BY MICHELLE MCCRACKEN AND ALEXIA OROSCO, Editors
A few years ago in 2008, the United States fell into rapid turmoil after the housing market crashed. As housing prices drastically dropped, unemployment rates began to climb, consumer confidence began to fall and income levels became substantially lower. Eventually over 3 million houses were foreclosed. This was later referred to as the Great Recession.
The recession not only affected the U.S. Out of the seven largest economies in the world, only two countries avoided recession in 2008. France’s economy contracted 0.3 percent in the second quarter, while China’s grew nine percent.
Although people today aren’t going through nearly as many financial problems as they did in years of the Recession, money continues to be a big issue or importance to a majority of the population. When money is given to teenagers, put onto a card, or thrown into someone’s savings account, spending money carelessly can become tempting.
“There will always be recessions as our economy goes through its natural ups and downs. Our government will try to smooth out the ‘peaks and valleys’ while maintaining steady economic growth for the nation,” business teacher Doug McNally said. “Sometimes they will do the right thing and sometimes they will contribute to the problem. Differing opinions between and even within political parties as well as between and within branches and agencies of the government will always make it difficult to make the right decisions for everyone.”
Often enough teenagers complain about being broke. The reasons could be anything from excessive shopping to going out too much, or simply not having an income. High schoolers should be aware of easy ways to save money while still being a teenager.
At some point in time, a teenager has wanted something that they just haven’t had money for. While some high schoolers may just get money handed to them from parents, not all teenagers have it that easy. On top of that, when teenagers finally earn money for certain things, they often don’t spend it as smartly as they should.
“Teenagers should spend their money wisely by buying what is needed and what they can afford. They should not buy on impulse,” McNally said.
According to the National Consumers League, 55 percent of teenagers say that they work mainly for spending money. Another 35 percent save their earned money.
There are several easy ways for teens to rev up their savings. The Federal Deposit Insurance Corporation (FDIC) recommends saving for a specific goal. Teenagers should take into account any major future expenses, such as college costs and car payments. The FDIC also recommends developing an “emergency” fund for any difficult times.
“Individuals should budget or plan on their own for tough times. During times when all is going well, people should avoid ‘over spending’ and put some of their money aside for tougher times,” McNally said.
“They could save money by having a budget,” junior Jess Coia said.
The FDIC also encourages saving money regularly. Routinely saving makes it easier to let go of hard earned money and invest it in savings. The continuous adding of money and compounding interest adds up after a decent amount of time.
“Teenagers in high school should set aside money for the major purchases in their future. They should save now to purchase their car rather than financing it. They should save now to help pay for their post-secondary education,” McNally said.
When money is on a card, whether it’s credit or debit, it can be easy to lose track of how much money someone really has. Often for high school students, parents are the ones paying for whatever expenses arise.
According to NCL, 63 percent of teenagers say that parents are where they get most of their information about money and financing. Parents are a good source, but teens should also learn on their own the difference between debit cards and credit cards.
Debit and credit are completely different concepts, which some teenagers may not think about while spending money. By owning a debit card, a person gets that money directly put into their account, and can spend it as their own without worrying about future charges. On the other hand, an owner of a credit card can spend a countless amount of money without actually owning it, but then eventually have to pay it off. Credit cards can result in problems for some teens rather than debit cards, because they may lose track of how much money they’re really spending.
“I have a debit card, I think it’s better than a credit card because your parents can just put money on it,” Coia said.
“In terms of cards, a credit card is essentially a loan and debit card works like a check. A credit card is a revolving credit account. The user ‘charges’ purchases on the card with the promise to pay the amount back per the terms of the credit card agreement,” McNally said. “Debit cards deduct your purchases or withdrawals directly from your checking account.”
Although teenagers may be tempted to spend their allowance or salary carelessly, having a budget and knowing how to spend sparingly could lead to a better financial future for themselves and, in the long run, the country.