I am a Financial Advisor in part because I want to help other peoples’ kids learn how to handle their money (my own three kids got off to a slow start managing their money). I was thrilled when I received an email from an 18-year old who had seen a video of me talking about teens and money. Following, for teens everywhere, is my response to his query about what he should do about his future finances.
Here are 10 things you should know about money:
Number 1 – Being good with your money has a great deal of sex appeal. Demonstrate to the opposite sex such things as saving, investing, frugalness, and she or he will be attracted to you. Also, seek a partner with good money habits.
Number 2 – Your best investment is a good education. Learn as much as you can for every minute in the classroom. If you can’t afford a four-year university, take appropriate classes in a Community College for two years and then switch to the university.
Number 3 – Never, ever spend more money than you make.
Number 4 – Think before you use a credit card. You must already have the money in the bank before you buy something with a credit card. If you cannot pay your credit card balance at the end of the billing cycle, you are in deep financial trouble. Avoid deep financial trouble.
Number 5 – Track your expenses monthly or each pay cycle. If you know where your money goes, you can set priorities.
Number 6 – Save at least 10% of your earnings. Start saving for retirement when you land your first real job. Also, put some of your earned income in a Roth IRA, the younger you are when you start, the better will be your future.
Number 7 – Get a job. The majority of financially savvy and successful 20 and 30 somethings I know started working outside the home in their early to mid teens. The money they earn buys things not available under the family budget and gives them valuable experience on how to handle money.
Number 8 – After you buy something, label it: “Needs” (food, shelter, transportation, insurance); “Wants” (video games, more clothes than you will ever wear, eating out); “DH” or Dangerous to your Health (tobacco products, alcohol, drugs, sugary foods, processed foods with unpronounceable ingredients). Review your list of purchases. Then next time you buy something, ask yourself, “Is this something I really need?” Use common sense when you buy stuff.
Number 9 – Do not loan money to friends.
Number 10 – Understand that you and you alone are responsible for your money. Take charge of every dollar.