Being a teenager gives you the chance to make a great life decision, whether you realize it or not. Starting to have great money management habits at a young age can set you up for a lifetime of financial happiness.
Not everyone is good with money at a young age and it’s often the last thing on our mind. We want to run around with our friends, go to the movies, buy the new phone or just simply grab a snack at the store. Money is not really wired into our brains until we hit that dead stop at 18 and all of a sudden we have bills, need a job, need a car, need to pay insurance and you’re sitting there thinking “what just happened, I am not ready for this” – we’ve all been there.
Time Can Hurt You
There is a strong chance that you’re not actually making money or working through your teenage years, there are actually a lot of kids that don’t work. You should work those summer jobs when you can. You should save that money. You need to build a budget. You won’t make thousands and thousands of dollars, that’s not the point here. The point is to work and take that money and do something with it. Depending on your passions and interests you can start investing. The earlier you invest the more value your money has later on, it’s really not a secret and your parents will tell you the same thing.
Good Money Saving Habits Can Go a Long Way
A habit can be good or bad and you don’t want any bad habits with your money. By staying conscious of your saving and spending habits you can often just automatically save money without even noticing. This is a habit many millionaires have – they save. You should really strive to save at least 10% of any money you get, that’s right any money you get.
Stay Educated on Money and Investing
The best thing you can do as a teenager is to get educated on investing. If you look at all of the self made millionaires out there they all have the same traits when it comes to their money, they save and they invest. If you’re already good at saving it may be time to freshen up your investing skills and put that money to use. The more you know about money, investing, budgeting, and just all around financial guidance the better off you’ll be in the future.
Make Smart Decisions on “Big Ticket” Items
So you’re 18 and you’re running off to college, should you pull out $120k in loans? Probably not. These are the decisions you’ll have to start making as your life goes on. A smart decision when it comes to big ticket items is to think about it before you buy it, do you really need it? Can you live without it? When it comes to college it may be in your best interest to either not attend or attend a local community college before running off to the big leagues. It’s the same thing when it comes to a car. You may want to choose a cheaper and sufficient used car versus buying brand new.
Start Building a Credit History
The single most important thing you can do when you turn 18 is to start building a credit history. You’ll need credit for almost every major purchase whether it’s a car or a house. You should speak to your parents about being added as an authorized user on their card. This is probably the “best” way to start building a credit history as you can benefit from the length of credit, credit balance, and payment history they have while you’re a user. We don’t suggest running out and getting 5 credit cards to max out – that’d be the worst thing you can and you’ll spend a better part of your twenties paying them off.