Understanding Financial Literacy

For most high school students, it’s a common and even natural expectation that your parents will take care of any financial situations that should arise. Groceries, clothing, the cost of participating in sports, medical expenses, and even your first car are often things that parents pay for. Unfortunately, this doesn’t last forever. First jobs and the goal of graduation often decrease your dependence on your parents for money. During this period of time, you need to learn how to be financially literate and maybe even consider taking classes to get your master’s in accounting when you go to college. This means not only knowing how to spend money but how to get it, keep it, and use it in the most responsible way. Parents and teachers are the first people to offer invaluable guidance and advice when it comes to understanding and making smart choices in financial matters, but actually handling money in real time is also one of the best ways to become more comfortable with it.

Earning Money

One of the first things to learn about financial literacy and responsibility is how to earn money. That means getting a job. Some people are already familiar with the concept of getting a job even before they start high school. Mowing lawns for pay, selling lemonade, or babysitting are all ways that teens work to earn extra cash while in school. When looking for a job, consider how much money you want to make, particularly if you have a specific goal in mind. Take into consideration that taxes and other deductions are taken out of what is earned, so what you make and what you actually bring home will differ. Common places for high school students to work include retail stores, restaurants, entertainment centers such as the movie theater, and car washes.

Saving Money

Once money has been earned, it’s important to save some of it. While you’re in high school, and even after, the temptation to spend your hard earned money is great, and it can be even worse when your job doesn’t pay a lot or you’re tempted to buy a specific thing. Learning to save money, however, is a way to build money. When a person spends their money right away, it’s gone. When money is being saved, it grows over time. To properly save money, a teen should take a set amount of money out of each paycheck and place it into a savings account. This amount should be as much you can part with without interfering with your usual expenses. What’s not placed into savings can be used to pay for your personal needs, such as gas for your car. When opening a savings account, keep in mind that there may be fees, and these can vary from bank to bank.

Budgeting Your Money

Setting up a budget helps when it comes to keeping finances in order and reaching financial goals, and it helps you to be better prepared for unexpected expenses. The idea of a budget is often scarier than actually sitting down and writing one. To do that, it’s important to know how much money is currently being spent and where it’s going. For a few weeks to a month, use a notebook or make a document on a computer to keep track of how money is being spent, including small, routine, and occasional purchases. Make note of whether the money is coming from odd jobs or part-time work. Once a routine has been established and there’s a better picture of how your money is spent, create a budget based on your expenses. While in high school, your expenses are likely to be more variable than fixed, but this will begin to change after graduation and as you enter college.

Spending Money Wisely

When a person earns their own money, it’s a great feeling. Unlike money that you get from your parents, this money is what you’ve earned, and it’s tempting to spend it on whatever you want, whether it’s clothes or video games. But that isn’t always the smartest thing to do. There are a lot of risks for unsuspecting shoppers, from overpriced products to scammers both online and offline who’ll not only steal your money but your identity as well. Spending wisely doesn’t mean not spending at all, though. A smart consumer shops around to find the best deal on an item that they want to purchase. This may mean going to different stores or comparing prices online. Always go shopping with a set amount of spending money in mind, and do not exceed that amount. Impulse buying can be costly and take money away from other things. When shopping online, only buy from well-known, legitimate retailers. There are sites that are only online to collect credit card and other consumer information, and these sites can look genuine, so always be aware of unusual wording or images or a lack of security during checkout.

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