The Money Answer Book for Kids and Teens: How to Make, Save, and Invest Your Money 2009

Summary:

• The Money Answer Book for Kids and Teens: How to Make, Save, and Invest Your Money by Dave Ramsey is a comprehensive guide to financial literacy for young people. The book covers topics such as budgeting, saving money, investing in stocks and bonds, understanding credit cards and loans, avoiding debt traps like payday loans and student loan debt, building wealth through real estate investments, starting a business or side hustle to make extra income, giving back through charitable donations or volunteering time. It also includes advice on how to talk about money with parents or guardians.

  The book begins with an introduction that explains why it's important for kids and teens to learn about money management early on. It then dives into the basics of budgeting by discussing different types of budgets (fixed vs variable) as well as tips on tracking expenses. Next up is saving money which covers setting goals (short-term vs long-term), creating an emergency fund account for unexpected expenses like car repairs or medical bills; opening a savings account at a bank; using apps like Acorns or Stash; taking advantage of employer matching programs when available; participating in 529 college savings plans if applicable; investing in mutual funds/ETFs/stocks/bonds etc.; researching companies before investing in them.

  The next section focuses on understanding credit cards & loans including the differences between secured & unsecured debts; interest rates & fees associated with each type of loan product; how credit scores are calculated & what affects them positively & negatively. After this comes information about avoiding debt traps such as payday loans & student loan debt by learning how these products work so you can avoid getting caught up in their high interest rates & fees. The book then moves onto building wealth through real estate investments which discusses the pros & cons of buying rental properties versus flipping houses.

  Next up is starting a business or side hustle which provides ideas on ways kids can make extra income from home such as tutoring services online/offline; selling items online via eBay/Amazon etc.; becoming an Uber driver etc.. Finally there’s advice on giving back either financially through charitable donations or volunteering your time at local organizations that need help. The book ends with some final thoughts from Dave Ramsey himself encouraging readers to take action now rather than waiting until they’re older.

Main ideas:

• #1.     Budgeting: Creating a budget is an important step in managing your money. It helps you track your spending and make sure you are saving enough for the future. Budgeting also helps you prioritize your spending and make sure you are getting the most out of your money.
  
  

  Budgeting is an essential part of managing your money. It allows you to keep track of where your money is going and make sure that you are saving enough for the future. When creating a budget, it’s important to prioritize your spending so that you can get the most out of every dollar. You should also consider setting aside some money each month for savings or investments, as this will help ensure financial security in the long run.

  Creating a budget doesnt have to be complicated or time-consuming; there are many tools available online and in books like The Money Answer Book for Kids and Teens: How to Make, Save, and Invest Your Money by Dave Ramsey which can help simplify the process. Once you have created a budget, its important to stick with it so that you can stay on top of your finances.

• #2.     Saving: Saving money is essential for achieving financial security. It is important to start saving early and to set aside a portion of your income each month. You should also look for ways to increase your savings, such as setting up automatic transfers or taking advantage of employer matching programs.
  
  

  Saving money is essential for achieving financial security. It is important to start saving early and to set aside a portion of your income each month. This will help you build up an emergency fund, which can be used in case of unexpected expenses or job loss. You should also look for ways to increase your savings, such as setting up automatic transfers from your paycheck into a savings account or taking advantage of employer matching programs.

  When it comes to investing, there are many options available depending on the amount of risk youre willing to take and how much time you have before needing access to the funds. Investing in stocks and mutual funds can provide higher returns than traditional savings accounts but come with more risk. If youre just starting out, consider low-risk investments like certificates of deposit (CDs) or government bonds.

  Its also important not to forget about retirement planning when saving for the future. Contributing regularly towards a 401(k) plan or IRA can help ensure that youll have enough money saved by the time you retire so that you dont need worry about running out of money later in life.

• #3.     Investing: Investing is a great way to grow your money over time. You should research different types of investments and understand the risks associated with each one. You should also diversify your investments to reduce your risk and maximize your returns.
  
  

  Investing is a great way to grow your money over time. It can be an intimidating process, but with the right knowledge and guidance, it can be a rewarding experience. Before investing, you should research different types of investments and understand the risks associated with each one. You should also diversify your investments to reduce your risk and maximize your returns. Investing in stocks, bonds, mutual funds, ETFs (Exchange Traded Funds), real estate investment trusts (REITs) or other asset classes are all viable options for growing wealth.

  When researching potential investments, consider factors such as past performance history of the company or fund manager; fees associated with buying and selling shares; liquidity of the investment; tax implications; and any additional costs that may apply. Additionally, it’s important to have realistic expectations about how much return on investment you will receive from any given asset class.

  Finally, remember that investing involves risk—you could lose some or all of your initial capital if markets move against you. Therefore it’s important to only invest what you can afford to lose without putting yourself in financial hardship.

• #4.     Credit: Credit is a powerful tool that can help you build wealth, but it can also be dangerous if used incorrectly. You should understand how credit works and how to use it responsibly. You should also be aware of the potential risks associated with credit and how to avoid them.
  
  

  Credit is a powerful tool that can be used to help you build wealth, but it must be used responsibly. When using credit, its important to understand how it works and the potential risks associated with it. Credit cards are one of the most common forms of credit and they allow you to borrow money from a lender in order to make purchases or pay for services. Its important to remember that when you use a credit card, youre borrowing money from the lender and will need to repay them with interest.

  When using credit cards, always try your best not to exceed your spending limit as this could lead to high levels of debt which can be difficult or even impossible for some people to pay off. Additionally, if payments are missed then late fees may apply which can further increase the amount owed. Therefore, it’s essential that any debts incurred on a credit card are paid back promptly.

  It’s also important not only manage your own finances responsibly but also protect yourself against fraud by regularly checking statements for any suspicious activity and reporting anything unusual immediately.

  Overall, understanding how credit works and being aware of its potential risks is key in order ensure responsible usage so that you dont end up in financial difficulty due to excessive debt.

• #5.     Debt: Debt can be a major obstacle to achieving financial freedom. You should understand the different types of debt and how to manage them responsibly. You should also be aware of the potential risks associated with debt and how to avoid them.
  
  

  Debt can be a major obstacle to achieving financial freedom. It is important to understand the different types of debt and how they work, so that you can manage them responsibly. Credit cards, student loans, mortgages, car loans and other forms of debt all have their own unique characteristics and should be managed differently. For example, credit card debt typically has higher interest rates than other forms of debt and should be paid off as quickly as possible.

  It is also important to understand the potential risks associated with taking on too much debt. Too much debt can lead to missed payments or defaulting on your loan which could damage your credit score or even result in legal action being taken against you. To avoid these risks it is best practice to only take on debts that are necessary for essential purchases such as a home or car.

  Finally, it is important to develop good habits when managing your debts such as making regular payments on time and avoiding taking out more than you need. By understanding the different types of debts available and developing responsible habits when managing them you will be able to achieve financial freedom without getting into too much trouble.

• #6.     Insurance: Insurance is an important way to protect yourself and your family from financial loss. You should understand the different types of insurance and how to choose the right coverage for your needs. You should also be aware of the potential risks associated with insurance and how to avoid them.
  
  

  Insurance is an important way to protect yourself and your family from financial loss. There are many different types of insurance, such as health, life, auto, home, and disability insurance. Each type of insurance provides coverage for specific risks or losses that you may face in the future. Its important to understand the different types of coverage available so that you can choose the right policy for your needs.

  When selecting an insurance policy its important to consider factors such as cost, coverage limits, deductibles and exclusions. You should also be aware of potential risks associated with certain policies and how to avoid them. For example, some policies may have high deductibles which could leave you financially exposed if a large claim were made against your policy.

  Its also important to review your existing policies regularly in order to ensure they still meet your needs. Insurance premiums can change over time due to changes in risk levels or other factors so it’s wise to shop around periodically for better rates or more comprehensive coverage.

• #7.     Taxes: Taxes are an important part of managing your money. You should understand the different types of taxes and how to file your taxes correctly. You should also be aware of the potential risks associated with taxes and how to avoid them.
  
  

  Taxes are an essential part of managing your money. It is important to understand the different types of taxes and how to file them correctly. There are federal, state, and local taxes that you may be responsible for paying depending on where you live. You should also be aware of any potential risks associated with filing taxes incorrectly or not filing at all. To avoid these risks, it is best to consult a tax professional who can help guide you through the process.

  When filing your taxes, make sure that all information provided is accurate and up-to-date. This includes income sources such as wages from employment or investments in stocks or bonds. Additionally, if you have deductions such as charitable donations or medical expenses, make sure they are properly documented so that they can be claimed when filing your return.

  Finally, keep track of any changes in tax laws throughout the year so that you can adjust accordingly when it comes time to file your return. By understanding the different types of taxes and taking steps to ensure accuracy when filing returns each year, you will save yourself time and money in the long run.

• #8.     Giving: Giving is an important part of managing your money. You should understand the different types of giving and how to make sure your donations are going to the right causes. You should also be aware of the potential risks associated with giving and how to avoid them.
  
  

  Giving is an important part of managing your money. It can be a great way to help those in need and support causes that you believe in. When giving, it’s important to understand the different types of giving available and how to make sure your donations are going to the right places. You should also be aware of potential risks associated with giving, such as scams or fraud, and how to avoid them.

  When considering where you want your donation dollars to go, research organizations thoroughly before donating. Make sure they have a good reputation for using funds responsibly and efficiently. Also consider if there are any tax benefits associated with making a donation – this could help reduce the amount of taxes you owe at the end of the year.

  It’s also important to remember that not all forms of giving involve money; volunteering time or skills can often be just as valuable as monetary donations. Consider what type of contribution would best suit your needs and budget when deciding on which organization or cause you want to support.

• #9.     Retirement: Retirement is an important part of achieving financial security. You should understand the different types of retirement accounts and how to choose the right one for your needs. You should also be aware of the potential risks associated with retirement and how to avoid them.
  
  

  Retirement is an important part of achieving financial security. Its important to understand the different types of retirement accounts available and how to choose the right one for your needs. There are several options, such as 401(k)s, IRAs, Roth IRAs, and annuities. Each has its own advantages and disadvantages that you should consider before making a decision.

  Its also important to be aware of potential risks associated with retirement planning. These include inflation risk, market volatility risk, longevity risk (outliving your money), sequence-of-returns risk (the order in which returns occur over time), withdrawal rate risk (withdrawing too much from your account too quickly), and investment management fees.

  To avoid these risks it’s essential to have a well thought out plan for saving for retirement that takes into consideration all aspects of your finances including income sources during retirement years. You should also diversify investments across asset classes like stocks, bonds, real estate investments trusts (REITs), mutual funds or exchange traded funds (ETFs). Finally make sure you review your portfolio regularly so you can adjust it according to changes in the markets or other factors.

• #10.     Entrepreneurship: Entrepreneurship is a great way to build wealth. You should understand the different types of businesses and how to start and run a successful business. You should also be aware of the potential risks associated with entrepreneurship and how to avoid them.
  
  

  Entrepreneurship is an exciting and rewarding way to build wealth. It involves taking risks, but with the right knowledge and preparation, it can be a great opportunity for financial success. To become an entrepreneur, you need to understand the different types of businesses available and how to start one up. You should also research what kind of legal structure your business will require in order to operate legally. Additionally, you should familiarize yourself with the potential risks associated with entrepreneurship such as cash flow problems or unexpected costs that could arise during operations.

  Once you have done your research on starting a business, it’s important to create a plan that outlines all aspects of running your business including marketing strategies, budgeting plans and customer service policies. Having this plan in place will help ensure that everything runs smoothly when launching your venture. Finally, make sure you are aware of any government regulations or laws related to running a business so that you can stay compliant.

• #11.     Credit Cards: Credit cards can be a great way to build credit and manage your money, but they can also be dangerous if used incorrectly. You should understand how credit cards work and how to use them responsibly. You should also be aware of the potential risks associated with credit cards and how to avoid them.
  
  

  Credit cards can be a great tool for managing your money and building credit. When used responsibly, they can help you make purchases that you may not have been able to afford otherwise. However, it is important to understand how credit cards work and the potential risks associated with them before using one.

  When using a credit card, it is important to pay off your balance in full each month so that you dont incur interest charges or late fees. You should also avoid making impulse purchases or spending more than you can afford. Additionally, be sure to monitor your account regularly for any suspicious activity.

  Finally, if you are having trouble managing your debt or paying off your balance on time each month, consider speaking with a financial advisor who can help create an action plan for getting out of debt and staying on track financially.

• #12.     Identity Theft: Identity theft is a serious problem that can have a major impact on your finances. You should understand how to protect yourself from identity theft and how to respond if you become a victim. You should also be aware of the potential risks associated with identity theft and how to avoid them.
  
  

  Identity theft is a crime in which someone uses your personal information, such as your name, Social Security number, credit card numbers or other financial information without your permission to commit fraud or other crimes. It can have serious consequences for you and your finances. Identity thieves may use stolen information to open new accounts in your name, make purchases with existing accounts or even take out loans.

  To protect yourself from identity theft, it’s important to be aware of the potential risks associated with sharing personal information online and over the phone. You should also regularly monitor all of your financial accounts for any suspicious activity. If you become a victim of identity theft, contact the authorities immediately and report it to the three major credit bureaus: Experian, Equifax and TransUnion.

  It’s also important to remember that there are steps you can take now to help prevent identity theft before it happens. Make sure that all passwords used on websites are strong and unique; never share them with anyone else. Be careful when using public Wi-Fi networks as they may not be secure; always use a virtual private network (VPN) if possible. Finally, shred any documents containing sensitive information before disposing of them.

• #13.     Financial Planning: Financial planning is an important step in achieving financial security. You should understand the different types of financial planning and how to create a plan that meets your needs. You should also be aware of the potential risks associated with financial planning and how to avoid them.
  
  

  Financial planning is an important step in achieving financial security. It involves setting goals and creating a plan to reach those goals. This includes budgeting, saving, investing, and managing debt. Financial planning can help you make the most of your money by helping you understand how to use it wisely.

  When creating a financial plan, it’s important to consider your current situation as well as any future needs or goals that may arise. You should also be aware of potential risks associated with financial planning such as inflation or market volatility. To avoid these risks, you should diversify your investments across different asset classes and create an emergency fund for unexpected expenses.

  It’s also important to review your financial plan regularly so that it remains up-to-date with changes in the economy or personal circumstances. A good financial planner can help guide you through this process and provide advice on how best to manage your finances.

• #14.     College Planning: College planning is an important part of achieving financial security. You should understand the different types of college savings plans and how to choose the right one for your needs. You should also be aware of the potential risks associated with college planning and how to avoid them.
  
  

  College planning is an essential part of preparing for the future. It involves researching and understanding different types of college savings plans, such as 529s, Coverdell ESAs, and prepaid tuition plans. Each plan has its own advantages and disadvantages that should be carefully considered before making a decision. Additionally, it’s important to understand the potential risks associated with college planning in order to avoid them. These include inflation risk, market volatility risk, liquidity risk, and more.

  When choosing a college savings plan for your needs, you should consider factors like tax benefits offered by each option; fees associated with each plan; how much control you have over investments; whether or not withdrawals are allowed without penalty; if there are any restrictions on where funds can be used; and other features that may affect your choice.

  It’s also important to remember that college planning isn’t just about saving money—it’s also about setting yourself up for success after graduation. You should research scholarships and grants available at various schools so you can make informed decisions when selecting which school to attend.

• #15.     Estate Planning: Estate planning is an important part of achieving financial security. You should understand the different types of estate planning and how to create a plan that meets your needs. You should also be aware of the potential risks associated with estate planning and how to avoid them.
  
  

  Estate planning is the process of preparing for the transfer of your assets after you die. It involves creating a plan that outlines how your property and possessions will be distributed to beneficiaries, as well as making arrangements for any taxes or debts that may need to be paid. Estate planning can also include setting up trusts, which are legal entities that allow you to control how and when certain assets are distributed.

  When creating an estate plan, it’s important to consider all aspects of your financial situation. You should think about who will receive what portion of your estate, whether there are any special considerations such as charitable donations or family members with special needs, and if there are any tax implications associated with transferring ownership of certain assets. Additionally, you should make sure that all documents related to the estate plan—such as wills and trust agreements—are properly executed so they can be enforced in court.

  It’s also important to understand the potential risks associated with estate planning. For example, if you don’t create a valid will or trust agreement before passing away, then state laws may dictate how your property is divided among heirs instead of following your wishes. Additionally, if not done correctly, estate plans can lead to disputes between family members over inheritance rights or other issues.

  Creating an effective estate plan requires careful consideration and professional advice from experienced attorneys or financial advisors. By taking these steps now while youre still alive and healthy enough to do so yourself (or have someone else do it on your behalf), youll ensure that everything goes according to plan when it comes time for distribution after death.

• #16.     Risk Management: Risk management is an important part of managing your money. You should understand the different types of risks and how to manage them responsibly. You should also be aware of the potential risks associated with risk management and how to avoid them.
  
  

  Risk management is an important part of managing your money. It involves understanding the different types of risks that can affect your finances and taking steps to minimize or avoid them. There are several types of risk, including market risk, credit risk, liquidity risk, operational risk and legal/regulatory risk. Each type has its own set of potential consequences if not managed properly.

  Market Risk refers to the possibility that investments may lose value due to changes in economic conditions or other factors beyond your control. Credit Risk is the chance that a borrower will default on their loan payments or fail to meet other obligations they have agreed upon with you. Liquidity Risk is when there isn’t enough cash available for you to pay off debts or make necessary purchases quickly enough without incurring losses.

  Operational Risk occurs when something goes wrong within a business process such as inadequate internal controls leading to fraud or errors in accounting records which could lead to financial losses. Legal/Regulatory Risks involve compliance with laws and regulations governing businesses which could result in fines and penalties if not followed correctly.

  Its important for you to understand these risks so that you can take steps towards mitigating them by diversifying investments across asset classes, using hedging strategies where appropriate and monitoring markets regularly.

• #17.     Financial Literacy: Financial literacy is an important part of managing your money. You should understand the different types of financial literacy and how to use it to make informed decisions. You should also be aware of the potential risks associated with financial literacy and how to avoid them.
  
  

  Financial literacy is the ability to understand and manage your finances. It involves understanding how money works, what types of investments are available, and how to make smart financial decisions. Financial literacy also includes knowing about taxes, insurance, budgeting, debt management, retirement planning and more.

  Having a good grasp on financial literacy can help you make informed decisions when it comes to managing your money. You should be aware of the potential risks associated with investing or borrowing money so that you can avoid them. Additionally, having an understanding of different types of investments will allow you to choose ones that best suit your needs.

  It’s important for everyone – especially young people – to have a basic knowledge of financial literacy in order to make sound decisions regarding their finances. There are many resources available online and in books that can help teach you about personal finance topics such as budgeting and investing.

• #18.     Financial Goals: Setting financial goals is an important part of managing your money. You should understand the different types of financial goals and how to create a plan to achieve them. You should also be aware of the potential risks associated with financial goals and how to avoid them.
  
  

  Financial goals are important for everyone, regardless of age. Setting financial goals helps you to plan ahead and make sure that your money is being used in the most effective way possible. It also allows you to track your progress towards achieving those goals over time.

  When setting financial goals, it’s important to consider both short-term and long-term objectives. Short-term goals might include saving up for a vacation or buying a new car while long-term objectives could be retirement planning or paying off student loans. You should also think about how much risk you’re willing to take on when investing your money – this will help determine which types of investments are best suited for reaching your financial targets.

  Creating a plan is essential when working towards any type of goal, especially with finances. Make sure that you have an actionable timeline with achievable milestones along the way so that you can measure your progress as well as adjust if needed. Additionally, it’s important to understand the potential risks associated with certain investments and how they may affect your overall strategy.

• #19.     Financial Education: Financial education is an important part of managing your money. You should understand the different types of financial education and how to use it to make informed decisions. You should also be aware of the potential risks associated with financial education and how to avoid them.
  
  

  Financial education is an important part of managing your money. It can help you understand the different types of investments, how to budget and save for the future, and how to make smart decisions about spending. Financial education also helps you understand the risks associated with investing and other financial activities so that you can make informed decisions.

  When it comes to financial education, there are many resources available. You can take classes at a local college or university, attend seminars or workshops offered by banks or credit unions, read books on personal finance topics such as budgeting and investing, watch videos online about financial topics, or even talk to a trusted advisor who specializes in these areas.

  It’s important to remember that no matter what type of financial education you pursue, it’s essential that you do your own research before making any major decisions regarding your finances. Be sure to ask questions if something doesn’t seem right or if something isnt clear. Additionally, be aware of potential scams when seeking out advice from third parties.

• #20.     Financial Advice: Seeking financial advice is an important part of managing your money. You should understand the different types of financial advice and how to find the right advisor for your needs. You should also be aware of the potential risks associated with financial advice and how to avoid them.
  
  

  Financial advice can be a great way to help you make the most of your money. It is important to understand what type of financial advice you need and how to find an advisor who is qualified and experienced in providing it. There are different types of advisors, such as investment advisors, tax advisors, estate planners, and insurance agents. Each one has their own area of expertise so it’s important to do your research before selecting an advisor.

  When seeking financial advice, it’s also important to be aware of potential risks associated with the advice given. Make sure that any recommendations made by the advisor are suitable for your individual circumstances and goals. Ask questions about fees or commissions they may receive from recommending certain products or services.

  Finally, remember that no matter how good the advice may seem at first glance, always take time to consider all options available before making any decisions regarding your finances.