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Teen Money is all about learning to become a more financially independent young adult. One of the hardest parts of being a teenager is communicating with adults effectively about most things, let alone the subject of money management.
The manuals we are currently working on aim to help bridge that gap by introducing consistent ways in which Parents and Teenagers can benefit from simple money management techniques that will help prepare them better for becoming more financially independent from the commonly referred to "Bank of Mum & Dad".
With regards to the current climate of uncertainty of the "traditional" path of life, go to school, get good grades, get a good job with prospects, buy a home of your own etc etc, it would be easy to become depressed at the prospect of never owning a house, or expecting anything other than a debt filled future.
Remember there is NO Financial Education Taught in school, it is up to you or your parents. If you are smart, you will add an extra study class or two to your week and make some great reading choices to further your financial education as well as your general one. Some suggestions are to the right of this page.
But there are plenty of young people "bucking trend" and using the Internet to forge a path in life for themselves. A positive role model would be Mark Zuckerberg ( 23 years old ) creator of Facebook, he's worth $ 700 million dollars and tops the young rich list.
There are plenty of others out there too, so far from being just another Teenager, if you are the type of Teenager with big ambitions and big ideas, then managing your money effectively should be top of your list.
Teen Money is all about staying positive about the future. There is such a lot of bad press about teenagers in this country at the moment, it can be too easy to ignore the vast majority of them, who are people growing up in the most expensive times in history.
If parents never take the time out to explain exactly where income comes from, it can be confusing as a teenager to suddenly find out the wrong way. If you have no idea about income, expenditure, mortgages, loans and credit cards by the time you reach the age of 18, you really do not stand much of a chance of making sense of student loans, savings and investing from that point on.
Where DOES money come from?
If you are anything like me, then you will have had a car in the drive with fuel in the tank, food on the table an in the cupboards, clothing and shows to wear plus more in the wardrobe, heating and lighting, a TV or two and a computer and the phone works when we want to use it. It can be quite a shock to suddenly find out that those things do not appear by magic, they are paid for with money.
It is a good idea to spend at least half an hour every month with your teenagers to educate them about money. Remember currently in 2008, the average deposit needed for a house is in the region of £27,000, so old ways of "never talking about money" are long gone, get up to date with some basics and FAST.
Types Of Income
There are actually three ways to earn money, going out to work and being paid for that work is the most visible and direct way, so it's the one that people think of first and it is the one that is likely to become more and more outdated as job security and long term career type jobs diminish.
The three basic types of income are:- EARNED INCOME : Earned income is money you get paid for working, it is when you exchange your time for money. When you have a job, you are usually paid a salary by the hours. It is paid directly to you in wages either every week or every month. This is the easiest way to receive money directly related to your time and effort. The only down side is that you are likely to run out of time, as you are tied to what you can accomplish in an hour and what someone is willing to pay you for that work.
PASSIVE INCOME : Passive Income is earned even when you are not physically doing any work. If you have never spoken to your teenagers about this type of income, it is probably because you are not aware of it yourself, or you associate it with something only rich people do. Passive income can come from houses or apartments you own that are rented to other people, the rent paid to you each month is passive. Passive income can also come from businesses that you have set up and have someone else run them for you, the profits generated from those ventures is passive. Passive income can also come from royalties, such as income from writing a book, a song, or a commercial appearance on TV Radio, or in a Film. Every time a book is sold, a song is sung, or a commercial is aired, the people who are involved usually get paid over and over again. Passive income can also be earned in a similar way using the internet, and there are many new ways being found every day. Rich people tend to be good at generating passive income, their money is working for them, while they are working in other ways, managing their businesses, portfolio or enjoying themselves.
PORTFOLIO INCOME : If you have money invested in paper assets (stocks, bonds or mutual funds) you have portfolio income. Portfolio income works on the same principle as passive income. Your money is working for you, even when you sleep.
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Teen Money; because life has never been more expensive than today
Question?
Who's the rebel?
Teenager who drinks too much, spends too much and disrespects society
Or
Teenager that studies financial education, budgets effectively, socialises with like minded go-getters and ends up owning the pub that the other teenagers spend their money in?
Ask yourself one simple question ... what do you wish YOU knew when you had the rest of YOUR life ahead of you?
Is this YOUR image of the youth of today?
Is this what you ASPIRE to be ?
Does your education include subjects that are NEVER taught in school, like WEALTH?
What if you knew what some other young positive role models from the UK had achieved?
Dean Hunt
& Michael Dunlop
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