How to Speak Money

Withdrawal. Interest. Debit. Credit. When people talk about money, it might feel like they’re speaking a different language. Guess what? In a way, they are.

“I think teens have some of the same fears about learning about finance as they do about learning any foreign language, since it’s chock-full of special terms,” says Jean Chatzky. She’s a personal finance journalist. Even though learning about money may feel intimidating, it’s important. As a teen, you need to know how money works if you want to get a job or save for a big purchase. When you’re an adult, you’ll need money to buy a car, pay your bills, or rent an apartment to live in.

Fortunately, once you get past the unfamiliar words, most basic financial concepts are not hard to grasp. Learning how money works will help you manage your cash, so you can have more of it in the future. Read on to pick up some finance basics and become a pro at the language of money.

If you regularly spend money on things like snacks, movies, or transportation, you might carry around a lot of cash. An alternative to a wallet full of dollar bills is a debit card. This is a plastic card that is linked to your checking account. You can use it to buy stuff or take cash out of an ATM.

Every time you use your debit card, the money is withdrawn directly from your checking account. You can link your debit card to apps like Venmo, Cash App, or PayPal to send or receive money to and from friends.

Credit cards can also be useful, but you need to be careful with them. When you use a credit card, you’re actually borrowing money from the bank. The bank doesn’t let you borrow that money for free.

At the end of each month, you need to pay back the amount of money you borrowed. If you can’t pay back the total amount, the bank will charge you interest on what you owe. They may also charge late fees.

Credit cards can be dangerous because of how the interest and fees add up. The amount of interest banks charge for credit cards changes yearly, but it can be as high as nearly 30 percent. This means that if you buy a $100 pair of jeans with your credit card and you don’t pay back the $100 by the end of the month, after a year those jeans can cost you more than $130.

It might seem like savings accounts are for older people who are thinking about retirement. But in fact, now is the perfect time to start saving, says Chatzky. It’s a great idea to get in the habit of saving a portion of any money you get, even if it’s a small amount like $10 or $20. “People think if you don’t have a lot of money, you don’t need to learn how to manage it,” she says. “But the way to build a comfortable financial life is with small habits often repeated.”

Financial experts often recommend that adults save at least 15 percent of their money. To figure out what amount you should be saving, think about your financial goals. Do you want money for a new dress for homecoming? Tickets for Taylor Swift’s next tour? Your first car? Then think about how much you can comfortably put aside each week or month. The earlier you start saving, the sooner you will be able to make your goal a reality.