Mismanaged money

Teenagers spend paycheck on unnecessary items, ignoring future budget

Anna Czulno, Online editor-in-chief

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We’ve all heard this lesson at least one time in our life. Save your money. It seems simple enough, yet according to a survey conducted by Capital One and ING Direct, approximately 87 percent of teens know little to nothing about managing money. This means they know little to nothing about saving money for college or their future careers.

High school is the time when students begin to work, therefore being able to retain a steady income. While it may be less than a thousand dollars a year, this income is necessary for students to begin building a foundation for their future financial endeavors.

This income, however, is more often than not managed by a teenager’s parents. When it comes to depositing checks or pulling money from a bank account for example, students often take for granted that their parents are willing to automatically help them.

Despite the fact that Illinois is one of 13 states in the U.S. that requires kids to take a business course in high school, like Intro to Business or Personal Finance, students still don’t have the experience of making smart financial decisions.

It is estimated by Capital One and ING Direct that teens spend approximately 20 percent of their annual income on food. While this may not seem like a large percentage, spending money on food essentially gives a person no return on their investment. Spending money on other various activities like going to the movies or purchasing concert tickets can also eat away at a person’s salary.

The first and most basic lesson for students to start saving money is learning how to make a budget. Coming from a person who spends money on food almost everyday, I can assure you that making a budget for yourself is extremely important.

According to the Teachers Insurance and Annuity Association (TIAA), it is estimated that teens should save an average of 20 percent of their total income. Another 50% should then be delegated towards necessities like saving for a car, college textbooks or anything that students will need to spend their money on after high school. Therefore, students should only spend about 30% of their total income on luxury items.

In order for students to open a savings account, they should visit their local bank or talk to a parent or teacher for more help. While classes in high school like Personal Finance or Intro to Business may help students learn more about how to handle their money, students need to start taking the initiative themselves.

It should ultimately be up to the student whether or not they want to manage their money. If continue to rely on their parents though, their financial status will almost certainly be crippled in the long run.