All about the Money


By Thamar Jones
If you’re a teen or young adult, you are in a very powerful position to develop good money habits that can put you ahead for the rest of your life. I’ve got some tips to get you started.
I was not good with money as a teenager. First of all, I was clueless on how to make money and when I did manage to earn a little cash, I would spend it on clothes and food for my friends and I. If I knew as a teenager even a fraction of what I know now about money, I’d probably be retired. So let avoid some common financing mistakes with these five tips
1. Understand the Power of Time
You probably aren’t making much money right now, but that doesn’t matter. What matters is time. And your money has a lot of it. Let’s look at an example: At the end of your summer job, you have $1,000. You invest it at a rate of return of 5%. You don’t contribute another cent for 50 years. At the end of those 50 years, you will have $11,467.49. Of course, you will be investing much more over those years than just that initial $1,000 so imagine how fast your money will grow if you start early. Time is rarely on our side but it’s on your side now if you start now.
2. Start a Money Saving Habit
How long have you been brushing your teeth? Hopefully, by the time you’re a teenager, for many years. And because you have been doing it for so long, it’s just a habit. The power of habit is almost as important as the power of time when it comes to money. A habit is something you do automatically; you don’t have to think about it too much.
If you start the habit of saving money now, that habit will always be with you. Every dollar you get, whether it’s a gift, an allowance, or pay from a job, get into the habit of saving a portion of it. Half of it would be ideal and now is the time to start because you don’t have a lot of expenses. The older you get, the harder it can seem to save even 10% of your money, but if you started saving much more than that at an early age, it wouldn’t seem hard to you because it’s just a habit.
3. Track Your Spending
This can be hard because as a young adult you might be earning money by doing jobs, which are usually paid in cash. And cash is the hardest thing to track because it does tend to burn a hole in our pockets, so it’s better to have it stashed away somewhere; that way it is less tempting.
It’s a good idea to establish a relationship with a bank when you’re young. In fifteen years when you want a loan to buy a house, a long track record with a bank can be helpful. Take your cash and open two accounts, a checking and a savings account. Remember, you’re saving half of every dollar you get so half goes into checking and half into savings. It’s essential to separate your money. Money that should be saved tends to disappear when it’s mixed around with money that gets spent. You can get a debit card for the checking account. You can now spend money via your debit card rather than cash so you can easily track spending.
4. Get Educated
You probably aren’t getting much education about personal finance in school, maybe none at all. I have a whole conspiracy theory built around this. The more you know about money, the less you are tied to a job for decades making someone else money and the less consumer crap you buy. So you can see that it’s in the interest of certain groups to keep you in the dark when it comes to handling money. But they don’t control the Internet so this is the best place to start. There are also many personal finance books to choose from such as I Will Teach You to Be Rich, The One Page Financial Plan, Level up Your Life, The Boglehead’s Guide to Investing, and A Happy Pocket Full of Money.
Talk to your parents about money. Some families don’t like to talk about money; they think it’s rude or vulgar, or just none of your business. But they’re wrong, and those attitudes are why so many people leave home without the first clue about how to handle money or anything related to it. You don’t have to poke around in your parent’s bank balances to have a discussion about money. You can speak and ask questions, in general, terms.
One of the best ways to open the conversation is to ask what the most important piece of money advice they can give you is. Parents love to give advice and asking such an open-ended question can help to start a deeper conversation.
5. Make Smart Decisions about College
A smart decision about college can include the decision not to attend, or to delay attending for a few years and work full- time to help pay for it. A smart decision might be attending a local college for two years and then transferring to a more expensive, prestigious school. It means applying for every grant and scholarship you are evenly remotely qualified for. A smart decision is choosing to major in something that people actually get paid well to do. Crippling yourself with a debt that can almost never be discharged is going to color the rest of your life for decades to come.
You may have to delay things like buying a home and starting a family for years if you come out of college with monumental debt. Overall, college is still a good decision but the days of going to the best school that will have you on loans are over.
Bonus: Avoid FOMO
FOMO is fear of missing out. It’s easy to think everyone is having more fun than you are when you’re a teenager. And sometimes, people are having more fun than you. That’s true no matter how young or old you are. It’s important, though, to not give up what you want most for what you want now.
What you want now is to take the money you made at your summer job and go on spring break. What you want most is to graduate debt free, or to retire at forty instead of 65, or to be able to quit a job you hate because you have a big emergency fund to see you through to your next job. It might not seem like it when you’re eighteen, but all of that will be true in time.
If you ask people older than you what their biggest financial regret is, a lot of them will tell you that they wished they had started getting serious about money much earlier than they did because doing it only gets harder the older you get. Start now so you don’t have that same regret a few decades down the road.