Managing finances should be expensed through the 50/30/20 rule, writes this Grade 10 Pinetree Secondary student.
November is Financial Literacy Month.
Students from Pinetree Secondary School in Coquitlam share their thoughts about how they want to become "money smart" after recently participating in a financial education course by Edward Jones Canada.
The following submission was written by Shaye Tanaka in Grade 10.
To be a "money smart" teenager in Canada is to have the ability to make knowledgeable financial decisions.
Being "money smart" is a crucial life skill everyone should develop sooner, rather than later, so that we have the means necessary to be able to get through unpredictable financial events.
Knowing more financially causes less stress on a person. When one creates better habits early, they continue to follow them throughout life, which leads to more financially responsibility for the future.
When making purchases throughout one's life, it is crucial to develop the ability to determine the differences between your "needs" and "wants" and how to balance them.
Your "needs" are items that are essential for you to survive and must be a first priority. Your "wants" are items which allow you to go through life more comfortably, but aren't necessary.
"Wants" bring more happiness into your life and let you go through it with more enjoyment. For example, a "need" may be something like food or housing, while "wants" may be things such as the newest technology or traveling to other places in the world.
It is also important to remember not to impulse buy and to make sure to look for the best deals while shopping.
The 50/30/20 rule is one way to help manage and plan spending by operating in the following way:
- 50 per cent of money should go to "needs"
- 30 per cent of money should go to "wants"
- 20 per cent of money should go to savings
Following these money-saving techniques will also ensure that your credit history is in good standing, as that will decide whether or not financial institutions lend you money in the future.
A credit score is a numerical analysis of a person's credit worthiness and the likelihood of them repaying the loans back in a prompt manner. Having a bad credit score can make receiving a credit card and/or loans more difficult.
It is important to be a money smart teenager in Canada, as it sets us up to be more financially secure in our future by having a better understanding of how to budget and save money.
Doing this assists in creating plans that hold us accountable for our finances as well as aiding in accomplishing our goals.
