Financial Literacy Tips for Teens!

"If I had my choice, every highschool would be teaching financial literacy along with math and science"

The above said words of Gregory Meeks (U.S representative from New York) lay a deep emphasis on Financial Literacy and the very need for it in today's world. Financial education is as important as academic qualifications.

Understanding how money works at an early age is crucial for future success and in this blog, I am going to share 5 Financial Tips that would set a foundation for your financial knowledge.

1. Budgeting

Budgeting is an important life skill that if learnt young, can help in the long run. It helps in keeping track of your money; income and expenditure. Budgeting helps you appreciate your money and teaching one how to live within their means. It is intact pretty easy to budget.

First, you need to make a list of your income sources i.e regular 'pocket money' or money earns from part-time gigs. Second, you need to keep a track of various expenditures. Just by doing these two simple steps, you'll be more rational about your expenditure. It will also help you in saving so that you are able to afford things on top of your priority list.

2. Taxes

Throughout our teenages, we hear everyone advising us about EARNING MONEY. But no one every talks about the thing that comes along with it- taxes. Taxes play a vital role in the functioning of the human society. Evidence of taxes trace all the way back to 3000BCE, in Mesopotamia.

Gaining a basic knowledge about taxes will keep you one step ahead of your peers and it is a subtle flex as well. There are different types of taxes- Income Tax, Sales Tax, Property Tax, Corporate Tax, etc.

There are several detailed resources on the internet that can be referred to ignorer to gain an insight to this topic.

3. Investing

The more emphasis laid on this topic, the better. It is always advisable to start young.

Did you know, Rs. 0.1 ($0.0012) if compounded double everyday for 30 days would end up with you having approximately around Rs.5,400,000 OR $65550(approx.)

This is how powerful compounding and investing are.

Stocks, Bonds, Mutual funds are some investment vehicles. There are various risks that might come along with investments. Low risks generally result in low rewards whereas taking high risks can result in higher rewards

4. Saving

Saving is one habit that is extremely important for a person. Start saving early on and set monthly saving goals. Save some portion- say 15-20% of your income. You can also try making an emergency fund. The money in this fund will be useful in emergencies. Say, some type of medical emergency.

5. Credit- Pros and Cons

Understand the concept of credit, loans and debts. Be cautious with borrowing money and remember make it a habit to repay on time if ever borrowed. Credit comes with its own set of pros and cons. On one hand, it provides a person with a sense of security or 'back-up money' and helps them in making purchases even if they don't have cash in hand. The downside of this can be debt accumulation via which one can fall into a debt trap. It might also lead to irrational spending or spending money beyond a person's means.

---