Dollars and Sense for Teens

A credit card can be a very useful tool, but it can also be dangerous. Some kids get credit cards to use in emergencies, such as a car breakdown far from home. They can certainly be helpful—but you need to learn how expensive credit cards are if you use them for everyday purchases. These resources will help you comprehend the high cost of credit card use:

• The True Cost of Credit: This article outlines how much a large purchase will cost by the time it is paid off.
• What Do Credit Cards Really Cost? This site describes the different types of fees you can incur when you use a credit card.

If you have a credit card, use it sparingly. Keep in mind, however, that you can, and probably should, use one to start building your credit score. If you are going to have a credit card, make sure you use it wisely..

When the time comes to buy your first car, use some common sense. It may be fun to drive the hottest new sports car, but make sure the car you get can last for a couple of years, get good gas mileage, is affordable, and can safely take you to and from work or school. Buying gas, having repairs done, and making your monthly payments can all add up; you probably don’t want to spend your entire paycheck on your car. Save some money first, and either pay for your first car in cash or put a tremendous down payment on it. Try to avoid buying a brand-new car, because it will lose a lot of value the moment you drive it off the lot. For more information about buying a car, visit these links:

• First Time Car Buying Tips for Teens: Advice for teenagers and other young first-time car buyers.
• How Much Can You Afford? Tips for deciding how much to spend on your first car.
• 10 Steps to Finding the Right Car for You: A guide from Edmunds.com for first-time car buyers.
• Used Car Buying Guide for Teenagers: Help for finding a good used car.

When looking to buy a car, it’s important to do research on who is selling you the car, their business, and previous customers’ reviews because there are many scams out there. There are several common online scams to watch for, so do your homework before you spend money online. Start with these resources:

• Scambusters.org: A good site to search if you think you are looking at a scam.
• Snopes.com: A site you can use to find out if something you read online is true.
• Internet Safety: A guide from Surfing the Net with Kids.

Identity thieves are experts at finding the information you post online. Never give out your bank account number, credit card information, or social security number on an online forum unless you are sure it is secure. Learn all you can about internet security by visiting these sites:

• Staying Safe Online: Resources for helping kids avoid internet dangers to their personal information.
• Internet Security Overview: A technical guide to keeping your computer secure.
• Fighting Back Against Identity Theft: A guide from the Federal Trade Commission.
• Tips for Avoiding Identity Theft: Advice about identity theft aimed at internet users, especially around the holiday season.

Spending money is easy, and many people spend more than they earn when they’re early in their careers. To avoid falling into a debt trap, learn how to budget with your first job. A simple budget compares your expenses with your income and makes a plan to pay for your expenses. Be sure to plan for extra spending money and for savings. Check out these resources to help you make a budget:

• Budgeting 101: Everything you should know about setting up a budget.
• How to Teach Teens to Budget Money: A step-by-step guide to budgeting geared toward parents of teens.
• Top 10 Budgeting Basics for Teens: A useful guide to budgeting for teens, written by teens.
• Teens on a Budget: A short article that contains budgeting tips.