Managing Your Money:
Why it is Important to Start Young
An Example
Of How To Rework Your Budget
Let's say Joe works
part-time at a grocery store while he attends high school. Joe
ends up taking about $600 home each month from his paycheck.
Joe's mandatory expenses
each month are $175 car payment and $98 for car insurance. His
flexible expenses are $50 for college savings, $30 for his cell phone,
$100 for food, $40 for gas and oil. Joe's optional expenses are $40 for
clothes, $20 for the movies, $30 on recreation. In a typical month, Joe
is left with $17 after expenses.
Adjusting Joe's
Budget
Let's say this month Joe
picks up $45 in overtime (additional income) and his expenses change.
His car insurance goes up to $118. Joe spent only $90 on food, but paid
$25 at the movies and for pizza with his friends. He spent $30 for a
birthday present for his mom (an unbudgeted expense).
How did Joe do this month?
His extra income allowed him to spend more money, but he still didn't
spend more than he earned. Good going, Joe!
Why Credit Card
Companies Want Teens
You've probably received
lots of mail from credit card companies. More and more teenagers are
being offered credit these days-despite the fact that most full-time
students don't have regular income.
Teens and young adults are
also solicited by credit card issuers because:
- College students spend a lot of money on things like tuition, books,
late night pizzas, and t-shirts. Often, these expenses are charged to
credit cards.
- College students generally have high future earning potential, as well
as high spending potential.
- Several studies have found most people hold onto their first credit
cards for up to 15 years.
- Aggressive marketing techniques have paid off for the credit card companies.
An estimated 80% of today's college students have credit cards.
