Money and Relationships 9781422296349, 1422296342

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All About Money: The History, Culture, and Meaning of Modern Finance Banking Basics Cost of Living Earning Money: Jobs Entrepreneurship A Guide to Teaching Young Adults About Money Investing Money Money and Relationships Planning for Your Education The Power to Do Good: Money and Charity Spending Money Sustainable Lifestyles in a Changing Economy Understanding Credit Understanding the Stock Market

Copyright © 2011 by Mason Crest Publishers. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, taping, or any information storage and retrieval system, without permission from the publisher. MASON CREST PUBLISHERS INC. 370 Reed Road Broomall, Pennsylvania 19008 (866)MCP-BOOK (toll free) www.masoncrest.com First Printing 987654321                Library of Congress Cataloging-in-Publication Data Simons, Rae, 1957–  Money and relationships / by Rae Simons.       p. cm.  Includes index. ISBN 978-1-4222-1767-2 (hbk.) ISBN 978-1-4222-1759-7 (series) ISBN 978-1-4222-1886-0 (pbk.) ISBN 978-1-4222-1878-5 (pbk. series) 1.  Money—Social aspects—Juvenile literature. 2.  Money—Psychological aspects—Juvenile literature.  I. Title.  HG221.S6155 2011  306.3—dc22                                                            2010029721 Design by Wendy Arakawa. Produced by Harding House Publishing Service, Inc. www.hardinghousepages.com Cover design by Torque Advertising and Design. Printed by Bang Printing.

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 What Is Money?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Why Is Money So Important?. . . . . . . . . . . . . . . . . . . . . . . . . . . 10 What Does Money Have to Do with Relationships?. . . . . . . . 12 Money and Pressure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Money and Emotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Money and Your Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Talking to Your Parents About Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Listening to Your Parents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Letting Your Parents Know How You Feel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compromising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Talking to Your Friends About Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Money and Jealousy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Being Sensitive to Other People’s Feelings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . You Are Not Your Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Setting Boundaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Respecting Other People’s Boundaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Being Honest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Money Etiquette . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Money and Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Being in Control—or Not!. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Keeping Track of Your Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Everyone Is Different!. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How Important Is Money Really? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What’s Most Important to You? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Here’s What You Need to Remember. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Words You Need to Know. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Further Reading. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Find Out More on the Internet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Picture Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . About the Author and Consultant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Our lives interact with the global financial system on an almost daily basis: we take money out of an ATM machine, we use a credit card to go shopping at the mall, we write a check to pay the rent, we apply for a loan to buy a new car, we set something aside in a savings account, we hear on the evening news whether the stock market went up or down. These interactions are not just frequent, they are consequential. Deciding whether to attend college, buying a house, or saving enough for retirement, are decisions with large financial implications for almost every household. Even small decisions like using a debit or a credit card become large when made repeatedly over time. And yet, many people do not understand how to make good financial decisions. They do not understand how inflation works or why it matters. They do not understand the long-run costs of using consumer credit. They do not understand how to assess whether attending college makes sense, or whether or how much money they should borrow to do so. They do not understand the many different ways there are to save and invest their money and which investments make the most sense for them. And because they do not understand, they make mistakes. They run up balances they cannot afford to repay on their credit card. They drop out of high school and end up unemployed or trying to make ends meet on a minimum wage job, or they borrow so much to pay for college that they are drowning in debt when they graduate. They don’t save enough. They pay high interests rates and fees when lower cost options are available. They don’t buy insurance to protect themselves from financial risks. They find themselves declaring bankruptcy, with their homes in foreclosure. We can do better. We must do better. In an increasingly sophisticated financial world, everyone needs a basic knowledge of our financial system. The books in this series provide just such a foundation. The series has individual books devoted specifically to the financial decisions most relevant to children: work, school, and spending money. Other books in the series introduce students to the key institutions of our financial system: money, banks, the stock market, the Federal Reserve, the FDIC. Collectively they teach basic 6

financial concepts: inflation, interest rates, compounding, risk vs. reward, credit ratings, stock ownership, capitalism. They explain how basic financial transactions work: how to write a check, how to balance a checking account, what it means to borrow money. And they provide a brief history of our financial system, tracing how we got where we are today. There are benefits to all of us of having today’s children more financially literate. First, if we can help the students of today start making wise financial choices when they are young, they can hopefully avoid the financial mishaps that have been so much in the news of late. Second, as the financial crisis of 2007–2010 has shown, poor individual financial choices can sometimes have implications for the health of the overall financial system, something that affects everyone. Finally, the financial system is an important part of our overall economy. The students of today are the business and political leaders of tomorrow. We need financially literate citizens to choose the leaders who will guide our economy through the inevitable changes that lie ahead. Brigitte Madrian, Ph.D. Aetna Professor of Public Policy and Corporate Management Harvard Kennedy School

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You probably learned about money when you were still little. Before you were very old, you had discovered that these pieces of green paper and round metal discs could be exchanged for the things you wanted. You learned that four quarters made a dollar, that pennies were bigger than dimes and yet not worth as much, and that George Washington’s face was on a dollar bill. You saved up change and Grandma’s Christmas gifts in your piggy bank. Maybe you even had your own bank account. You looked forward to going to the store and spending your money. But have you ever thought about what money really IS? Long ago, people traded with each other, one thing for another. For instance, suppose one farmer grew pumpkins and another raised cows. The one farmer might trade a pumpkin for a bucket of milk. Or he might trade a whole field, good for growing pumpkins, in exchange for five cows. You might do something similar. Suppose your friend has a computer game you want—and your friend wants your bike. You decide that the bike and the computer game are worth about the same to each of you, and you agree to trade. No money has been exchanged, and yet you both have ended up with what you wanted. But you can’t walk into a store at the mall pushing your bicycle—or carrying a pumpkin—and offer to exchange it for some new jewelry. Money fits into your pocket a lot easier than a pumpkin!

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Money is something our world has agreed to use as a symbol for the things we value. It’s not really the magic thing you may have thought it was when you were little. In a way, it stands for the same thing a pumpkin or a cow does—something someone worked hard to produce that is of value to others as well. It stands for someone’s time. It’s a symbol for what people value most. Our world has come a long way since the days when cows and pumpkins were traded. Money—in the form of coins and bills—has been around for hundreds, even thousands of years. And yet since the very earliest cultures (the ones that used cows instead of coins), money (or wealth) has alway been mixed up with the meaning of life. What do you think are the most important things in life? Land? Houses and cars? Or lots and lots of THINGS, the many, many items that fill our malls and shopping centers? Money can buy all of those things. But can money buy what’s REALLY most important to you? What about friendship? Love? Happiness? Are those things you can purchase with money? Can you assign a dollars-and-cents value to them? Money does give us many wonderful opportunities. But in some ways, money all alone isn’t really all that valuable. After all, people are always more important than dollars. And as the saying goes, you can’t buy happiness! And yet money does play a very important role in our lives. Almost everything we do in life is tied to money in some way. You can’t use money to buy friendships or love—but money DOES have an effect on relationships. That’s because what we value—how we spend our money and our financial priorities—are part of the equation whenever we interact closely with another person.

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Money and people are connected by a network of products and services. But we’re so used to the way money works in our modern world, that we take it for granted. We no longer see the people who are so important to this network. We live in a world where consuming—buying the stuff that’s for sale in stores—is part of everyday life. It’s an essential part of what keeps our world’s economy healthy. Shopping is a part of all our lives. It’s difficult to imagine life being any other way. But life wasn’t always like this. People used to make the things they needed. Or they personally knew the people who DID make those things. The world was simpler then. It was easier to see the connections between people, and to understand how things affected everybody within a particular economy, from the people who grew the food to the people who sold it, to the people who ate it. It’s harder now to see those connections, let alone understand them! Instead, we see MONEY. Like we said, money has become the modern symbol for everything that’s important to us. We trade it back and forth for the things we want. We act as though these numbers attached to dollar signs have meaning in and of themselves. We forget they’re just convenient symbols for the things we value.

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When you’re in a relationship with another person, you share pieces of your life with each other. In a family relationship, you probably share a home, as well as food and recreation and various everyday products. If we’re talking about a friendship, then you may not share as many things as you do with your family, but Marriage you still share some things, like recreation or maybe transportacounselors say that the number-one tion or occasional meals. topic that causes most married couples’ arguments is— All these things—homes, food, good times— involve spending money. This means that spending money plays a role in these relationships in some ways. MONEY!

DID YOU KNOW?

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So who makes the decisions about how the money will be spent? In a family, it’s usually the parents who decide, but children, especially older children, have a voice in choosing where the family’s money goes. The older you get, usually the more say you have over how money is handled. In a friendship, maybe you take turns deciding who will spend money and how it will be spent. Working these things out isn’t always easy. When not everyone agrees about decisions having to do with money, it can lead to a range of emotions. A person who has little money (and little control over how money is spent) may feel out of control and powerless. A person who does have money may feel as though others are taking advantage of those resources. All these feelings can contribute to bad feelings and arguments. Because we are all unique, individuals have different perspectives on money and how it should be spent.

DID YOU KNOW? These different perspectives are often what cause arguments.

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Money can start to seem very important. We may feel as though we truly NEED to have a certain amount of money in order to be happy. Or we may think that people won’t respect us if we don’t have enough money. When that happens, we may start to feel pressured whenever we think of money.

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Money is a very complicated topic. It’s not always easy to understand things like banking accounts and paychecks, taxes and interest, and all the other terms that go along with understanding finance. It’s easy to get confused! When you feel confused about something that seems so important to the rest of your life—including your feelings and your relationships with others—you can start feeling as though money is an area of your life you can’t control. You may wish you had a better paying job (or your parents had better paying jobs) so you had more money for the things you want. You may also wish you understood how to manage the money you do have better. You may worry that you’ll never have enough money to pay for the things you need, or that people will think less of you because you don’t have as much money as they do. All these feelings can lead to a sense of pressure. Instead of money being the means to get the things you truly enjoy, it becomes a source of worry and tension. Lots of grownups feel this way when they think about money. And young adults do too sometimes.

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Money can contribute to a wide range of feelings, from happiness to disappointment, from frustration to pride. Sometimes we get these feelings mixed up with the money itself. It’s hard to tell what’s a financial problem in our lives—and what’s an emotional problem.

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When psychologists did a study of lottery winners, they found that the winners were happy when they first won the money—

DID YOU KNOW? but after that their happiness wore off, and they were no longer any happier than they had been before.

That’s because, like we said before, money is really just a symbol for the things we value in life, like time and possessions. So of course the things that are important to us are also all mixed up with our emotions. When you hold a handful of money in your hand, you may feel as though that money is what’s making you happy. But really, it’s the opportunities that money can buy—like a chance to buy new clothes or a gift for someone you love —that is filling your heart with joy. And on the other side of the coin, when you’re absolutely broke, it’s not really the lack of money that makes you sad. Instead, it’s the feeling that you don’t have choices, or that you have to give up on something you had hoped for, that contributes to your feelings of sadness.

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What makes you you? Is it the color of your eyes, the kind of hair you have, and whether you are short or tall? Or is it your sense of humor, your ability to do well at certain things and not so well at others, the things that scare you, and the things that make you happy? Or do your friends and family make you the person you are? In reality, who you are depends on a combination of all these factors—who you are on the inside, as well as who you are on the outside, plus the environment where you’ve grown up and the choices you’ve made. Does money play a role in any of that? Well, yes, it does. Money can’t make you short or tall, and it doesn’t make your hair brown or blonde—but money DOES shape your environment. A person whose family has lots of money is going to have different opportuIn school, nities (and probably more opportunities) as he grows up than a your grades are how your person will whose family has very little money. People with success is measured. In the adult world, money is used in a very similar way— more money are not smarter or prettier—but because of the opportunities money can buy, they may end up more educated or better dressed. as a way to measure how successful you are compared Because money is so connected to our sense of value, to others. we humans easily become confused about what money really means. We think that someone who has more money is somehow better than someone who doesn’t have as much. We may take pride in our own money—or think less of ourselves if we don’t have money.

DID YOU KNOW?

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As a young person, you didn’t get to choose your family. The home where you grew up had a particular budget and a certain set of perspectives on money that you didn’t have much to say about.

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As a younger child, you probably took all that for granted. Now, though, as you get older, you may start to feel frustrated that you don’t have more control over the choices that are made in your family that have to do with money. For example, you may not understand why your parents won’t allow you to buy something that’s important to you. You might not understand why your father got to spend money on a big purchase when you don’t get to do something you really want to do because your parents say it’s too expensive. Parents often argue about money, and you may hate to hear them fighting. You might feel as though you could offer them some good advice—but no one listens to you. As a young adult, you’re at a point in your life where you’re starting to break away from your parents and become your own individual. Because money is so connected to your emotions and your identity, it can become all mixed up with everything else that bothers you about the adults in your life. The whole money thing can make you feel frustrated and angry.

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Sometimes, the adults in your life can seem like the enemy. They may seem as though their one goal in life is to stand in your way and keep you from doing and having the things you want! Most teenagers have those feelings at one time or another. When your parents were teenagers, in fact, they probably felt that way too! Although it’s sometimes hard to remember, parents and the other adults in your life are just people, who were once your age. They’re struggling with responsibilities and feelings of their own. They’re not actually your enemy! But once people start arguing about something like money, it’s often hard to find a way to stop. Money can become the symbol for the power struggle in which you’re

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locked. If neither side will give up, it turns into a stalemate—and the angry feelings and tension just get greater and greater. A good way to stop the cycle of anger and tension is to stop and listen to the other side. Listening doesn’t mean you’re giving in. It just means you’re taking the time to understand the other person’s point of view. When you do that, you’re showing respect; you’re recognizing the other person’s right to his feelings and perspectives. And respect does a lot to make the other person feel less angry too.

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Once people are no longer so angry, they can listen better to each other.

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If you honestly listen to your parents’ perspectives, then you have the right to ask them— respectfully—to listen to yours as well. Remember, listening doesn’t mean giving in for your parents either! It just means that they’re open to hearing how you feel. Don’t switch back into argument mode. Instead, try to communicate in a way that’s very different from fighting. Try using more “I” statements than “you” statements. This means that instead of saying, “You never let me do anything I want,” you might say, “I feel so frustrated that I can’t buy the computer I want. I really want a new computer because it will help me . . .” Don’t make accusations. Do your best to explain your reasons for wanting to spend money in a certain way. Let your parents know why it is important to you. Stay calm (if you can). Because money is so closely tied to the things that are important to us, it’s easy to feel emotional when you talk about money with your parents. They probably feel emotional too. It’s okay to back up and say you’re sorry if you start slipping back into a fight. Just keep trying.

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You know what it means to compromise. It means you give up something but you also get something—and so does the other person.

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When you’re locked in a power struggle over money, it’s easy to think in terms of all or nothing. Either you win—or your parents do. There’s no middle ground. But if both sides make an effort to truly hear what the other side is saying and feeling, compromise can become an easier alternative. If you understand, for example, that your parents don’t want to pay for your new computer because they’re stressed about the school tax that’s due next month, you can begin to accept that your parents aren’t simply saying no because they want to make your life misearable! And if your parents understand that you want a new computer because you need it to do homework (as well as for instant messaging your friends), and because there are programs you need that will help you get ready for college, they will no longer feel that you’re simply being selfish and unreasonable! Understanding each other’s perspectives is always an important first step in any compromise. The next step is to work out a deal that will work for you both. Maybe you agree to wait till Christmas for your new computer—and your parents agree to contribute two-thirds of the cost if you will put in the rest of the money yourself. Compromises look different every time. They’re whatever will work for you and your parents.

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Talking to your friends about money may not be anywhere near as difficult as talking to your parents about money. But even with your friends, money can be a tricky subject. Remember, right or wrong, we often connect money to both feelings and our identities. This means that people can get their feelings hurt when money comes up as a topic of conversation. Simply spending money—or not spending it—can even cause tension and hurt feelings sometimes. One person may not be aware of how others around him are feeling, but that doesn’t make the tension go away.

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If you have a lot of money and your friend doesn’t, she may feel jealous.

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Or if the situation is the other way around—if your friend has money and you don’t—imagine how you’d feel. Maybe you wouldn’t mind, because you know you and your friend are equals in all the ways that count. In that case, you could simply enjoy the opportunities your friend chooses to share with you through the money she spends. But maybe you start to feel uncomfortable because your friend is always paying for everything you do together. You don’t have money to pay for things, and that begins to make you feel embarrassed. You may feel as though you’re not worth as much as your friend because you can’t contribute money to the friendship. Or what if your friend DOESN’T share her money? Instead, she enjoys it on her own, and you’re left out? All those feelings can turn into jealousy. Your friends has something you don’t. And you wish you had as much money as she does!

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When you’re friends with someone, you want that person to be happy. You don’t want to hurt her feelings. And you don’t want her to hurt your feelings.

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This means learning to be aware of how others might be feeling. In the same way that respect is important between parents and children, it is also an important element of any friendship. In a friendship, respect means that you treat your friend the way you would like to be treated. You don’t make fun of him because he doesn’t have the same things you have. You don’t talk about him behind his back because he can’t afford to dress the way you do. And you don’t boast to him about the new things your parents bought you or the places you’re going with the money you’re earning from your new job. Instead, you pay attention to how your friend is feeling. You remember that feelings and money are connected—and you make sure not to confuse your friend’s worth as a person with how much money she has.

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It’s hard not to feel as though money is one of the most important things in life. After all, without money you can’t buy clothes or get your hair styled, you can’t buy a pair of earrings or sunglasses or blue jeans, and you can’t go to the movies or even buy a Coke. But all those things, as nice as they may be in their place, are just THINGS. You are far more than any object, and you are way, way more than any amount of money. Money cannot buy intelligence. It cannot buy kindess or imagination or a sense of humor. Money is not what makes you different from any other person ever born in the whole human race.

Money is not you. You are far bigger and more valuable than any amount of money.

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You are not your money, and your money is not you. But at the same time, money plays an important role in your life. You want to make sure that you control it, not the other way around. This means setting boundaries in life. It means deciding what your priorities are. And when it comes to friends, it also means you don’t let them take advantage of you, whether you’re the one who has money or they are.

In other words, just because your friend has more money than you do doesn’t mean he should get to make all the decisions about what you do. And if you’re the one who has more money, you need to be sure that you’re using your money the way you want. Don’t let your friends make these decisions for you. Think about what’s important to you. And then use your money in a way that’s in line with that decision.

It’s okay to have boundaries!

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Respect means treating people the way you want to be treated—so if you want them to respect your boundary lines when it comes to how much money you’re willing to spend and on what, as well as how you use your time and the things you choose to do together as friends, then you also have to respect those same decisions on your friends’ part.

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It’s not so complicated as it might seem. If your friend says she can’t afford to go to a movie on Saturday, you don’t try to persuade her she really can. And if you know your friend has a wallet full of money, you don’t try to tell him how he should spend it.

It’s not so much about money, really, as it is about respecting what’s important to your friend, about valuing her as a person more than you value her money. Bottom line, it’s about

treating her the way you want to be treated yourself!

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If you’re friends with someone, you need to be honest with that person about how you feel and who you are.

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Otherwise, you’re not really friends. You’re just playing a role for some reason (maybe to be popular or to get something you want). That’s not friendship. Friendship means you care more about a person than you do her money. And it means she cares more about you as a person than she does about YOUR money (or your lack of money). Friendship means you can share your feelings about money. And it means you can listen with respect to your friend’s feelings. Remember the “I” messages we talked about using with your parents? They’re also a good way to build a friendship. Practice saying things like, “When you talk about going shopping all the time, I feel kind of envious. I don’t like feeling that way, but I do. Could we talk about other things?”

Saying things like that may seem embarrassing at first. But real friends listen. Real friends are sensitive to others’ feelings. And real friends always respect each other for being honest. In fact, being honest about who you are and how you feel—and encouraging your friend to be honest as well—is how friendships grow.

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When you were a kid, your parents probably taught you to say please and thank you. Being polite is still just as important now that you’re older.

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Etiquette is the word we use for good manners. It’s a set of rules we follow to make people feel more comfortable. These rules involve thinking about how others see us. They help us to make sure we don’t offend others or hurt their feelings. Here are some good rules of etiquette to follow when it comes to money: Always say thank you whenever someone offers to pay your way or gives you something of value. If you don’t, you may act as though you take for granted your right to have the other person’s money. The other person may feel used, as though you don’t value him for himself. Don’t get in the habit of asking your friends for loans. If your friend does loan you money, always pay her back, no matter how small the amounts may be. Don’t talk about your money, even if you don’t think you are boasting. Find other things to talk about instead. Don’t ask people questions about their money. Respect their privacy. Don’t flash your cash. Be careful when choosing places to go so that everyone who’s going can afford the cost.



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MONEY = POWER

If you feel like that equation is true, you’re not the only one who thinks that! For example, money is what helps politicians win elections. Wealthy people really do have more power, for good or bad, in our world.

As individuals, we all tend to feel we have more control over our lives if we have

money. Money allows us to do the things we want to do. Money gives us more choices to choose from.

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So it’s no wonder that money makes us feel more powerful.

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Money does bring opportunities and possessions. As a symbol for what’s important in our lives, it’s very tangible. In other words, you can take it out and touch it. You can look at it. You can count it. In fact, psychologists have even found that just counting the money in their wallets can actually make people feel better after they’ve been insulted or when they’re physically in pain. But does that prove that money really DOES have the power to make us happy after all? No, not really. Money is still just a symbol for the things that are important to us in life. When it comes right down to it, the symbol is never worth as much as the actual thing. Think about it. If you were on a desert island with no stores, which would you rather have—a billion dollar bills or your favorite book (or your dog or the person you love most in the world)? Money’s only worth something when you can exchange it for something else that you want. If you can’t, then money becomes worthless. So if you want to become an athlete, or go out with a certain person, or become a nicer person, money may allow you certain opportunities that could help you reach your goals (like joining a gym, paying for a movie, or buying self-help books). But money can’t really ensure you have control over the future.

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Ultimately, it’s your determination and hard work and unique personality that will help you reach these goals. And money can’t protect you from certain things. Money may make it more likely you’re in good health, for example, if you use it to buy health products and nutritious food—but it can’t protect you from diseases and accidents. When it comes to being in control of our life, money’s really not the answer!

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Understanding more about money won’t necessarily give you more control over your life—but it WILL give you more control over your money!

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When you were a kid, you probably weren’t responsible for all that much. Your parents or other adults in your life took care of keeping you safe and healthy. And they were the ones who worried about money. But as you grow older, these are responsibilities you will take over for yourself. Don’t expect other people to do it for you. The more you can keep track of your own money, the smoother your relationships with others are likely to go. Here are important things you need to understand as you enter the adult world:

• budgeting • banking skills • savings • the cost of living • investing • earning • spending wisely

It takes time to learn any new skill, and mistakes are completely normal. But as you learn to keep track of your money, you can also learn to set boundaries for yourself—and you can better understand others’ boundaries. All this can make it easier to get along with both your parents and your friends. And one day, if you end up being in a long-term relationship with someone, it can make that relationship a whole lot less stressful too.

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Everyone needs to understand basic things about money and how it works. But everyone is also unique. This means that one person may like to keep a lot of savings in the bank, while another person would rather spend his money and enjoy it. One person may like to give generous gifts, while someone else is more cautious about spending her money. These individual qualities do not mean that one person is better than another. It just means that people are different. There isn’t one single, right way for handling money. Respecting the different ways people handle money is a part of respecting their boundaries. It’s also a part of setting your own boundaries.

Understand what’s right for you when it comes to handling money. But don’t expect that the same way to be right for your friends or for the other people in your life.

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Respect their priorities. Everyone is different!

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Money is an important topic. It’s not just dollars and cents, and learning to balance your checkbook. Thinking about money has to do with deciding what it is you truly value most. It has to do with understanding what your priorities are, and who you really are— and how you want to get along with others. People feel strongly about money. And because they do, it’s important to understand and respect those feelings.

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But it’s also important to remember that money isn’t really the magic pot of gold at the end of the rainbow that will make you live happily ever after.

Money can’t buy health. It can’t buy true friendships. It can’t buy self-respect. And it can’t buy love.

Money CAN buy other things, of course. But how important are those things compared to friendship, love, health, and self-respect?

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As you grow older, you will need to make up your own mind about what’s most important to you. Here are some questions for you to consider What is worth more—a friendship or a car?

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What would you rather have in life—your parents’ love and respect or a trip around the world? How important is money to you? Can you imagine living without it? What’s YOUR definition of wealth? And how does it connect to money? These are important questions. Answering them will help you find better ways to get along with others.

But remember, it’s up to you to decide the right answers. No one can do it for you!

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• Money can be a source of conflict in almost any relationship, whether with your family, friends, or your girl or boyfriend. Often, different perspectives on how money should be spent cause conflicts in relationships. Each of us is an individual, with our own sense of how we should earn, spend, and save money. • Whether you have it or you don’t, money can stir a wide range of emotions. You might feel a rush of positive feelings when you get paid, but the next day you might feel used when your friends make you pay for lunch. Without enough money, you might feel like you can’t make as many choices as you could if you had more. It’s important not to confuse an emotional issue with a financial one (or vice versa). • Discussing money with your parents can be difficult. It’s easy to fall into other arguments when talking about money, easy to see money as a way in which your parents are trying to control you. More often than not, however, listening to what your parents have to say about money can help you learn about making good financial decisions. Respectfully speaking with your parents about how you feel about certain money-related issues is important as well. Remember to stay calm and express yourself as clearly as possible. • No matter whether you’re speaking with your parents, friends, or boyfriend about money, make sure to try to understand their point of view. Making compromises, rather than having one person give up everything that they want, is key to any relationship, particularly when it comes to money. • Although money can make you feel happy, sad, powerful, proud, and both in and out of control, you are not your money. Remember that your identity and emotions may be influenced by money, but your money doesn’t determine who you are.

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budget: The amount of money that is available for a given purpose or time. economy: All the money, goods, and services that are exchanged and the ways in which that is done. financial: Relating to the circulation of money, the giving out of loans, banking, or any other aspect of money. interest: A percentage of an amount borrowed that is due back to the lender above the original amount owed.

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investing: Putting money into something in order to get more money out of it. priorities: Things that come before others or that are considered more important. products: Material goods that are produced and sold. resources: Things that can be used to gain wealth. services: Acts that help others, which are often sold for money.

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Butler, Tamsen. The Complete Guide to Personal Finance: For Teenagers. Ocala, Fla.: Atlantic Publishing Group, 2010. Byers, Ann. First Credit Cards and Credit Smarts. New York: Rosen Publishing, 2009. Freedman, Jeri. First Bank Account and First Investments Smarts. New York: Rosen Publishing, 2009. Matheson, Murdoch. Building Wealth for Teens: Answers to Questions Teens Care About. Bloomington, Ind.: Trafford Publishing, 2007. Peterson, Judy Monroe. First Budget Smarts. New York: Rosen Publishing, 2007. Wagner, Michael J. Your Money, Day One: How to Start Right and End Rich. Charleston, S.C.: BookSurge Publishing, 2009.

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CNN.com “Ticklish Money Problems with Friends” www.cnn.com/2007/LIVING/personal/10/01/rs.money.etiquette/ index.html “Fun Facts About Money” www.frbsf.org/federalreserve/money/funfacts.html MoneyandStuff.info “Budgeting Basics for Teens” www.moneyandstuff.info/budgetingbasics.html MyMoney.gov www.mymoney.gov WalletPop.com “Money Manners Faux Pas” www.walletpop.com/top5/general/money-rules-etiquette-vs-fauxpas Young Money Magazine www.youngmoney.com The websites listed on this page were active at the time of publication. The publisher is not responsible for websites that have changed their address or discontinued operation since the date of publication. The publisher will review and update the websites upon each reprint.

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boundaries 36, 49–50 budgeting 20, 49

identity 18, 21, 29 opportunities 9, 17–18, 31, 46

choice(s) 17–18, 21, 44 control 13, 15, 21, 36, 44, 46, 48 emotion(s) 13, 16–17, 21, 25 feeling(s) 13, 15–17, 22–23, 27, 29, 31–33, 41, 43, 52 food 11–12, 47 friend(s) 8, 18, 27, 29–33, 36, 38, 41, 43, 49–50 friendship 9, 12–13, 31, 33, 41, 53–54 happiness 9, 14, 16–18, 32, 36, 53 honesty 40–41

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parent(s) 13, 15, 21–22, 25, 27, 29, 33, 41–42, 49, 55 perspective 13, 20, 23, 25, 27 priorities 9, 36, 50, 52, 59 respect 14, 23, 25, 33, 38–39, 41, 43, 50, 52–53, 55 shopping 9, 11, 41 spending 8–9, 12–13, 21, 25, 29, 31, 38–39, 49–50 value 9, 11, 17–18, 39, 43, 52

a4stockphotos: pp. 16–17 Adler, Klaus-Peter: pp. 24–25 Afanasyev, Alexey: pp. 36–37

Tolstoy, Mikhail: pp. 10–11

Barskaya, Gallina: pp. 22–23

Trilling, Ann: pp. 44–45

Coburn, Stephen: pp. 16–17

Tromeur, Julien: pp. 18–19

Colja, Domen: pp. 48–49

Van Trees, Beth: pp. 32–33

Collier, Dan: pp. 52–53

Wire_man: pp. 36–37

crabshack photos: pp. 20–21 CYCLONEPROJECT: pp. 42–43 Damkier, Mikael: pp. 14–15 deanm1974: pp. 28–29 Elenathewise: pp. 22–23 frenta: pp. 12–13, 30–31 iQoncept: pp. 50–51, 54–55 klick: pp. 40–41 Kounadeas, Ioannis: pp. 38–39 Kromosphere: pp. 26–27, 46–47 Maxwell, Scott: pp. 8–9, 30–31 olly: pp. 54–55 soupstock: pp. 34–35 Stitt, Jason: pp. 24–25 Sunagatov, Dmitry: pp. 38–39

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Rae Simons is a well-established educational author, who has written on a variety of topics for young adults for the past twenty years. She has also worked with financial advisors to produce adult-level books on money management. Brigitte Madrian is Professor of Public Policy and Corporate Management in the Aetna Chair at Harvard University’s Kennedy School of Government. She has also been on the faculty at the Wharton School and the University of Chicago. She is also a Research Associate at the National Bureau of Economic Research and coeditor of the Journal of Human Resources. She is the first-place recipient of the National Academy of Social Insurance Dissertation Prize and the TIAACREF Paul A. Samuelson Award for Scholarly Research on Lifelong Financial Security.

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