Teaching Teens About Finance and the Stock Market
The general population of the United States have the lowest rate of savings in several decades. Currently, as a nation we spend far more than we save, and as a result our credit levels are at an all time high. One of the biggest problems is that we are not educating our population enough about money and finances. This is especially the case with younger people who are not prepared to handle finances when they reach adulthood. However, teenagers and young adults can learn about the value of money and importance of saving and budgeting.
As we all know money is the key to the economy. People work to earn money, which in turn is used to purchase goods and services. Ideally, people need to earn more money then they spend in order to maintain a proper economic balance. And, any money that is not used for expenses can be either saved, invested or spent on other items.
The world relies on money to buy and sell items, which works to stimulate the economy. The balance of the amount of income that a person has to the amount of expenses is important to earn a profit for a business or to be solvent for an individual. In the financial world, if a person is looking to purchase a large item and can not pay cash, they can finance the purchase. They can get a loan for the item, and repay it back with a set amount of interest. Or, if a person has extra money, they can save it and receive a set amount of interest for the investment. These are just a few of the basic principles of finance.
People are always looking for ways to stretch their money. One of the ways to do this would be to utilize ways to save money. People can find simple ways to save money including using coupons, reducing expenses and other ways. The methods of saving can very from easy ways to complex budgets and refinancing loans.
One of the most important tools that older teens and young adults have is creating a budget. By proper budgeting, people have the ability to allocate the amount of money you earn into certain categories. By creating a budget people can ensure that any expenses they have are paid, they don’t overspend within the categories and that they set aside money for savings. Budgeting is a key method that forces people to save money, and is especially helpful if people are looking to purchase a large ticket item such as a house, car or television.
Stock Market and Investments
Another important part of learning how to handle finances is through investing. There are many different ways that young people can earn money. Financial institutions such as banks and credit unions offer savings accounts, money market accounts and certificates of deposit which earn a set rate of interest. For more experienced investors, money can be invested in stocks, bonds and mutual funds. These types of investments also give people a rate of return, however, they have greater risk which can affect the amount earned or lost. Investments, whether in the stock market or in a savings account, can help people by providing an additional income.
Learning about finances, credit and investments is very important for older teens and younger adults. The lessons that are learned can help carry individuals throughout their lives by providing important tools and information. In addition, to the valuable resources on this page, we have included a few other helpful sites:
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