With economic difficulties, saving important for teens

Ben Olson/Staff Writer

Even with the $700 billion bailout plan, the Dow Jones Average plunged just shy of 2,400 points in eight days of consecutive losses last week.

In the confusion of these steep declines, one thing for certain is that this downturn will affect tomorrow’s generation. Young people today, not just their parents, are beginning to worry about the lasting effects of the money crisis.

“It sucks. As I get closer to college it will become more of a worry,” sophomore Jordan Carias said.

This is how many young people are feeling. Presently, the answers to providing for future home, car and college loans are murky at best. This downturn is negatively affecting all of these areas of the economy and people’s attitudes as well. Many people are losing enthusiasm for saving.

“The tough times that we are going through right now are one of the best reasons for saving. If you are in between jobs or money is tight because the gas for your car is so expensive, having a savings account can be life saving,” Marketing Director for UNI Credit Union Jolene Downs said. “No matter where you are in your life, you should always pay yourself first to your savings account. Choose a percentage of all the money you bring in from work, allowance, holidays, and put this into savings before you spend anything. Adding three, five, or even 10 percent to your savings every time you get paid for something will always be in your best interest,”

Still, many teens want more answers as to why they should consider saving when the economy seems to be going nowhere. Justin Dams, Vice President and Financial Advisor at Veridian Credit Union, believes saving is still the way to go.

“The economy fluctuates, but with a proper plan in place, savings decisions fall into place. Define your goals and create a plan to reach those goals, implement the plan, protect the plan and monitor the plan. Time horizon is an important factor in savings plans, so for long-term savings such as retirement, young folks often have time on their side, which is a huge advantage,” Dams said. “The longer you have until retirement, the longer the money can grow.”
As the economic troubles keep unfolding, many experts compare this crisis with the likes of the Great Depression and other hard times.

“It’s an election year. We have troops overseas. The price of food and gas has increased significantly. Residential real estate is falling in parts of the country. I can’t say that these things have ever all happened at the same time before, but clearly this country and our economy have seen adversity throughout our history. The market has been incredibly resilient even through those tough times, and many of the market’s increases have come in the face of disaster,” Dams said. “The reality is that the stock market fluctuates up and down.”

Historically, the stock market is very tricky to predict, even for investment pros. Many people today want sources they can turn to as they consider saving their hard-earned money.
“The NEFE Student Guide, the National Endowment for Financial Education, is an organization created here in Iowa with goals to assist schools with the financial education of their students by offering free materials for the classroom,” Downs said.
Students can log on to http://hsfpp.nefe.org/students/index2.cfm?deptid=15 to find out more info about that program.

“The University of California Cooperative Extension puts out a great site for teens about all kinds of money, credit and investment issues,” Downs said.
He points students to this site at http://www.moneytalks.ucr.edu/english/links/links_home.html. The financial problems have triggered many people to worry about their future and how their finances will be affected. Also, people are starting to point fingers at who is to blame for this mess.

“I am not sure I believe the problem of today is the entire fault of Wall Street. Our country as a whole is having a serious issue with financial literacy. The majority of the consumers in this country believe if you want something, you should have it right now regardless if you have the money. Unfortunately, big businesses have made it easy for this to happen,” Downs said. “Teens throughout their lives are going to have to approach finances with a different mindset than that of previous generations and be more educated.”

Dams stressed that if there is one key thing to learn about our economy, it is to know that nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value, and are not guaranteed by the financial institutions.

Overall, Dams said problems today can be looked at as learning experiences for today’s teens. “Obviously, each generation ends up inheriting whatever their parents’ generation left them. Lessons can always be learned from any mistakes made,” Dams said.

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