's how to get it.

* OBJECTIVE

Students should understand

* how good spending, saving, and credit practices now can pay off in the future.

* BACKGROUND

Teens--like people of any age--find it much easier to spend money than to save it, and are likely to keep buying only what they can afford now, rather than wait a bit until they can save enough to buy a more expensive item. As brothers Kyle and Kent Healy exemplify, learning how to handle money well is a worthwhile skill of lifelong value.

(Note: Some students may be interested in the Healy brothers' Web site promoting their book: coolstuffmedia.com.)

* CRITICAL THINKING

CAUSE AND EFFECT: When using a credit card or holding a bank loan, why is it best to pay off the debt as soon as possible? (The higher the remaining balance, the greater the interest added to the amount due.)

RESTATING A THESIS: Kyle and Kent Healy said, "Our generation is used to instant gratification." What does that mean? Do you agree? (Answers will vary.)

* ACTIVITY

WORK IT OUT: Ask students to think of something that they want but can't afford, then devise a savings plan to earn and/or save enough to buy it. (Don't forget to allow for sales tax.) What can they do without, or with less of, for a while? How much can they expect to save per month? Given that, how long would it take to save that much? Then have them share their plans and ask classmates: Is the plan realistic? Why or why not? What else could the saver do to reach his or her goal in the shortest time possible?

STANDARDS

SOCIAL STUDIES, GRADES 5-8

* Production, distribution, and consumption: How personal funds can be earned and allocated to better effect.

* Individual development and identity: Taking responsibility for one's own actions is important in saving for the future.

RESOURCES

PRINT

* Kiyosaki, Robert T., with Lechtel Sharon L., Rich Oad, Poor Oad for Teens (Warner Books, 2004). Grades 6-12.

* Mayr, Diane, The Everything Kids' Money Book (Scholastic, 2000). Grades 6-12.

WEB SITES

* The Motley Fool for Teens

www.fool.com/teens/teens.htm

* U.S. Small Business Administration: Teen Business Link

sba.gov/teens

Money is a big part of life. So why not learn to manage it well? The world of finance--banking, investing, and borrowing--can be pretty complicated. But you can start simply. The key is to believe in yourself, say Kent and Kyle Healy. The 22- and 20-year-old brothers are the co-authors of Cool Stuff They Should Teach in School.

Making Money

Before you can learn how to manage money, you have to make some.

As teens, Kent and Kyle did it by starting a skimboard/skateboard business. Here are some ways you can start earning.

* Work. Restaurants, stores, movie theaters, and camps hire teens for various jobs. If you have trouble getting hired or would rather do something different, become your own boss. Neighbors may be willing to pay you to baby-sit, walk dogs, rake leaves, or mow lawns.

* Turn items into cash. If you have old toys, books, or sports equipment that you don't want anymore, ask your parents if you can sell them. Have a tag sale, or take items to a flea market or used-books store.

* Stay in school. Overall, high school dropouts earn 27 percent less than graduates. The more you learn, the more you can earn.

How to Save

Once you have some money, start managing it. Here are two tips:

* Hold on to your money. This doesn't mean that you should never buy anything. Just don't spend more than is necessary. For instance, compare prices at different stores. If you can save 50 cents on your favorite fruit juice every day for a year, you will have accumulated $182.50. Here is another thought: Maybe you don't need so much stuff! Getting by with less today can help you save for the future.

* Plan ahead. Say that you want to buy $300 stereo speakers in September. How much should you set aside each month? (Hint: Divide 300 by 6, the number of months from March to September.)

How to Invest

"Where will you put the money you save? Why stick it in your sock drawer when you can put it where it can grow? If you open a savings account, the bank will pay you interest.

Interest is a percentage of an account balance, based on the government's current rate. The larger the account balance, the more you will earn in interest. So don't just put some money in a savings account, then forget about it. Keep adding whenever you can.

Another option: Buy a U.S. savings bond. The plus: You can pay one sum, let it alone, and double your money. The minus: You have to wait a while. With $25, you can buy a $50 Series EE Savings Bond. It will be worth $50 in cash--in 20 years.

It takes time for money to grow, so start early. "If you leave your money [in a savings account] to grow for a long time, $100 can turn into a million dollars," writes Selena Maranjian for The Motley Fool, a Web site that offers financial advice.

Kyle and Kent Healy agree. "Our generation is used to instant gratification," they write. "We forget that some things require time."

Avoid Debt

If you want to borrow money, think it through carefully. Debt is a serious matter. When you owe money on a credit card or bank loan, you are paying interest instead of earning it. Never borrow more than you can afford to pay back promptly.

Bank loans are useful if you need to make a large investment--in a home or a college education, say--but do not have the cash to pay for it. A bank will loan you the full amount and allow you to pay back the money in monthly installments.

In exchange for the loan, the bank will charge you interest. If you borrow $1,000 at 10 percent interest and pay it back in one year, you will be paying back $1,100 dollars. The longer you take to pay off the debt, the more interest you will owe.

Go for it

With a little effort, you can become an expert at managing your money. Just remember to think your decisions through. Whether buying or borrowing, consider the consequences before you spend your hard-earned cash.

WORDS to Know

* balance: the amount of money in an account.

* debt: something (especially money) that is owed.

* interest: the amount of money earned in a savings account or owed on a loan.

* invest: to commit money or other assets in order to gain a financial return.

Money-management Tips

Here are tips from the Healy brothers on how to stretch a dollar.

1. BE AWARE OF YOUR SPENDING HABITS. When, where, and how do you spend your money? That can mean the difference between digging in the couch for spare change or flying first class to Fiji.

2. INVEST YOUR EARNINGS. Whenever you earn money, take 10 percent and put it in savings or invest it. Our parents introduced this rule to us at a very young age--even though we were getting paid only a dollar an hour. Today, we thank them for it.

3. CONSIDER OPPORTUNITY COST. Opportunity cost means that when you make one choice, you are giving up another. It can be as simple as getting a summer job instead of just hanging out. Which decision contributes to the life you want?

4. SPEND SMART. Do you go for Money Eaters or Money Makers? Money Eaters are purchases that decrease in value (DVDs, clothes, etc.). Go for Money Makers--investments that increase in value, or items that help you earn money, such as tools if you are repairing bikes for extra money.
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Title Annotation:MONEY AND YOU
Author:Gershenson, Gabriella
Publication:Junior Scholastic
Date:Mar 6, 2006
Words:1298
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