Here’s how Teenagers can Build a Solid Foundation
Teenage is probably the most powerful phase in life. It is the stage of life that determines the kind of person one evolves into during the coming years of life. Inculcating healthy financial habits during teenage helps young minds to understand the importance of investment and savings. Teenage plays a crucial role in determining your financial stability in the future.
It is the responsibility of parents and financial institutions to teach teenagers the significance of financial planning in Dubai. Regardless, of the fact that your kid earns an income in the form of a part-time job or an internship, it is vital to educate your children about the importance of financial planning and management in Dubai.
If you are a teenager or a parent with teenage kids looking forward to educating yourself or your children about financial planning in Dubai, you are just in the right place. In this thread, we’ve come up with some of the best-handpicked tips and techniques that will help you and your children to build a solid foundation right from their teenage.
Understanding the Value of Time
Most of us during the teenage do not make a lot of money, which does not affect our lives since we are dependent on our families for managing our expenses. The major detrimental factor to focus upon in the teenage is time instead of money. To understand the importance of time let us consider an exemplary situation.
Suppose you’ve started a part-time job after your exams at the school and you earn AED 10000. You invest the earned amount at a rate of interest of 5% and do not contribute to the investment for the next 30 years of your life. At the end of 30 years, that amount would compound eventually building a huge amount.
Without any investment throughout the course of 30 years, you’ll manage to grow your earning substantially. However, in real-time, you’ll contribute to the savings allowing it to grow to an even bigger amount. Hence it is evident that time is one of the most important factors to consider while making investment and savings. The earlier you start to save and invest the stronger will be your financial stability during the later years of life.
Differentiating between Wants and Needs
Not just teenagers this where even adults can make wrong extremely wrong decisions. The first and foremost step in teaching teenagers about the importance of financial planning in Dubai is making them realize the importance of money. Teaching them the importance and value of money will build a healthy foundation for a better future.
This lesson in the later years of life will help kids to understand the difference between wants and needs which is crucial. We all are aware of the fact there is no end to wants therefore it is important to distinguish between needs and wants. Needs include shelter, food, clothing and want include all the unnecessary expenses that can be avoided. The best way to differentiate between needs and wants is to ask yourself that is this something I really need? Or do I want it? Once you start analyzing and assessing your expenditure you’ll learn to differentiate between needs and wants.
Saying No to Debts
Debts are probably the most hazardous element that can cause immense damage to your financial instability and thereby affect your long term goals. Getting an attractive credit card with a high credit limit might give you a sense of euphoria however, very often we fail to asses the kind of impact it has on our long term financial stability.
Credit card companies charge heavy rates of interest that can disturb your financial well-being and in the worst case scenario might land you into a debt trap. Therefore it is crucial for teenagers to stay from unwanted debts as frequently opting for debts to cope up with financial needs leads to habit formation which is extremely perilous in the future. Apart from credit cards, one should also stay away from other debts to ensure a smooth and healthy financial status throughout their lives.
Keeping a Track of the Expenditure
Very often, our lives in teenage tend to move on auto-pilot modes. Our expenses make our way without any analysis coupled with a very limited income which can lead to irresponsibility and eventually the development of wrong financial habits. An important pillar of financial planning in Dubai is centered around keeping a well-structured track of all the expenditures.
Doing this will allow you to strategically assess unwanted expenses and the scope of savings. Furthermore, it opens up various possibilities that allow teenagers to save and invest the surplus money into investment plans of a scheme instead of spending them on unnecessary wants.
Budgeting and tracking expenses are thoroughly interconnected to each other. Once you start to keep a systematic track of all your expenditure you can identify the scope of reducing unwanted expenses which are termed as budgeting, Technically, budgeting refers to creating a blueprint of all the places where you are planning to spend to ensure that you don’t spend too much or you do not spend unnecessarily.
Build a plan, write down all the places where you are planning to spend money and try to follow the plan strictly. Doing this will inculcate financial discipline within you which is an integral component of financial planning in Dubai.
In a Nutshell
According to financial experts, teenagers who master the art of financial planning in Dubai or anywhere in the world tend to make better financial decisions during the course of their lives in comparison to others. Lack of healthy financial habits may have negative impacts in the future which will eventually lead to a decelerated pace of achieving goals in life. Hence, it is clearly evident that teenagers should start to involve themselves in healthy financial habits to build a better financial future.