Money Matters, From One Teen to Another

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Money Matters

In some cultures, whenever you ask a person how much they earn, they’ll look at you like you asked for their most intimate secrets. Money signifies power and because of that, it’s a taboo topic. Whereas some folks are embarrassed to make less than a certain amount, others don’t want to admit that they have X amount in the bank for fear that it will make them look privileged or spoiled. What’s more, the mere act of talking about money is enough to make someone seem materialistic, even if they just want to understand the world of finances a bit better.

All told, such an attitude towards money can be detrimental to our futures, given that money management isn’t taught in schools and thus we’re left vulnerable to scams and mountains of debt. So, from one teen to another, here are a few basics about money that I’ve picked up over the years.

1. Why we need to talk about money

When people are reticent to talk about how much they earn, it leaves the window open for employers to take advantage of their employees. Talking about average salaries empowers people to fight for fairer wages and can also help reduce the pay gap between men and women.

2. To earn money, you need to provide something of value

Money Matters

This may sound obvious, but unfortunately, countless people fall victim to scams. If something seems too good to be true, chances are, it is. Furthermore, if you’re ever in a position to make “easy money,” stop and think about it. Are you providing any value for what you’re earning? If the answer is no, then chances are you’re about to get roped into something sketchy.

3. Importance of budgeting

Money Matters

When I asked people what they do when they get their paycheck, many said that they spend a sizable portion of it on something nice for themselves or their family. Very few mentioned savings. And yet, it’s crucial that everyone plans for necessary expenditures such as gas, electricity, water, etc. Likewise, it’s important to budget for food, and identify how many times you can afford to eat out versus cooking at home (an advantage of this is that it will motivate you to eat healthier and more sustainably). After all of life’s necessities are accounted for, you should put a portion of your money into a savings account. You know the saying, hope for the best and prepare for the worst. Then, and only then, you can spend whatever’s leftover on luxury items. A happy side effect of this being that whatever you purchase will be entirely guilt-free.

Let’s be honest, if you’re a teen like me, all your needs – not to mention a lot of wants – are fulfilled by your parents. Even still, I highly recommend dividing pocket money into different portions, which can cultivate budgeting habits that will be very useful in the future.

4. Importance of savings

Money Matters

Although there are many types of savings, they can basically be broken down into two main categories: short-term and long-term. Short-term savings are also called target savings and include things like a new car or house. True, such items can be rented or leased, but it’s generally better to buy these big-ticket items as they become assets, which adds overall value to your finances. Perhaps more importantly, should you lose your source of income at some point, you don’t have to worry about losing all of your possessions as well.

Conversely, long-term savings include retirement or emergency funds for things like costly surgeries, childcare, or losing a job unexpectedly. Retirement, in particular, is something a lot of people don’t plan for, and thus spend countless hours later in life stressing about working indefinitely or having to rely on their children for a comfortable future, both of which are not sound plans.

5. Multiple sources of income

Having multiple sources of income does not mean you have multiple jobs. It simply means that you’ve established what’s called passive income sources. Although having a side hustle – and one that speaks to your passions – isn’t so bad, either. They can help you in difficult times and allow for more independence. It is the embodiment of the phrase, don’t put all your eggs in one basket.

One of the most popular ways of earning extra income nowadays is freelancing on platforms like Fiverr and Upwork. There’s space for writers, graphic designers, illustrators, and plenty more. However, the market is incredibly saturated, with tons of folks from developing countries providing quality services at a fraction of the cost of someone living in Beijing.

A more traditional form of passive income is the stock market. A common misconception about the stock market is that it’s all about highly volatile day trading (i.e. buying and selling stocks for a profit). Stocks are, simply put, a small chunk of the company’s ownership rights that can be bought and sold by anybody. While there are some incredibly risky stocks out there, developing a portfolio of tried and true stocks that don’t fluctuate too much can pay off somewhat handsomely in the end.

Posting videos online can also be a solid source of passive income as they’ll basically generate income forever. However, given that the barrier to entry is low, monetization is intensely difficult.

If you’re someone who likes to play it incredibly safe and you aren’t looking to turn a massaive profit, then simply opening a savings account that accrues interest is a great option as well. If for no other reason than accessing money from these accounts is harder as the account holder needs to notify the bank before withdrawing any money.

A word of warning though: It’s far too easy to get caught up in a scam when establishing a passive income stream, and one of the most common scams is multi-level marketing firms, more commonly known as a pyramid scheme. It’s imperative that you research the company thoroughly before investing money anywhere. The unfortunate reality is that most people are introduced to pyramid schemes by people they trust such as friends and family. More often than not, however, that person doesn’t realize what they’re wrapped up in. So tread carefully.

Images: Pexels, Unsplash

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