Teens Meet Outreach

If there’s one obvious fact when it comes to teenagers and money, it is that teenagers love to spend money. Actually, who doesn’t? Money is that thing you’re excited when you get because you can already think of one thousand and one ways your life would be better because of it. It is also that thing that can ruin your day and make you gloomy when you don’t have it and your wants keep piling up without relent.

For a teenager, growing to know money beyond its ability to get an immediate craving is one of the most important parts of growing into adulthood. Yet, it is one of the most overlooked topics to discuss at home or even in school. As a result, quite a number of teenagers grow up thinking they have money all figured out, only to be faced with the hard truth in adulthood.

If you’re a teenager, the following are 5 things you probably do not know about money:

1. The difference between needs and wants

When you are a teen and everyone around you is getting the phone in vogue, putting on classy clothes and hairstyles, shoes and bags, it is natural to want those things. It is even easier to feel you need them when you’re not the one footing the bills. However, when you don’t differentiate clearly what is a need and what is a want, you might be losing on something you really need; something you can actually do without.

Okay, pause. What exactly is a need and what exactly is a want?

A need is a necessary requirement. A want on the other hand is a desire, a wish. Let’s bring this to every day teen language. A need is that cardigan you don’t have, and it’s rainy season. A want is that classy jacket every cool person in school has and you’re absolutely in love with and would like to get even though you still have a jacket or jackets in good condition.

A need is that cell phone you do not have and as such cannot reach or be reached and, in the process, lose important information or get it late. A want is that latest galaxy phone that was released over the weekend and everyone is raving about.

One other way to differentiate needs and wants is by asking how important that item really is. Is it something you can do without? Is it something you can live without? A couple of days, weeks, months or years from now, would your lacking that item cause any long-term harm?

Sincere answers to these can help you differentiate next time if that purchase you’re about to make is a want or indeed a need.

So, my dear, even though it feels like everything on your list feels super important, remember you don’t need every want.

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2. How to create a budget

Many teenagers have the mindset that ‘money planning’ is for adults. The average teen has an unreasonable list of things that they want ASAP (emphasis on ‘want‘ not ‘need‘). Teenagers are known to get cash and spend on the next want that shows up. After all, the adult bank never fails.

Truth is, this occurrence is hardly the fault of teenagers. They simply have little to no knowledge about budgeting and haven’t been taught. However, budgeting is not that hard and it is definitely not a topic to be avoided but rather embraced.

This skill (yes, it is a skill) is one that, if learnt early, would help avoid a lot of financial heartaches down the road. The beautiful thing about budgeting is that, when properly done, you’ll get your needs and enough for wants as well.

You need to know and understand that you can only spend that money once. Once you spend it, it cannot be spent again. Hence, you need to make sure it is well spent, creating a balance between how much of the money you spend on needs and wants.

So, what exactly is a budget? It is a financial plan for a definite period of time. A budget is also an outline of income and expenses.

To create a budget, you need to:

a. Make income projections

The income projection category should include every mode of income including allowances, tips, wages, gifts etc. Try to capture everything in here, leave nothing out.

b. Make expenses projections

This should cover everything (and I mean everything, at least to the best of your ability) you spend money on. Please note that these projections should be as specific as possible, e.g. airtime, clothing, transport, hangout, data, snacks etc.

Note: you might not be able to capture exactly how much you receive or spend as a teenager but you should try as much as possible to give a close estimate and even if something else comes up along the way, you can always update your budget.

c. Screen your expenses

Arrange them in order of priority. This should be easy now that you understand the difference between wants and needs. The logic behind this is that your needs should top the list and your wants should be at the bottom. Simple, yeah?

d. Find the difference

After outlining your income and expenses, find the difference between the two. This would help you determine whether or not your income is able to cater for all your expenses.

If your expenses are greater than your income, you would have three options: to cut down your expenses, to earn more, or both.

However, at this point, you’ll need to first cut down your expenses as much as possible.

• Start from the bottom of your arranged expenses and start crossing out until you can cross out no more. This should be when you have gotten to the needs.
• Now, re-calculate the difference between the income and expenses. If the expenses are still greater, then you need to earn more. As a teenager, you can do this by taking up an after school job or by starting a business on the side that can earn you more money.

3. How to save

Saving can be one of the simplest, yet complex, things to do as a teenager. It is relatively easy to “decide” to keep some cash away but even easier to dip hands in when you need a little extra cash. It becomes the hardest when you have friends always spending money on this or that. However, it’s not impossible.

Here are some tips to guide you:

a. Set saving goals

For example, set a target you want to meet at a particular time. The target can be the cost of something you need or want or maybe its not for anything in particular but just to build discipline.

b. Keep the money in a savings account

You don’t need to have millions of naira to keep your money in a bank. Banks offer children and teenagers several offers that can help build the savings habit. You can make your research and pick one that works for you.

When the going gets tough, remember why you started.

Yes! Its that simple. Whenever you feel like dipping your hands into your savings unnecessarily, remember why you started the discipline In the first place.

c. Reward yourself

Every time you meet a goal, the fact that you just met a goal would offer a sense of fulfilment that might be enough reward. You can take time to give yourself a treat. It could be as little as a cup of ice cream, your favorite chocolate bar or a trip to the movies IF YOU CAN AFFORD IT.

4. The power of compounding

Compounding is basically when you put aside money, for example in a savings account, and just leaving it there. For example, depositing an amount monthly in an account without withdrawing for an extended period of time. Imagine depositing 2% or even 1% of everything you earn in a savings account from when you’re 15years old till when you are 20 and then investing the money you have then, earning more and continuing the process. You’ll surely be a millionaire soon enough. The beauty of this however is this: the earlier, the better.

5. You cannot ignore your financial life

It might be a little funny to you how this even made this list but it is true. A lot of teenagers seem to assume their financial life is one of those things that will just fall into place as they grow older. This, unfortunately, is untrue. Sooner or later, you’ll need to start paying attention to your finances whether you like it or not. Better if you start early enough. That way, you can avoid a lot of unnecessary financial blunders as you grow.

There you have it, five things you probably did not know about money.

Is there any other you think should be part of this list? Feel free to drop a comment below.

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