What's the Main Idea?

 

In the article titled "Budgeting: For Young Adults", the author Ralph Zubiate makes the point that learning budgeting as a teen develops important skills for understanding money. Zubiate basically is saying that wanting to learn how to manage your money as a teen will ultimately ingrain healthy habits as an adult. Budgeting, as discussed in the article, helps and shows teens how to differentiate things from needs and wants. You may want to buy a video game, or the most recent headphones, but with a budget, you can see whether your financial goals and priorities can support those purchases. Budgeting enables you to prepare for unexpected expenses like a phone breaking or school functions because it guarantees having those funds in place, if necessary.

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Another interesting point is that budgeting encourages goal setting and decision making. Budgeting allows teens to plan for goals. These can be short term (e.g visiting a concert at the penny arcade or buying a new phone) or long-term goals (ex: attending college or purchasing a new car). Learning how to make a plan to spend money on something develops responsibility and thoughtfulness, both important life skills. 

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Inferred in the article is that budgeting creates an opportunity for youth to learn financial independence. For example, the ability to learn how to manage money in a responsible manner allows youth to mentally prepare for adult responsibilities (ex: paying bills, saving for larger purchases, making a decision when it is time for a loan). Budgeting also diverts into problem solving in the sense that by allocating your income or cautiously spending, it ensures that adolescents can adjust or make good alternatives when unexpected problems occur.

 

Why is this important for teens?

 

Budgeting is essential for teens as many earn their first money from an allowance, part-time job or gifts. It is easy to spend money without a budget/plan, which does not allow you to save for bigger, more meaningful goals. A budget gives financial priorities, forces you to save for immediate and long-term goals, and prepares you to have the habits to be financially independent.

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Real-Life Example: Let's say a teen earns $100 a month from a part time job. Without a budget, they might spend their money very fast, unintentionally. A budget may have the following allocation: $50 for necessities (school supplies or food), $30 to save (for a phone, concert, or college fund), and $20 for fun (snacks, decorations, or socializing) - 50/30/20 method explained in the article. This allows the teen to allocate their money in one budget by eliminating the impulsive spending, limiting financial worries, and helping the teen achieve their goals.

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Key Vocabulary Connotations:

Income: Money received, especially on a regular basis, for work or through investments.

Expense: The cost required for something; the money spent on something.

Savings: An economy of or reduction in money, time, or another resource.

Budget: An estimate of income and expenditure for a set period of time.

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