Money Management 101

Like a lot of things you’ll read about on this website, money is an important issue for young adults. Understanding what it is, how it works and learning how to manage your money is critical for living independently after high school. Financial planning isn’t just for people with mortgages, kids and stock portfolios. The sooner you develop a sense of how money works, the better, as these skills will help you manage potentially limited financial resources and understand your finances independently.

Tips to learn about managing your money

• Make and follow a budget: a budget is a way to keep track of how much money you have to spend and how much you will be spending on various things. Discuss with your parents what money you have to spend on a weekly basis and what you will be responsible for paying for yourself. This discussion and managing some of your own expenses are a great way to learn about managing your money.
• Some money is for saving and some for spending: If you are earning money through working or receiving gifts from family for occasion like birthdays, it is really good to discuss which money might be used now to get things you might want and which might be saved. You might want to save up to get some larger item you’ve been wishing for. This requires learning patience. You may also want to consider starting some longer term savings if you have enough money to do this. Life will become more expensive as you go along and if you have some money saved this could give you a head start.
• Try to live within your means and beware of advertising: we are constantly battered by advertisements telling us our life will be a failure without a particular pair of shoes or the right brand of soap. Think about how much money you really have to spend and try as much as you can to resist the pull of advertising.
• Remember that stuff you put on a credit card is not free: credit cards and borrowing money in general may make it seem easy to buy things but don’t ever forget that you will need to pay back credit cards and other loans (money you’ve borrowed). And often borrowing to pay for something makes the item even more expensive. Read more about credit and debit cards here.
• Look here for more about how to manage your money.
• Interested in learning more about the history of money? Look here for information.