Life Skills 101: Managing Your Own Money

The older you get, the more independence you have. Increased independence is really great in many ways: you make your own decisions about how you spend your time, what friends you will have, what activities you do, what clothes you will wear, and how you manage your time. Your successes become much more due to your own efforts. You make the decision, you do the work, you take the risk, and you get the credit for a job well done. But, all this independence has a down side-more responsibilities. When you are managing your own life, you have more responsibility and also more opportunity for things not to work out. For example, if you are responsible for managing your own money-your allowance and/or money you earn at a part-time job- you may love the freedom you have to spend this money how you choose. Gotta have that new CD-buy it! See a great outfit on-line-click-buy it! Your friends all tapped out and you have money in your pocket-lend them some bucks. Dues need to be paid for your youth group and the fee needs to be paid for your class trip-uh, oh-the well is dry and the pockets are empty except for a linty gum wrapper. Now what? Maybe your family will bail you out-maybe not. Maybe you are embarrassed to ask them to help you as you know you will get the "Managing Money Wisely" lecture. Maybe you won't be able to go on the class trip - a hard lesson to learn in smart money management. More independence-more responsibilities.

Life Skills 101

You can manage your increasing independence and responsibilities well by learning some basic life skills. These aren't skills that you can necessarily learn at school or on the practice field. These are skills in how to make your life run smoothly-skills in managing money, for example, managing your time, taking care of your clothing and your home, eating healthily, reducing stress, shopping wisely, setting goals and making decisions, planning ahead…and other skills. Once you have mastered these, you will find that independence becomes easier to handle.

Money Management 101

The big secret of managing money successfully is a very simple one-you can't spend more than you earn. This may seem kind of old-fashioned when credit cards seem to supply an inexhaustible stream of purchase power, but the bills will come due eventually and one of the worst money management mistakes you can make is to get a poor credit history. Credit bureaus (there are three big ones) keep track of the credit histories of anyone who has a credit card, taken out a loan, used an installment plan, bought a home, financed a car, gotten a student loan-anytime you have used credit to buy something or have taken a loan to finance a purchase. If you screw up your credit record, you would have trouble buying a home, leasing a car, renting a car, getting a credit card-even getting a job (many employers pull up a job-seeker's credit record to see how responsible the person is.) So, from the very start, you want to learn the skills you need to manage money wisely.

Keeping A Budget

A budget helps you keep track of how much money you actually have and how much money you can spend. A budget lists how much income you have (allowance, earnings, gifts, interest on savings and investments) and how many expenses you have (food, clothing, entertainment, gifts, transportation, donations, sports or youth group dues, activity fees and other costs) usually per month. Keeping a budget is a good lesson in discipline. You can keep track of your expenses on your computer or in a notebook. Make a column for your income and the categories under that and list what you have to start with and what you earn. Then, make a column for expenses and list all the money you spend each month. Total up your income and your expenses at the end of the month. You are hoping that your income will be higher than your expenses -then you will actually have money to save for big purchases, like a computer, a car, even college. If your expenses were greater than your income, then you are officially "in the red" and in debt-which is a place you do not want to be in-even for a little while. If you are spending more than you are making, you could:
1) Cut back on your expenses.
2) Find a way to earn more money.

Earning Money

Depending on the laws where you live, you usually have to be sixteen years old to get a part-time job after school or on the weekends in a store, for a business, for a public agency or at a restaurant. But you shouldn't let age limit you. Besides the traditional ways of making money, like babysitting or mowing lawns or shoveling snow, there are lots of creative ways you can cash in your talents for bucks!

For example, are you computer-savvy? Lots of adults aren't. Take advantage of that and start your own computer consulting, web site building, or desktop publishing business.

Do you like animals? Many pets need to be walked or taken care of when their owners are at work. Start a pet-sitting service.

Are you good at gardening? Do landscaping and gardening work-go beyond mowing lawns to designing gardens, caring for plants, plant-sitting when owners vacation, planting and tending vegetable gardens.

Do you have a lot of energy? Aim for one or two clients a week and clean their homes. You can make a lot of money in a few hours of hard work, and if you are responsible, you will get a lot of referrals. Clean as a team to make the time pass faster.

Are there a lot of kids home alone in the afternoon? Organize a "latch-key club" with games, snacks, and homework help for a few neighborhood kids.

Are you handy with tools? Start a handyperson service in which you get paid to do all the fixing and household chores that no one really wants to spend the weekend doing.

Are you artistic? Make unique jewelry, hand-painted scarves, greeting cards, scrapbooks, ties, caps, T-shirts, stuffed animals, baby clothing… the possibilities are endless.

Can you sew? Offer to do simple repairs and hemming.

Are you mechanical? Start a fix-it service and make repairs on small appliances and other machinery.

Are you athletic? Offer your services as a running or walking partner or aerobics leader. Your service will keep your clients motivated.

Can you cook? Offer to provide three meals a week to a family that is too busy to cook. Cater parties on the weekends.

The businesses that you can think up are only limited by your talents and your skills. Think about all the things that you are good at doing and all the knowledge that you have. Then get up and start a business.

Checking, Savings, and Money Market Accounts

While you may want to keep all your money in a sock under your bed, the best place for it is a bank. A savings account, a money market account, and a CD (certificate of deposit) all earn interest on your money. In the savings account you earn the least amount of interest, but you always have access to your money. In a money market account you may have to keep a certain balance or else pay a penalty and in a CD you will have a penalty if you try to withdraw your money. A checking account allows you to write checks which is handier than keeping cash. You can talk to your family or a bank's customer service representative about the types of accounts you are able toif you are not a legal adult. Also, different banks offer different programs so shop around for the best rates.

Investing in the Stock Market

You can also invest in stocks or mutual funds. These are riskier places to keep your money than in a bank-though you can also make more money with these investments. Get advice from your family and from someone who is a professional investor before stashing your money on the hot tip you overheard on the bus!

In Life Skills 102 you can look forward to reading about how to manage your time-one of the biggest issues for over-scheduled teens today.