Today ZenHabits has an article about dealing with money in a relationship that I recommend people read. I think these are good things to think about when talking about money with anyone, whether it’s your boyfriend or girlfriend, your best friends, your parents, or yourself. The important things include discussing priorities, being honest about what you’re spending and what you want to spend money on, and planning. Oh, and talking. Talking is important. Even talking to yourself (by way of making lists and reviewing what you’ve spent money on and what you want to get and how much it costs).
When you’re a teen these days you start to receive offers for credit cards in the mail. I recommend you accept one and start learning about how to manage money. If you take a part-time job so you actually have some money to play with, that’s even better. Having a credit card is useful for a few reasons. It’s convenient, the bill gives you a way of reviewing your expenditures that spending cash doesn’t offer (unless you keep receipts for everything), and using credit improves your credit rating if you do it responsibly, which will help you qualify for loans in the future.
The downsides are that you have to pay your credit card bill (at least the minimum payment) every month, on time, or you will get charged fees and your interest rate will go up. And you will get charged interest for any balance that you don’t pay off in full each month. Also, having a credit card can mean that you are able to spend more money than you have to spend, more than you can afford.
Most people would list that last as a positive aspect of credit cards, but really it’s a very dangerous thing. If you get in the habit of spending more money than you have, or than you’re going to have by the time the bill is due, then you may fall into the trap of maintaining credit card debt. Consumer debt is costing millions of people millions of dollars per year and making bank executives richer, all because people don’t learn to save and then buy instead of borrowing against money they don’t yet have. Then once you have debt it’s easy to just keep adding to it while ignoring how much it’s really costing you. In addition to the actual cost of fees and interest rates, there are the opportunity costs of what you could have been earning on that money if you had posted it in a savings account or CD and earned interest on it and then spent it, instead of spending it first and then paying that interest to somebody else.
In general, you want to stay aware of what you’re spending and whether or not the money you spend today will frustrate you by preventing you from buying something more important to you tomorrow. Don’t just spend what you have while you’ve got it, plan. Open a savings account and keep money there until you are ready to buy it, instead of keeping it as cash, which is easy to spend without thinking. And be careful about debit cards. Overdrawing a bank account can wrack up fees even faster than not paying a credit card off, sometimes.
After you have a credit card for a year, request an annual overview from your credit card company, which can probably categorize your expenses for you and send you a report. Look at your expenses and be honest with yourself. If you’ve bought things you wanted and are happy about, and paid your bills on time and in full, pat yourself on the back. If your interest rate has gone up, call the company and ask them if they’ll change it back down. Often they will. All it takes is talking.
Being aware of your spending habits will also put you in a better position to talk to other people about them. If your parents or your partner criticize your spending, you can respond from a position of knowledge. And that can make it less difficult to talk about it. People avoid talking about money for all kinds of reasons, but you shouldn’t feel ashamed about it - don’t feel ashamed about having it, needing it, spending it, or saving it. But do be aware of your own and others’ values having to do with it. Figure out what your values, habits, and priorities are, and talk about them to the people who are important to you. They might even be able to help you achieve your goals, if you talk about them.