Know Your Whole Money Picture

Principle 1

Know Your Whole Money Picture

We have a friend with a serious sweet tooth. When we’re out at a restaurant, he’ll say, ”Hey, I haven’t had a piece of chocolate cake in a while. I think I’ll order some for dessert.” If we’re at a movie theater, our friend might say, “Been a long time since I had Milk Duds.” At an amusement park: “When was the last time I ate cotton candy?”

Our friend’s doctor tells him that his diet is taking years off his life.

We tell you this story to make a larger point about seeing the whole picture. Our friend doesn’t see his whole diet picture. He can tell himself he hasn’t had a cookie in a while—and then feel fine about eating a few. He can then tell himself the next day it’s been a while since he’s had a doughnut—and eat two.

Our point?

The point is, maybe the question our friend should ask himself isn’t whether he’s had some specific high-cholesterol dessert recently, but whether he’s had any dessert recently.

The same rule applies to money.

Here’s how.


The average American family is $11,000 in credit card debt!


Imagine a guy about your age. He’s riding his bike home from school and stops at a strip mall along the way to get an iced tea from the convenience store, which he does every day. But today he decides to pop into the local videogame shop next door and get a new game for his PlayStation.

Is he spending his money wisely?

The answer, of course, is that you can’t know the answer. You don’t have enough information. So let us give you one more piece of data. Imagine he hasn’t bought a PlayStation game in months. Now do you think he’s spending his money wisely? You still can’t really know, can you?

That’s because we haven’t told you about this guy’s whole money picture.

You don’t have the whole picture

Maybe he has a job and saves most of what he earns. Once in a while—on a day like today—he pops into the game shop. He’s well aware of his whole money picture and sets aside a little extra for purchases like this.

In that case, he should definitely buy a game if he wants one.

But maybe he has no job, gets very little money from his parents, and spends every dollar immediately. And even though we told you he hasn’t bought a game in months, maybe he’s recently bought himself a skateboard, a snowboard, a few albums on iTunes and some DVDs.

In fact, maybe the money he’s spending on this game is money that his mom gave him to pay for lunches at school.

You need your whole money picture

You need to understand your “whole money picture” before you can know if any specific purchase is a good idea.

Your whole money picture is a way of thinking about your total financial situation at any given time. It covers everything—how much money you have right now and where it is (in a bank, under your mattress), how much you expect to have coming in (from a job, gifts, other sources), how much you plan to spend (food, clothes, music), and how any single purchase will affect your overall financial situation.


One third of high school seniors who have their own checking accounts have bounced a check.

Something always comes up

The something-always-comes-up rule is part of your whole money picture too.

Even if you keep track of how much money you have, how much you expect to get, and where you’re spending it, you still need to keep a “cushion”—a little something set aside for emergencies, or even for unexpected opportunities—because something always comes up.

Not knowing can hurt you

Even if you make enough money to cover all your expenses, if you don’t set aside a cushion—money you save specifically for the unexpected, like car problems—eventually you’ll find yourself in trouble.

Remember: something always comes up.
Not understanding their whole money picture is what gets a lot of adults into debt


The number of 18- to-24-year-olds filing for bankruptcy increased 96% from 1997 to 2007.

Life lesson

Not leaving a “cushion,” money set aside for the unexpected, is often what gets adults into debt.

They get hit with a surprise—“It’s so-and-so’s birthday,” or “My computer crashed and I need a new one”—and because they don’t have the money available, they borrow, usually by using a credit card.

Big mistake.

We’ll get into this later, but for now just remember this: Avoid buying anything on a credit card unless you can pay the whole thing off when the bill comes.


Read the credit card
agreement before you apply.

Track your whole money picture

When it comes to keeping track of your whole money picture, use whatever tool works for you. Write everything down in a journal, or use software like Quicken or Microsoft Money, or put it all into an Excel or Word file.

The point is, keep track of it.

This is a lesson that no one ever taught young Will Smith. He had millions in the bank, so he thought, “Hey, I’m a multimillionaire. I can afford this sports car.” So he bought it. And soon after that he had a similar thought: “Hey, I have millions. I can afford this luxury SUV.” Same for designer clothes. And for trips around the world.

And before he knew what had happened, Will Smith didn’t have millions anymore. In fact, he owed millions!

money skill track your spending


The average teen spends $3,200 a year.

So, should you never spend?

At this point, you might be wondering if we’re telling you to save everything and never spend your money, or if we’re even suggesting that buying things is bad.

Don’t worry.

The Money Savvy Teen philosophy is about developing a healthy relationship with money. That means learning the right balance between enjoying your money and protecting it—so you can continue enjoying it throughout your life.

You know that feeling you get?

You know that feeling you get when you put off doing something you don’t want to do?

Maybe it’s homework, studying for a test, or doing chores.

You’ve probably noticed that when you put off doing those things, you can’t fully enjoy yourself until you get them done, because the task is always in the back of your mind. But if you just tackle the task and get it over with, you can fully enjoy yourself right after because you know it’s done.

In fact, sometimes you even enjoy doing the task, because you know you’re getting it out of the way.

The same applies to money. Let’s take a closer look.

Trust the feeling

You can get that same feeling when it comes to your money.

If you don’t have a good understanding of your whole money picture, you can go out and spend, spend, spend—and you might even have some fun doing it.

But you’ll also have a nagging worry in the back of your mind that you’re getting yourself into money trouble.

But there’s a better way…


Write down all of the poor spending practices that you’ve noticed in yourself and that you want to change. Practice doing it a better way.

Peace of mind

On the other hand, if you have a good grasp of your whole money picture—you know where your money is coming from and where it’s going, and you keep a money cushion for emergencies—then everything you buy will be that much more fun. You’ll enjoy not only the stuff you buy but also the peace of mind of knowing that you’re in great financial shape.

We’re all in favor of you having fun with your money. That’s an important part of what money’s supposed to do for us. We just want you to strike the right balance between spending and saving, between having fun with your money right now and understanding how that spending affects your whole money picture.

In short, we want you to be in charge of your money, not the other way around.


What is a money cushion?

A money cushion is money set aside for emergencies or unexpected opportunities

benefits of being money smart

Knowing your “whole money picture” will…

  • Help you enjoy your money much more
  • Give you peace of mind that you’re financially ready for anything
  • Help you develop a healthy relationship with money
  • Maybe even save you a fortune

Timeless Advice

We’re writing here about your whole money picture in terms of you now, as a teen, and how you can use this tool to develop smarter spending and saving habits today. But this concept also applies to you as an adult—and it’ll be even more valuable to you then.

So learn this skill.

Always know your whole money picture. We promise you’ll live a far happier financial life.


The mint makes it first, it is up to you to make it last. – Evan Esar


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