4 money tips every teen should know

Build financial smarts in your 'young adults' - it's never too early to start!

For most teens, personal finance is not an area of life that gets a lot of attention. Emirati teenagers spend four times more than that of global teens with an average weekly spending of $103, as compared to $28 of a global teen, according to a 2011 report conducted by Dubai-based leading market research agency AMRB and TRU, a pioneer in global teen research.
Consider the millions of students expected to graduate in 2017, and what we have is too many young adults heading out into the real world lacking even a basic understanding of money management.
"That means today's young people are spending and borrowing more than ever without understanding the consequences," says Wendy Kha, a San Francisco teen who serves as ambassador for the teen financial literacy programme called Money Matters: Make it Count, created in collaboration with the Charles Schwab Foundation.
Taking part in this programme had a profound impact on Kha. As an advocate for teaching financial responsibility, she offers a few tips for parents and teens.

Save early, save often
As soon as you start earning money or receiving an allowance, you should open a savings account. Parents and teens can decide together how much of the earnings should be set aside for savings.  
"Whenever you earn or receive money, put at least 10 per cent of it into a savings account," Kha says. "I personally set aside 25 per cent of my income from my part-time job to help me save up for big-ticket purchases, such as concert tickets and cool electronics, as well as college tuition."
 
Needs vs wants
When something fun comes up at the last minute, it's hard to say no, and even harder to face the prospect of missing out. The best thing teens can do is to prepare for situations that lead to impulse purchases. Start by making a list of needs and wants. Each month, plan for the things you need, and figure out how much is left over for the fun stuff. If you know these ahead of time, you will be less likely to spend all your money on new clothes.

Keep track of spending
Now that you're aware of how much you need for necessities and what's left over for the fun stuff, it's time to start keeping track of everything you spend. It doesn't matter if you use cash or a debit card, and it doesn't matter if you keep track with an app or a small notebook. Just be sure to log every single purchase. Even small things, including the taco from the food truck or trail mix from the vending machine, should be entered into the log. Being mindful of every dirham you spend will help you understand your spending habits - and help you find ways to reduce your spending and save even more.
"You can avoid impulsive, emotional or irrational decisions if you recognise them in advance," Kha says.

Get a reality check
Before graduating school or college and going out on your own, it's important to sit down and get a solid idea of what it takes to make ends meet while living the lifestyle you want. Look for a financial education programme geared for teens. A good one will cover budgeting, goal setting and planning for the future.
For example, Kha learned a lot from one component of Money Matters called the Reality Store, a hands-on experience that helps teens envision the realities of adult life - understanding careers and salaries, managing income and expenses as well as planning savings and investments.
"It's a lot to digest," she says. "But I know when I head off to college, my eyes will be wide open, and that will help me make better money decisions."
- BPT