You are on page 1of 12

Start Smart: Money Management for Teens

How to save, spend and protect your cash


Saving money may not be as much fun
as spending money, but its still
important to do. When you save your
money, you can use it later to buy fun
things (DVDs, video games, clothes)
as well as pay for serious things like
college or a car. FDIC Consumer
News, published by the Federal
Deposit Insurance Corporation, has
produced this guide to help teens get
good grades in money management.
Why is the FDIC, a government
agency best known for protecting bank
accounts, publishing a money guide
for teens? Its because consumer
education is a big part of what the
FDIC does to protect the public.
We know that the more people
understand how to save and manage
money, the more likely they are to
make smart decisions that affect their
finances and their future. In this guide youll find tips and
Although the FDICs financial
information on how to: Inside
education programs are mostly for Save and earn money;
adults, this special guide will help you Simple, Everyday Things You Can
Decide where to keep your money; Do to Save Money
learn how to make good decisions
about your money, right from the Spend money wisely; Page 3
start.
Borrow money; Shopping for a Bank Account
Teens have access to more money than Page 4
ever before, thanks to allowances and Protect against identity theft;
gifts and, for many, income from Risks, Rewards of Investing Money
Be charitable; and
chores, summer jobs or part-time jobs. Page 5
Teens also are becoming more Get more help about money matters
from government agencies, banks, 5 Ways to Cut Spending and
responsible for handling money and
businesses, professional associations, Still Get to Do and Buy Cool Things
making decisionsfor everything
from small, everyday purchases to schools, parents and other sources. Page 6
bigger-ticket items (such as a bike or a Theres also a quiz on the back page Borrowing Money: A Responsibility to
camera) to saving for college. that you can take to find out how Be Taken Seriously
This guide wouldnt be necessary if much you know about saving and Page 7
money really did grow on trees or if managing your money.
Be on Guard Against Identity Theft
The Bank of Mom and Dad was open If you consistently make smart Page 8
24 hours a day and offered unlimited decisions about your money, you can
withdrawals, but this is the real have more of it for what you truly What to Know About the FDIC
world, said Paul Horwitz, an FDIC need. We hope one of your first Page 9
Community Affairs Specialist. decisions will be to read our guide. 
Test Your Money Management IQ
Back Page

2 FDIC Consumer News Summer 2006


MONEY MANAGEMENT FOR TEENS

Saving Money
Simple, Everyday Things You Can Do to Save Money
Everyone can use a little guidance on Have a strategy for saving money. items you might want to buy within
how to save more money. Here are Every time you receive moneyfrom the next few months. With whats left,
some suggestions for simple things your allowance, a gift, a summer job keep some handy for spending money
you can do. or some other sourcetry to (maybe for snacks or a movie) and, as
automatically put some of it into we suggest on Page 9, also consider
Set goals. Saving money now for use
savings instead of spending it. That donating some of your money to
in the future gets easier if you know
approach to saving money is known as charity.
what you want and how much youll
paying yourself first.
need, said Janet Kincaid, FDIC Cut back, not out. Are you spending
Senior Consumer Affairs Officer. It Heres one suggestion: Consider $5 a week on snacks? If you save $2
helps to set savings goals you can putting about 25 percent ($1 out of by cutting back, after a year youll
easily achieve. If you want to buy a every $4) or more into savings that have $104 to put in a savings or
$500 item within the next year, plan you intend to let build for a few years, investment account that earns
to save $50 a month for 10 months, perhaps for a down payment on your interest.
which is just $12.50 a week. (Were first car. Separately you can save a
Want more ideas for saving more and
not including any interest you could similar amount of money for clothes,
spending wisely? Just keep reading. 
earn on your savings.) video games, electronics or other

Its Amazing: How a Small Savings Account Can Get Big Over Time
People who put even a small amount You can earn even more in compound If you instead put in a slightly higher
of money into a savings account as interest if you make deposits regularly amount$15 each monthyoud
often as they can and leave it and stretch to put in as much as you have a balance of $1,042 after five
untouched for years may be amazed at can and leave it untouched. See the years. But if you had increased your
how big the account grows. The chart below, which is based on a deposits to $50 a month, those extra
reason? A combination of saving as savings account started with $50 dollars plus the compounding of
much as possible on a regular basis and earning interest at a rate of interest would give you a balance of
and the impact of interest payments 3.5 percent each month. If you add $3,333 after five years. 
(what the financial world calls the just $10 each month, the account can
miracle of compounding). grow nicely to $714 after five years.
Heres how you can slowly build a
large savings account and experience
the miracle of compounding.
Lets say you put money into a savings
account that pays you interest every
month. After the first month, the
interest payment will be calculated
based on the money you put in. But
the next time the bank pays you
interest, it will calculate the amount
based on your original deposit plus the
interest you received the previous
month. Later, that larger, combined
amount will earn more interest, and
after many years it becomes a much
larger sum of money. The earnings are
called compound interest.

FDIC Consumer News Summer 2006 3


MONEY MANAGEMENT FOR TEENS

Where to Keep Your Money


Its usually best to choose an account
that takes very little money to start
Shopping for a Bank Account and involves low fees or no fees for
having the account. The fees charged
That Fits Your Style may be more important than any
interest you may earn on the account,
How to choose and use a checking or savings product especially if the account has a small
balance, said James Williams, an
You probably started saving money Easy access. Bank customers have FDIC Consumer Affairs Specialist.
years ago in a piggy bank and may different ways to send or receive their Keep your account records up to
now have another favorite place at moneyfrom going to the bank to date. Record all transactions
home to stash your cash. Thats fine writing checks or using the Internet deposits and withdrawals.
for smaller bills and coins, but what if from home. Some banks even have
youve got checks and large sums of branches at schools. If your parents Pay attention to your bank
money from birthday gifts or your approve, you also may want to start statements and immediately report
job? Maybe your parents (or other using a debit card to make purchases. any errors. If your account has a
trusted adults) have been keeping your It looks like a credit card but you minimum balance requirement, avoid
money in their bank accounts. Now wont pay interest or get into debt going below it. Your bank may charge
may be a good time to talk with them because the money is automatically you a fee, which would mean less
about opening your own bank account deducted from your bank account. money in your account.
which, if you are under 18, youll
Whether you open a checking or Use the account responsibly. Even a
probably have to do with their help.
savings account, it pays to be smart in free checking account can involve
There are lots of good reasons for how you choose and use the account. some fees, such as when you use
opening a checking or savings account Here are some suggestions: another banks ATM to withdraw
at a bank, including these: money, so do your best to keep costs
Shop around for a good deal before down. Also, never share your account
Safety. Money in the bank is better you open an account. Banks usually numbers, bank cards or passwords
protected against loss or theft than it is offer several accounts to choose from with friends or strangersthis could
at home. And if the bank has financial with different features, fees, interest give them access to your money. See
troubles and goes out of business, your rates, opening balance requirements more tips for avoiding fraud and theft
FDIC-insured money will be fully and so on. These accounts also may on Page 8. 
protected (see Page 9). differ significantly from bank to bank.
Some banks have special accounts for
More ways to save. Banks offer
teens and even younger kids featuring
several different ways to save money
parental controls on withdrawals.
and earn interest, which is what banks
pay customers to keep their money in
the bank. Its also less tempting to
spend your money if its in the bank
rather than in your room, said Sachie
Tanaka, an FDIC Consumer Affairs
Specialist.
One example of a common bank
product is a certificate of deposit,
which enables you to earn a higher
interest rate the longer you leave the
money untouched in the bank, but
these accounts usually require a large
amount of money (perhaps $1,000 or
more) to open. But many banks also
offer special savings accounts designed
just for young people and can be
opened with very little money.

4 FDIC Consumer News Summer 2006


MONEY MANAGEMENT FOR TEENS

Are You Ready to Start Investing? Understand the Risks and the Rewards
Company stocks and bonds can be attractive but, unlike bank savings accounts, can lose money

Investments can be attractive


alternatives to bank savings accounts
as a way to earn money. They come in
different varieties, and they may be
sold by banks as well as by brokerage
firms and other financial institutions.
You can make money on
investmentsoften more than you can
earn on bank deposit accountsby
selling them for more than you paid
for them or by earning dividends or
interest.
But investments also involve more
risks than bank deposits, including the
possibility that you could lose some or
all of your money if the investment
doesnt perform well.
Some of the more popular types of
investments to consider (with a parent
or guardian if you are under 18)
include:
Stocks, which are shares in the
ownership of a company. If the
company does well, you might be able insured by the FDICnot even the
to sell your stock for more than you investments sold at FDIC-insured
paid for it. But if the company does
Savings Bonds: A Safe and
banks.
poorly and you want to sell your stock, Affordable Investment Option
you might lose money. When youre willing to take some
risks for your money to growand U.S. Savings Bonds are investments
Bonds, which represent a promise you believe it wont hurt you if some that are backed by the federal
by a company or another organization or all of your money is lostthen government and offer a safe, easy
to pay a specific interest rate for youre ready to move from saving to way for teens (and anyone else) to
money you leave with it for a certain investing, said James Williams, an save for the future.
time period. FDIC Consumer Affairs Specialist. Savings Bonds are affordableyou
But before any young person wants can buy a bond electronically
Mutual funds, which are
to invest money its important for through the U.S. Treasury for as
professionally-managed collections of
them to consult with their parents, do little as $25 or purchase a paper
money from many different investors.
some research and consider getting bond from a local bank starting at
Each mutual fund buys a variety of
professional advice. $50. Savings Bonds also pay interest
stocks, bonds or other investments.
Some mutual fund accounts can be For more information about the rates that are competitive with
opened for an initial investment of basics of investing, including the other forms of saving. And you will
$250 or less. potential risk and rewards, start at the always get your money back, unlike
U.S. Securities and Exchange with stocks and certain other
You might find it interesting to invest investments.
Commissions Web site Beginners
in companies whose products or
Guide to Investing at For more information, go to
services you use and like. But its
www.sec.gov/investor/pubs/ www.treasurydirect.gov or call
especially important to remember that
begininvest.htm.  toll-free 1-800-4US-BOND,
investments involve risks and are not
which is 1-800-487-2663.

FDIC Consumer News Summer 2006 5


MONEY MANAGEMENT FOR TEENS

Spending Money
5 Ways to Cut Spendingand Still Get to Do and Buy Cool Things
Do you want to find ways to stretch
your money, so it goes farther and is Research before you buy,
there when you really need it? Here especially with a big
are some suggestions for knowing
purchase. Read reviews,
how much money you have, how
much you need for expenditures, and talk to knowledgeable people,
how to reach your goals by cutting and check other stores.
back on what you spend.
This comparison shopping
1. Practice self-control. To avoid
making a quick decision to buy can lead to tremendous
something just because you saw it savings and better
featured on display or on sale:
quality purchases.
Make a shopping list before you
leave home and stick to it.
3. Keep track of your spending.
Before you go shopping, set a This helps you set and stick to limits,
spending limit (say, $5 or $10) for what many people refer to as
impulse buysitems you didnt plan budgeting. Maintaining a budget
to buy but that got your attention may sound scary or complicated, but
anyway. If you are tempted to spend it can be as simple as having a
more than your limit, wait a few hours notebook and writing down what you Do You Really Need Those
or a few days and think it over. buy each month, said Janet Kincaid, $125 Designer Sneakers?
FDIC Senior Consumer Affairs A need is something you cannot
Limit the amount of cash you take Officer. Any system that helps you
with you. The less cash you carry, the live without. A want is something
know how much you are spending that would be nice to have but isnt
less you can spend and the less you each month is a good thing.
lose if you misplace your wallet. necessary.
Also pay attention to small amounts of A need may be a pair of sneakers,
For more guidance on spending money you spend. A snack here and
wisely, see the box on the right. but a want is the $125 pair
a magazine there can quickly add up, advertised by your favorite athlete,
2. Research before you buy. said Paul Horwitz, an FDIC explained Paul Horwitz of the
To be sure you are getting a good Community Affairs Specialist. He FDIC.
value, especially with a big purchase, suggested that, for a few weeks, you
look into the quality and the write down every purchase in a small When you can control your
reputation of the product or service notebook. Youll probably be amazed spending on lifes wants, youll have
youre considering. Read reviews at how much you spend without even more money available to save for
in magazines or respected Web sites. thinking. what you need in the future.
Talk to knowledgeable people you 4. Think used instead of new. Janet Kincaid of the FDIC offered
trust. Check other stores or go Borrow things (from the library or this tip: Take a day or two to think
online and compare prices. Look at friends) that you dont have to own. about any purchase that will cost a
similar items. This is known as Pick up used games, DVDs and music significant portion of your savings,
comparison shopping, and it can at second-hand stores around town. she said. If you really need to buy
lead to tremendous savings and the item, it will probably still be
better quality purchases. And if youre 5. Take good care of what you buy. there for you. If you dont need it
sure you know what you want, take Its expensive to replace things. Think but you still want it, perhaps you
advantage of store coupons and about it: Do you really want to buy can buy something similar thats a
mail-in rebates. the same thing twice?  lot less expensive and save the
remaining money for other things.

6 FDIC Consumer News Summer 2006


MONEY MANAGEMENT FOR TEENS

Borrowing Money
Getting a Loan: A Responsibility to Be Taken Seriously
Borrowing money can be a great way amount you can borrow), which can deducted. This kind of debit card isnt
to buy something now and pay for it keep you from getting deeply in debt. linked to your bank account. Instead,
over time. And yes, there are ways for just like with a pre-paid telephone
An alternative to buying with a
a teen to borrow money. But there are plan, there is a limit on how much
credit card is to use a debit card,
some important thing to remember if you may spend.
but this also comes with costs and
you borrow money. One is that
risks. A debit card allows you to make Keep in mind that many debit cards
borrowing usually involves a cost
purchases without paying interest or have fees that can add up quickly, so
called interest, which is the fee to
getting into debt because the money make sure you ask about fees before
compensate the bank or other lender
is automatically deducted from an using a debit card. Also, because a
when you use their money. This is the
existing savings or checking account. debit card can provide a thief easy
reverse of what happens when the
Again, if youre under 18, you may access to an account, you need to
bank pays you interest to put your
qualify for this card with a parent or protect your card and any PINs
money in the bank.
other adult. (personal identification numbers) that
Also, when you borrow money you go with it. 
One example of a debit card that may
are promising to repay the loan on a
be appropriate for teens 13 and older
schedule. If you dont keep that
is a pre-paid card that carries a certain
promise, the results can be very
value from which purchases are
costlyeither in late payments youll
owe or in damage to your reputation,
which means you could have a
tougher time borrowing money in the Small Payments Can Mean Big Costs When Borrowing
future.
Heres a situation you wont encounter for a few years, but its never too early to
Here are some of your options
begin learning how credit (borrowing) works. The main message is this: The
and important considerations.
longer you take to pay back what you owe on a credit card or loan, the more
For many teens, their first lenders youll pay the lender in interest charges. In particular, if you use a credit card to
are their parents. If your parents are make a major purchase and you only pay back a little of what you owe each
willing to lend you money, they month, it will take you a very long time to pay off the balance, and the interest
probably will set repayment terms costs can be shocking, according to Janet Kincaid, FDIC Senior Consumer
(how much to pay back and when). Affairs Officer.
They also may require you to pay
The chart below shows what an expensive purchase will really cost you if you
more money than you borrowed, as a
charge it and only pay back the minimum amount due each month, which may
bank would do when it lends people
be something like $20 or $30. In this example, a $500 stereo would end up
money and charges interest.
costing you about $900 when you figure in the total interest youd pay, and a
You may be able to get access to a $1,000 computer would set you back more than $2,100. If you instead pay back
credit card or bank loan. Under as much as you can each monththe entire balance, if possibleyou can really
most state laws, for example, you must limit interest charges.
be at least 18 years old to obtain your
own credit card and be held Years to Total
responsible for repaying the debt. If Pay Off With Minimum Interest Total
youre under 18, though, you can Item Purchase Price Monthly Payments Paid Cost
qualify for a credit card along with a Stereo $500 7 $367 $867
parent or other adult.
Computer $1,000 13 $1,129 $2,129
If you and your parents are
comfortable with you having access to Note: Years are rounded to the nearest whole year. These examples assume an interest rate
(Annual Percentage Rate) of 18 percent and a minimum monthly payment of the interest due plus
a credit card, there are cards designed one percent of the outstanding balance owed.
just for teens. One is a credit card
with a low credit limit (maximum

FDIC Consumer News Summer 2006 7


MONEY MANAGEMENT FOR TEENS

Protecting Against Fraud


Warning: Identity Thieves Target Young People, Too
Criminals use the Internet to obtain personal information and steal money

Youve probably heard or read about provide your birth certificate as proof
identity theft, which happens when of your age when you sign up for a
someone learns enough private sports league or get your learners
information about another person to permit, you shouldnt leave your birth
be able to withdraw money from a certificate in your locker at school or
bank account or obtain a new credit any other place that may not be safe.
card in that other persons name and
For more information about avoiding
use it for purchases that will not be
ID theft, visit the Federal Trade
paid for. But did you know that adults
Commissions Web site for consumers
arent the only people whose identity
at www.consumer.gov/idtheft. 
is being used by ID thieves?
Crooks target young people like you
even though you may be too young to other personal information. If you
have a checking account or credit card follow their instructions, the thieves How AreYou Saving Money?
on your own. They can use your hiding behind what you think is a Send Us Your Stories
name, address and Social Security legitimate Web site or e-mail can use
Number to open accounts. the information to withdraw or spend Calling all teens. Please help us
money in your name. help other young people be smart
While we dont want to scare you, we money managers. In 250 words or
do want to help you protect yourself Identity thieves are very good at less, we want you to tell us your
and your family from ID theft. pretending to be legitimate business story about how youre saving
people and government officials so more, spending less, shopping
Be extra careful with your full
they can convince others to share smarter, or otherwise managing
name and address, date of birth,
personal information or even send your money. Also tell us what
Social Security Number, bank
money, said Michael Benardo, youve learned from your
account information, phone
manager of the FDICs financial experience that other young people
number and your mothers maiden
crimes section. would find useful. Some of the best
name. This is personal information
that banks and other businesses use to Thats why you should never provide stories or tips may be included in an
confirm your identity, which can be personal information in response to a upcoming issue of our quarterly
very valuable to an ID thief wanting to phone call, e-mail or a pop-up ad on publication FDIC Consumer News,
pose as you to commit fraud. the Web, no matter how official it so that other students around the
may appear to be. country can learn from you!
Dont give out personal
information in response to an Never share your passwords or Please send your stories by e-mail
incoming call or e-mail from a ID numbers for your computer to communications@fdic.gov and
stranger or an advertisement on the with friends or strangers. Be put Savings Success Stories in the
Internet. For example, beware of especially suspicious of new friends subject line. If you dont have access
what law enforcement officials call youve met through the Internet, such to e-mail, write a letter to the
phishing, a type of identity theft in as through a Web site where people FDIC, Office of Public Affairs,
which criminals use fake Web sites and can post information about themselves 550 17th Street, NW, Room 7100,
e-mails to fish for valuable personnel and can contact others through that Washington, DC 20429. Dont
information. site. These people could be fraud worrywe wont publish names
artists. without permission. But we do ask
In the typical phishing scam, you that, when you write to us, include
receive an e-mail supposedly from a Dont leave your birth certificate your name, address and phone
company you may do business with or or documents with your Social number (in case we need to ask you
even from a government agency. The Security Number unprotected at a question), and your age. Send us
e-mail describes a reason you must home, at school or anywhere else. your success stories today!
resubmit bank account numbers or For example, while you may need to

8 FDIC Consumer News Summer 2006


MONEY MANAGEMENT FOR TEENS

Banking Basics
The FDICWho We Are and Why You Should Know About Us
You probably know something about The FDICs primary job is to make the community. Banks make this
the FDIC from your parents or sure that, if a bank is closed, all of the money available to other people, in
teachers, our signs at banks around banks customers will get their the form of loans, so they can buy a
town, or perhaps radio ads from banks deposits backincluding any interest home, pay for college or start a
that end with the familiar words theyve earnedup to the insurance business, Brown explained.
member FDIC. But how much do limit under federal law.
you really know about what the FDIC But there is more to the FDIC than
does and how we protect you and your In the 70-plus years since the start of being ready to protect depositors
family? the FDIC, we have responded to from bank failures. For example, the
about 3,000 bank failures, and we are FDIC also is one of five federal
The FDIC thats short for Federal proud to say that no depositor has lost a regulators of banking institutions in
Deposit Insurance Corporationis single penny of insured money. the U.S., and together they make sure
part of the U.S. government. The that these institutions operate safely
FDIC insurance means that you
FDIC was created by Congress in (which helps prevent bank failures)
dont have to worry about whether
1933 after a terrible economic period and obey certain consumer protection
your money will be safe, said FDIC
called The Great Depression when laws (such as those ensuring that
Chief Economist Richard A. Brown.
thousands of banks shut down and people are treated fairly when they
And by protecting depositors, he
families and businesses all across apply for a loan).
noted, FDIC insurance also gives
America lost money they had people the confidence to keep their To learn more about the FDIC, start
deposited in those banks. money in banks, and thats good for at our Web sitewww.fdic.gov. 

What Do Banks Do? making home loans. To keep things


simple, weve used the word bank in This FDIC Special Guide
Banks are private, for-profit this guide to refer to all of the various
May Be Reprinted
businesses that offer a variety of types of FDIC-insured banking
services to the public. They provide a institutions. The FDIC encourages schools,
place to safely store your money in financial institutions, government
Most but not all banks and thrifts agencies, the media and anyone else
FDIC-insured checking and savings in the U.S. are insured by the
accounts until you need to take the to help make the tips and
FDIC. One way to check whether information in this special edition
money out. Banks enable customers to an institution is FDIC-insured is
write checks, pay bills or send money of FDIC Consumer News widely
to call the FDIC toll-free at available to teens and their families.
to other people. They also make loans 1-877-275-3342.
to people and businesses. The newsletter may be reprinted in
In addition, you may have heard whole or in part without advance
Lending money is one of the ways about credit unions. These are not-
that a bank earns money. And where permission. In addition, the FDIC
for-profit financial institutions that offers this special edition online in a
does the bank get the money to make are owned and operated by their
loans? Mostly, it uses the money that PDF version at www.fdic.gov/
members, who are usually people who consumernews that looks just like
customers have deposited into have something in common, such as
checking and savings accounts, while the printed newsletter and can
the same employer or occupation. You easily be reproduced in any
ensuring that those depositors can still have to become a member of the
get their money back when they want quantity. Space on the back page of
credit union to keep your money the PDF version also was
it. there. Deposits at credit unions are intentionally left blank so that an
Savings banks or savings and loan insured by another federal organization could add its name,
associations (also known as thrift government agency called the logo, a special message and/or
institutions) are also FDIC insured; National Credit Union mailing information.
their main business usually involves Administration. 

FDIC Consumer News Summer 2006 9


MONEY MANAGEMENT FOR TEENS

Extra Points
Another Good Use of Your Money: Helping the Less Fortunate
You may think the most important Coordinate with friends and parents
reason to save and manage money is People who give generously on a lemonade sale, car wash, a toy or
to take good care of yourself. It is, but of their time and their food collection, or some other event
you should also consider using some for a local charity.
money get tremendous
of your money (and some of your Volunteer to mow the lawn, rake
time) to help others less fortunate amounts of satisfaction
leaves or handle another chore for an
than you in your town or around the in return and have ill or elderly neighbor.
world.
a better appreciation of Help your parents when they
People who give generously of their volunteer for a good cause or donate
time and their money get tremendous what they are fortunate
items to a charity.
amounts of satisfaction in return, enough to have.
said Liz Kelderhouse, an FDIC Participate in a walk or run that
Community Affairs Officer. Youll Donate part of your allowance or raises money for a charity.
feel great knowing youre making a gift money to a charity you admire.
Need more ideas or direction? Start
difference, and youll have a better
Ask friends and family to donate to by talking to your parents and other
appreciation of what youre fortunate
a charity instead of giving you family members. Also, your city or
enough to have.
birthday or holiday gifts. county government may have Web
How can you get more involved sites that list local charities and
sharing your time and money with Join or start an organization at volunteer opportunities. 
others? Here are some possibilities: school or in your community that
helps others.

Gift Cards Are Great But Beware of Risks and Costs Getting a Job: A Way to Earn
You probably love getting gift cards Kincaid, FDIC Senior Consumer
and Learn at the Same Time
for your birthday or other occasions Affairs Officer. Thinking about getting a job to
so you can pick out exactly what you earn a little extra money? Ask your
Find out if there is an expiration
want at the store. Gift cards also are parents first. If the answer is yes,
date. Gift cards arent exactly like
easy to buy and give to friends and its usually best to start with odd
cashthey usually cant be used
relatives because theyre widely jobs for friends and neighbors.
indefinitely, advised Kincaid. You
available at stores and even at banks. Think about your talents. Are you
dont want to put gift cards away
But while gift cards may seem to be good at playing the piano or solving
and forget about them because, if
the perfect gift, they also can come math problems? Maybe you can
you let them expire, you could lose
with potential risks and costs. be a tutor. If you love animals,
the entire balance on the card.
Whether youre giving or receiving maybe you can get paid to walk
a gift card, remember this: Immediately report a lost or dogs or pet sit. If you prefer to be
stolen gift card to the card issuer. outdoors, consider mowing lawns
Watch out for fees. You may be Some companies will replace a lost or washing cars.
charged a fee for purchasing a gift card (for a fee), others may not.
Eventually your parents may agree
card. You also may have fees
If you have a problem with a gift its time you took a real job in the
deducted each time you use the card
card that you cant solve by summer or after school, which can
at a store or restaurant. Or, you may
talking to a store employee, be a great way to learn about the
be charged fees for not using the
consider contacting your state working world and handle new
card, perhaps $1 or more each
governments consumer protection responsibilities.
month after going a year or so
without making a purchase. When office, which will be listed in your
a fee is deducted, thats less money local phone book or other
for you to spend, said Janet directories. 

10 FDIC Consumer News Summer 2006


MONEY MANAGEMENT FOR TEENS

How to Learn More FDIC


Consumer News
Sources of Help and Information About Published by the Federal Deposit

Money Matters for Teens and Families Insurance Corporation


Sheila Bair, Chairman
The FDIC offers a variety of organizations, promotes financial DJ Nordquist, Director, Office of Public
assistance to help consumers education for students in kindergarten Affairs (OPA) and Deputy Chief of Staff
understand how to handle their money through college. The Web site at
Elizabeth Ford, Assistant Director, OPA
and resolve complaints. Start with the www.jumpstartcoalition.org offers
consumer information on the Web site extensive information for students, Jay Rosenstein, Senior Writer-Editor,
at www.fdic.gov, including the parents and teachers. You might want OPA
Summer 2005 issue of FDIC to try Jump$tarts Reality Check, an Mitchell Crawley, Graphic Design
Consumer News, which was written online calculator that asks you
for high school and college students questions about your dream life and FDIC Consumer News is produced
and other young adults but may be then tells you how much income you quarterly by the FDIC Office of Public
useful to many teens. The FDIC also will need to support that lifestyle. Affairs in cooperation with other
Divisions and Offices. It is intended to
has an educational page called Also available is a listing of various
present information in a nontechnical
Learning Bank that primarily helps types of materials, many of which are
way and is not intended to be a legal
young kids find answers to common available free of charge.
interpretation of FDIC or other
questions about the FDIC and
In addition, FDIC-insured banks, government regulations and policies.
banking. You also can get answers to
other financial institutions and Mention of a product, service or
questions by calling the FDIC toll-free company does not constitute an
professional associations have
at 1-877-ASK-FDICthats 1-877- endorsement.
financial education Web sites for
275-3342Monday through Friday
young people and their families. You This newsletter may be reprinted in
8:00 a.m. to 8:00 p.m., Eastern Time.
can find a number of excellent sites by whole or in part. Please credit FDIC
Other government agencies also searching the Internet. Consumer News.
publish consumer information on
Here are a couple of suggestions just Send comments, suggestions or
money matters and have staff, Web
for teens. questions to: Jay Rosenstein, Editor,
sites and other resources that can help
FDIC Consumer News
answer your questions on financial Your school can be a resource for
550 17th Street, NW, Room 7100
matters. A good place to start is information about managing and Washington, DC 20429
www.mymoney.gov, the federal saving money. Perhaps your school jrosenstein@fdic.gov
governments central Web site about has a personal finance class or an
managing money. Also check out investment club, many of which Find current and past issues of
www.kids.gov/k_money.htm, another feature a stock market game or FDIC Consumer News at:
federal government Web site about similar contests. Your school library www.fdic.gov/consumernews.
money but for students from also may have publications about To receive an e-mail notice about
kindergarten through high school. In handling money and taking control each new issue with links to stories,
addition, the Federal Reserve System of your finances. follow instructions posted at:
produces free brochures and www.fdic.gov/about/subscriptions/
publications related to money, banking Talk to your parents about what
index.html.
and savings that you can view and they think is important for the
family and for you in terms of saving
order online, including a series of
or spending money. Learn from
For More Information
comic books for various age groups from the FDIC
produced by the Federal Reserve Bank your parents what it costs to run a
of New York. Start at household, said Kirk Daniels, an Go to www.fdic.gov or call
www.federalreserveeducation.org. FDIC Supervisory Consumer Affairs toll-free 1-877-ASK-FDIC
Specialist. Its important to
The Jump$tart Coalition for thats 1-877-275-3342
understand that driving a car
Personal Financial Literacy, involves putting gas in the tank, Monday through Friday
consisting of more than 170 paying auto insurance, maintaining 8:00 a.m. to 8:00 p.m.,
government agencies (including the and repairing a car, and perhaps Eastern Time.
FDIC), businesses and not-for-profit paying interest on a loan. 

FDIC Consumer News Summer 2006 11


MONEY MANAGEMENT FOR TEENS

A Final Exam: Test Your Money Management IQ


1 All banks offer checking and
savings accounts that are pretty 4 Because credit cards offer the
option to pay a minimum amount
you could lose whatever amount
remained on the card. True or False?
much the same in terms of features, due each month for example, $20
fees, interest rates and opening
balance requirements; if youre
or $30 on a purchase of several
hundred dollars its always smart to
7 Instarttheof70-plus years since the
the FDIC, no depositor
has lost a single penny of insured
looking for a new account theres no send in the minimum and stretch out
money as a result of a bank failure.
need to shop around at several banks. the card payments as long as possible
True or False?
True or False? instead of paying the bill in full.
True or False?
2 Lets say you put money in a
savings account paying the same
5 Ifthatyoua company
receive an e-mail saying
interest rate each month, and you you or your Correct Answers
dont take any money out. Even family does business with needs you
though your original deposit and the to update your records by re-entering 7. True (See Page 9)
interest rate remain unchanged, the your Social Security Number or bank
6. True (See Page 10)
amount of money you will earn in account numbers, its always safe to
interest each month will gradually provide these details as long as the 5. False (See Page 8)
increase. True or False? e-mail explains the reason for the
request and shows the companys 4. False (See Page 7)

3 FDIC insurance covers deposits,


like checking or savings accounts,
logo. True or False? 3. True (See Page 5)
but not investments such as stocks,
bonds or mutual funds. 6 Its possible that a gift card you
receive for your birthday or
2. True (See Page 3)

True or False? another occasion may come with an 1. False (See Page 4)
expiration date, meaning if you dont
spend the entire balance by that date