2. Financial management is all about thinking
for the future and making the right choice to
invest or spend.
We need to learn to plan wisely according to
your financial situation, your current
objectives and so on.
3. Compound interest is interest on interest. It
is the result of reinvesting interest, rather
than paying it out, which can lead to a
“snowball”. Compound interest is standard in
finance and economics.
This interesting phenomenon shows us that
we can let money work for us and accumulate
by itself if we invest wisely and invest as soon
as we can.
4. Therefore budgeting is the key to smart
financing.
A budget is a plan, an outline of your future
income and expenditures that you can use as
a guideline for spending and saving.
5. 1. Add Up Your Income
Make sure you include all sources of income
such as salaries, interest, pension, and any
other income sources.
For teenagers, we usually have some type of
allowance from our parents, or even incomes
from part-time jobs.
6. 2. Estimate Expenses
The best way to do this is to keep track of
how much you spend each month. The first
step is to sum up just where — and how
much — you think you are spending.
For teenagers, we really don’t need to cover
much expenses — maybe some on
entertainment. That’s why should focus on
saving up and preparing ourselves for a
better future.
7. 3. Figure Out The Difference
Once you’ve totaled up your monthly income
and your monthly expenses, subtract the
expense total from the income total to get
the difference. A positive number indicates
that you’re spending less than you earn –
congratulations! A negative number indicates
that your expenses are greater than your
income and gives you an idea of where you
need to trim expenses and by how much.