A High School Student’s Guide to Managing Finances

When you are a high school student, money matters are cool and important things. You think about earnings, jobs and what you can do with money. Here are some tips for you to enter that complex adult system.

There are a lot of jobs for high school student. But always remember your homeworks issue and government issue about young employment.

Now that you have some money, it’s time to think about what to do with it. I started a bank account when I got my first job. It’s not only a great way to start budgeting, but is also a convenient way to keep up with your money. Ask your parents, guardian, or a trusted adult where he or she banks. This is a way to do some research on which bank might be best for you. Also, your parents or guardian may have to cosign with you on the account, so it may be more convenient to bank in the same location. At many banks, students are eligible for accounts with free checking and a debit card. This could be a major factor when deciding which bank to choose.

A debit card and checks are good things to have. Today, debit cards are quickly replacing checks as the most popular way to access funds in your bank account. Still, there are pros and cons to each. When you have a debit card, because it is so easy to use, you may be tempted to spend a lot. You may not save receipts or keep an accurate record of your deposits and purchases. DO NOT fall into this trap. Receipts are the only way to make sure your records are accurate. What if your card was stolen or your account was compromised? You would never know or be able to prove your case if you didn’t have the appropriate documentation.

That leads me into the safety issue of debit cards. Be careful to protect your pin number and do not share it with anyone except maybe a parent or guardian. When you type in your pin, be careful to make sure that you do not show the card number or your pin number to anyone. You never know who is watching you, so keep the card in the palm of your hand or in your wallet until the cashier asks for it. Finally, when using the Internet to make purchases with your debit card, be careful. Never pay using a site unless it has a valid security certificate, which is indicated by a closed lock in the bottom right hand corner of the browser window. When entering your card number, double check to make sure it is correct. In order to ensure that no one can access your account information except you, be sure to log out of any site when you finish your transaction, and don’t forget to print or save your receipt. Keep your passwords private and hard to crack, i.e. don’t save them on your computer. Now that your checking account number can also be used for online payment options, you should be careful when using it too.

Another pitfall with checks is the infamous account “overdraw.” What this means is that you write a check for more money than you have in your account. NEVER EVER do this. Sometimes people will write a check for a few things from the drug store anticipating a trip to the bank before the check clears, but Murphy’s law (what can go wrong, will go wrong, and at the worst possible time) will always hold true in this case. Also, there is a hefty penalty from your bank and the merchant for a bounced check. Again, keeping receipts and always balancing your checkbook as you make your purchases (and checking them against your monthly statement) will prevent this. Usually, for a small fee, you can get overdraft protection for your account (which is an especially popular offer for student accounts). If you ever lose your checks or debit card, if they get stolen, or if you think your account has been compromised, report it to your bank immediately and work with them to get your account frozen and to get a secure account again. Some banks even monitor your account for you and report anything that may seem suspicious. Be sure to ask about this before you sign up for an account. Remember, services and fees differ from bank to bank.

There are many options for credit cards, which means that you need to do your research in order to find the one that is best for you. Consider getting a card that has some sort of rewards program. You can get cash back on purchases, airline miles, even money to use at amazon.com or Best Buy. As a student, never pay a fee for a card. Be aware of the interest rates on credit cards. They matter if you don’t pay off your balance monthly. Banks love to make credit card offers to students, but be a smart credit user. You don’t want to get a card just because it is easy to do, use it, never pay anything but the minimum balance, and thus be indebted to the bank or store for the rest of your life. You probably only need one credit card right now, and it needs to be one you can spend anywhere, not just at a particular store.

Also, NEVER spend more money than you have. If you do this, the interest you will have to pay on the balance can be very costly. Not only will this end up costing you more money, but it also hurts your credit rating, something that will follow you for the rest of your life. A good credit rating can come in handy when you are going to buy a car or your first home. The moral of the story is: don’t buy anything you don’t need unless you have the money (or have budgeted) for it. Always make sure your payment is made on time. Finally, the same safety rules that apply to your debit card apply to your credit card.

Benjamin Franklin said, “In this world nothing is certain but death and taxes,” and his quip is still true today. Taxes are a fact of life, and you should pay them or the IRS will eat you. You are obligated to pay taxes on income, whether it is cash or check, and your employer should pay taxes on you too. Make sure to check the tax laws regarding how much money you have to make/earn before you must file a return. At your age, you are probably not making enough and do not have complicated income sources and deductions, so it may be possible to do your taxes yourself, though you can get an accountant to do them. Sit down with your parents or guardian and fill out a sample form, then fill out the real one, copy it, and put it in a file. This file that you keep your tax forms in is also a good way to keep up with a lot more of your important papers, such as credit card and bank account information as well as your receipts and deposit slips.

Making a budget may sound like something for your parents to do, but it is actually important to start one when you get your first steady source of income and a bank account. Project how much you will spend in a month on everything from gas to a night at the movies. Then compare that to what you actually spent. From there, you can begin to project the things you may want in your budget. If you know that you want to go to a movie twice a month, you can earmark a specific amount of your income to go towards that. Do the same for all the things you want to spend money on, but prioritize your necessities, meaning that you need to allot money for them first then use any extra for nonessential things.

One thing that you may overlook but will want to include in your budget is a monthly deposit into your savings account. Begin saving for the future when you get your first job or when you have enough disposable income to have the ability to purchase anything other than the necessities. You can open a savings account from your bank (the one where you got your checking account) or you can open one at a different bank. Research options like the amount of interest you will earn, how often you will earn it, and how it will compound. By saving now, you can help yourself in the future. You may think that a new iPod is crucial now, but wouldn’t a payment on your first apartment be even better? One day your car will break down, your refrigerator will stop working, or your kid will want to go to college and you will be glad you had funds set aside.

Another way to make money is investing. There are many options for investing, for instance, stocks, CDs, and bonds. Stocks are long-term investments. Research companies that interest you that you believe in and support, and buy some stock. WARNING-there is some risk involved in the stock market. Bonds come in many forms from short-term to long-term investments, though if you get one for a short period of time, you can keep it and it will continue to earn money until you cash it in. Bonds are generally seen as not involving as much risk as stocks. Another no-risk option is a CD. Certificates of Deposit can be short- or long-term. You incur a penalty if you want your money back before the maturation date (specified at the time of investment). Once they mature, you can either take your money back, or you can reinvest it in another CD. Some CDs automatically renew unless you take action. Be careful to keep track of your CD investment rates and renewal dates. Remember that dividends and interest are taxable.

Another thing to keep in mind is the goals you have for your money. First, establish a short-term goal for your money. It is just fine to spend some of your money on fun things like video games or movie tickets. Just make sure that you don’t spend all of it there. You may know already that you want to go to college or technical school, and you will need to buy your own books or help pay tuition. If so, go ahead and set some money aside for that. You can even get a short-term investment with your money so it will be gathering interest instead of dust. You may also know that you want to pursue a graduate degree, or you want to rent an apartment or buy a house or car. Start saving now. The more you prepare now, the easier it will be for you to have a more secure and comfortable life later. Most students in high school have many of their basic needs provided for them. That will not last forever. So when you are deciding whether to get a car now, or continue to share with mom and dad, keep in mind your future and current needs. Don’t be blinded by today’s want that could turn into tomorrow’s nightmare.

Now that you know some of the basics of money management, go out there and do something to secure your future and reach your financial goals. Get a job, open checking and savings accounts, and consider some investment strategies. Be careful, though, and look out for yourself and your money. Having your own money and knowing what to do with it can be empowering. Just remember to do your research and be smart about the decisions you make involving your money. It is easy to spend, but hard to make. When it’s gone, it’s gone, and it goes really quickly.

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