TEENS AND THEIR FINANCES

TEENS AND THEIR FINANCES!

Today, teenagers are contributing significantly to the growth of the Nigerian economy. They have access to much more money than previous generations and are better placed to lead more successful lives financially. They spend, save, earn, and borrow millions of naira each day and are responsible for the success of many businesses today. Many of the spending or savings habits that teenagers develop are most influenced by their peers, parents and the media and unfortunately, too few teenagers are exposed to a curriculum
in financial planning. Teenagers have developed the grandiose lifestyles of many adults as they insist on designer item and have little or no urge to begin to contribute towards their future financial success.
Although the dreams of today’s teenagers are very tall, many have failed to appreciate the need to work hard and to save regularly towards those dreams. The question “what can I do from now to achieve my dreams” is left unanswered till late. While skills and talents are left in teenagers untapped, saving and planning for financial success are left entirely to parents to handle. It is imperative that planning for your children is part of your overall financial strategy and introducing children to the principles of good financial planning at an early age keeps you safe in the knowledge that the wealth that you are creating can continue into future generations. Teenagers who are able to get lessons in financial planning, and money management are more likely to become adults who can make sound financial decisions, avoid excessive debts and manage income and expenses to reach their financial goals. Indeed, equipped teenagers are Nigeria’s hope to sustainable development.

WHAT CAN I DO IN MY YOUTH TO ENSURE THAT I AM WEALTHY?

1. Increase Your Knowledge Of Investing. Teenagers should be encouraged to read books and articles on money management and finances. An example of such books is “Rich Dad, Poor Dad” by Robert Kiyosaki, in which he advocates financial independence by means of investing. Knowledge is progressive and the more we acquire, the better prepared we are for the challenges that life brings.

2. Curb Frivolous Spending. We can choose to spend, save or invest our money. Spending is inevitable but basic questions must be asked before money is spent. Some of the questions that we might consider before buying/spending (irrespective of our ages) are:
Why do I want the item?
Will I use it more that once?
Do I really need the item I want to buy?
Will a different purchase make me just happy?
How will this purchase affect my long –term financial goals?
Is the price reasonable or can I get it cheaper / on sale?
Will I be better of saving /investing the money?

3. Avoid Peer Pressure. Many teenagers want things because their peers have those items. If the questions above were considered honestly, many purchases may be averted. Avoid shopaholic friends, they probably have more money than you or are not aiming at the great future that you are. Your long term goals are very important and people always want to associate with others who are successful, so become successful yourself and people would want to adapt to your style. Forget about what is in vogue, style constantly changes. Buy an item because you like it, can afford it and it’s purchase does not diminish your ability it save. Do not try to keep up with the Jones’, they will always be there.

4. Get Holiday Jobs. Holiday jobs provide income, which could be invested long term. Teenagers would get the opportunity to earn money and would have the choice to spend, save or invest portions of that income. This teaches teenagers how to manage their own money based on their needs, wants, and goals. Holiday jobs also give teenagers the opportunity to try out what they could be doing for the better part of their lives. I know of a girl who wanted to become a Doctor and after working at a hospital during a particular summer holiday, changed her mind. She fainted at the sight of blood and and found the smell of medicine overwhelming. Her experience helped to set her

5. Use Your Skills And Talents. Athletes today give us a clearer picture of the opportunity available to those who use their skills / talent. I doubt that as a little boy, Kanu Nwankwo imagined that his skills would make him a phenomenal success, his talent would be the gateway for his fortunes and his passion for children would make him a mentor to many people. Teenagers are pregnant with potentials. Some of them can bake, cook, play the piano, type, ride horses, braid hair, draw, paint, the list is endless. Teenagers should not bury their skills or wait much longer to use them; they should be encouraged to develop and to earn income from the talent they have.

6. Get Started. So, what is holding that teenager back? Parents should encourage their children not to consume all the money they receive either as allowances or as income. A portion of the money that children receive should be invested. Parents and guardians should also give gifts of investments rather than toys. Monetary gifts should be invested, as children do not need to use these in the short term.

7. Invest. Do something! There are so many more investment opportunities in the market place than one can decide to survey. However little money is available to each, there is an opportunity to invest your money without hassle. There are short-term instruments mainly in the money market and long- term instruments in both the capital market and in real estate. Begin with a saving account and then invest at regular intervals. Every bank has a savings product for children and parents should be encouraged to save for their children. At IBTC Chartered Bank, we have an account called “The IBTC CHESS”, which is a children education savings scheme (money market instrument) offering a higher interest rate than is obtainable on an ordinary savings account. With as little as N5, 000, children can open the IBTC CHESS which allows them multiple withdrawals. IBTC has capital market instruments, which children can invest in. These are essentially long term instruments such as “The IBTC CHESS Portfolio”, which is a portfolio of stocks held in trust for children and managed by IBTC Asset Management Limited on their behalf. IBTC also provide mutual funds – The IBTC Nigerian Equity Fund and The IBTC Ethical Fund, which are investments vehicles that pool investors fund to purchase a variety of securities with each investor owning units (a part) of the entire investment portfolio. Children and teenagers may invest in these instruments for the long term growth of their funds. These investments would give them both growth and income on their funds.
The benefits of investing in these capital markets instruments like the mutual fund, which IBTC offers, are numerous. Among them are: Full-time professional management of fund; Diversified portfolio (between different asset classes); Liquidity; New investors can join easily; Convenience; Easy exit; Ease of monitoring investment (availability of on-line portfolio viewing) e.t.c.

Conclusion. Wealth must be trans-generational. It is an absolute waste for parents to work hard, invest so much money and not equip their children with the tool of financial discipline.
While teenagers seem inexperienced, the foundations for their financial success can be laid now. From little savings and investments, millions of Naira can be returned and financial success can be promoted. Teenagers have longer time frames for investing but waiting one year could be the difference between being wealthy and just comfortable. Investing early could set teenagers above their peers. Teenagers have money, talents, and dreams; they should be encouraged to use their money to set the stage for their success, their talents to create wealth and their dreams to become more successful than their peers. Teenagers should actively participate in investing; they should use their finances wisely.