Good Money Management Essay

1629 words - 7 pages

Money is something that encases our whole lives. We all know this yet many of us fall into the traps of debt and overspending without even knowing it. The feeling of never having enough money or living paycheck to paycheck can lead to serious finical troubles that can and easily will carry over into a lifetime of financial struggles. Good money management and good money habits are the same way. Those skills can make a life of financial ease or struggle. All it depends on the skills one develops now as a teen. Money management is not a completely restrictive thing. Many of the skills learned can be use to help friends and family struggling with money. It all starts with clearly seeing the ...view middle of the document...

After that they can then reach an agreement where the teen makes the loan payments. One major flaw in this system is how big and spanned out this loan is. For a lot of teens with loans they want small amounts to make payments on. These can range from $50 to $100 dollars a month. The problem is a loan with payments of “$50 dollars a week takes almost 5 years to pay off”. (Junior 3) This long term loan brings in long term interest. Interest is the rate at which people pay the bank for using their money. This amount of interest paid to the bank adds on to the amount of money you had originally taken out. Many people, adults too, fail to take this into consideration when they take out a loan or spend with a credit cards. Credit cards work the same way as a loan just on a smaller scale. These two factors can lead to large debt issues for teens and adults. Debt issues that can and will follow them for a long time along after, making it hard to get out of. Seeing the problem of debt and over spending can be overwhelming. There are solutions.
Big things have little beginnings. The first real step towards a sound financial life is getting out of any debt. This can be done by focusing in and paying off friends or talking to a bank and making loan payments larger so less interest is paid. Once debt free the next place to go is back to the bank. Start a savings plan. Just $50 dollars a month grows to $3,333 in 5 years. That is an amazing amount of money to have as a teen and allows so much more flexibility when it comes to financial decisions and purchases. Going down to you local bank is not as scary as it
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sounds. Banks are a great place to get back on your feet when it comes to money. They will set up an account for you and help point you in the direction you want to go. They will also encourage saving. Saving can be hard thing to do. Taking that $20 and putting it into a bank account instead of spending it at the mall is a hard thing but it needs to be done. With money set and moving in a positive direct it is time to think about investments. Unlike bank accounts they are not guaranteed to perform and grown. Stocks rise and fall daily. Business like Edward Jones will help you purchase stock. People go in and tell stocks they would like to invest in and then for a small fee they will then invest your money in that stock. Low risk investments like treasury bonds are a smart decision because they have little to no risk and have a slow but steady return. Just remember the stock market is a long term investment and there is no guarantee to see a return. Getting back solid financial footing is tough but it can be done through self discipline and determination.
Holding on to money management is not as hard of a thing as it sounds. One smart step is to set up a budget. A budget is used to divide up an income into monthly or weekly needs that includes money for clothes and food along with money to set aside for investing and saving. Budgets do not need...

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