SAY GOODBYE TO LIVING PAYCHECK TO PAYCHECK: Tips for Teenagers

Tips for Teenagers

This post is part of a series.  To start the series from the beginning, click here.  To browse through the series, click here.

It is at this point that the conversation switches from the parent to the child.  Teenagers are at an age when real responsibility starts to become apparent.  Getting to work on time for their first real job, maintaining the gas level in their car, and much more.  The responsibilities keep multiplying exponentially each day.

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The teenage years are a crucial time to set the foundation for your financial success.  Financial security doesn’t come easy, it takes work.  But, there are many things you can do to get going on the right track.

Get a Job
Yes, of course, the way to get money is to get a job.  But, really at this time, the job is to teach responsibility and discipline.  By starting early, when you begin your career, you will know already have gone through the learning curve of holding a job.  Also, save as much money as you can.  No more 50/50 rule.  Just save, save, save.  You will be thankful for it later.

Get a Credit Card
Really!  But, be responsible with the credit card.  Credit is very important to your future success.  If you want to buy a car or buy a house, you will likely need multiple sources of credit.  It is quite easy to get credit at a young age because you haven’t yet done anything to negatively affect your credit score.  Start with a card with a low limit and pay off the card every month.

Just because you have a credit card does not mean you have a money fountain.  You still only have as much money as you make so spend wisely.  If you are worried about over spending, set a rule for yourself such as ‘only use the credit card for gas purchases’.  This way, you won’t be tempted to overspend but you will be building your credit.

Get Another Credit Card
No, I’m not kidding.  Once you have mastered having one credit card, spending a minimal amount on the card, and paying the card off monthly, get another credit card.  Banks love to issue credit cards to people with low risk.  On the flip side of this, banks are cautious about issuing credit cards to individuals without any credit who’ve been in the adult world for many years.  Don’t think you can just wait until you are 25 or even younger in some cases to apply for your first credit card.  The process will be much more difficult.

Do not, under any circumstances, max out your credit cards!  Do however be sure to keep each credit card under 33% of the credit limit at all times.  Remember, one day you will want to buy a large item like a house.  It is essential that you have a good credit score.

Live with Your Parents
I can hear it now.  “I’m 18, I’m an adult.  I don’t need to live under my parent’s roof.  I want my freedom.  I’m responsible. I just need out!”  Or something like that, right?  Of course, we’ve all had these thoughts.  The freedom from living on your own is fantastic.  But, with that freedom comes the responsibility.

Once you move out, you will have bills galore!  Rent, water, electricity, internet, phone, gas, food, and the list goes on.  There is no need to throw all of these responsibilities onto yourself so early in your life.

Chances are, if you move out young, you probably don’t have a job that allows you to pay all of your bills and save money.  You may even struggle to get all of your bills paid on time.  This is not how you want to start off your life.  Starting on this path will inevitably lead you towards a life of living paycheck to paycheck.

So, if at all possible, stay at home and save as much money as you can for as long as you can.   Let’s also put this into perspective.  Do you have a significant other?  Do you plan on getting married one day?  You’ll probably want a house at some point.

Houses all around the world cost different amounts, but let’s go with a standard $200,000 house for example.  You will not only need to have your sources of credit showing financial responsibility in order to buy your home, you will also need a down payment of 20%.  Yes, it is possible to buy a home with less than 20% down but it is way more expensive because of extra fees.  So, 20% of $200,000 is a whopping $40,000!

It is possible!  Without having to deal with expenses, you can almost literally dump your whole paycheck into your savings account.

Let’s say you make $10/hr and you work 20 hours per week during the school week and 40 hours per week in the summer.  That’s $200/week during the school year and $400/week in the summer.  Without including taxes, in one year, you could make $8000 during the school year and $4800 in the summer.  That’s $12,800 in just one year!  Back that down to $10,000 assuming taxes and other fees.  So, in just one year, you are a quarter of the way towards having your down payment.

Let’s say you start working at 17.  This means that it is possible to have saved $40,000 by the time you turn 21.  And yes, it is possible.  I did it and began looking for a home at 21.  I didn’t find my home until I turned 23 but that just gave me more time to save money.

Choose a Local College
Yes, college can be expensive but it is very important towards your future career and financial success.  By choosing a local four-year college, you can get a Bachelor’s degree with $30,000.  If you start school right out of high school, four years later you will be 22 and given the above example, you will have saved $50,000.  Paying for school leaves you at $20,000 and by 24 you will be back up to $40,000!  Plus, in those last few years you just may have landed a fantastic job paying $20/hr instead of $10/hr which would of course justify the expenses of living on your own.

Do Side Jobs
There are many opportunities for side work in the teenage years.  Babysitting, dog-walking, lawn-mowing, snow shoveling, concession stands, house-sitting, etc.  The teenage years also bring the most energy so do as much as you can while you are young because the older you get, the less energy you will have to take on side project.  As with every job, save, save, save!

Make Time for Friends and Family
While this may not seem like it can help you save money and avoid the paycheck to paycheck lifestyle, it definitely can!  Success happens more often when people are happy with their life.  Friends and family bring a lot of happiness and it is important to always make time for them.

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Say Goodbye to Living Paycheck to Paycheck: Creating the Roots

Say Goodbye to Living Paycheck to Paycheck Creating the Roots

This post is part of a series.  To start the series from the beginning, click here.  To browse through the series, click here.

The value of money is something so exciting to your young child.  The smallest amount of money seems so large and can be extremely motivating to them.  Around first grade or six years old, schools begin to teach students all about the value of money.  Children learn about pennies and nickels and dimes and quarters and all kinds of bills.  They also lean about dollar bills, face values, and how to add and subtract with all of their types of money. This new skill comes at a great time to begin teaching children how money is used in real life situations.

In order to create a life of financial stability, the school aged years are prime for teaching, modeling, and interacting with money. In the school ages years, children are very capable of understanding chores and allowances which can be used to show that we work to make money and then we have different options for what we do with the money. Each family should determine their own method for kids to earn money based on what fits best into their daily routines.

Once your family has put a system into effect for how their children will make money, the children need to be taught how to handle their money.  As adults, we all handle our money differently. Some people spend tomorrows money today by using credit, some spend only what they have but spend every penny each paycheck, and some save as much money as they can.  In order to create a lifestyle where living paycheck to paycheck isn’t the way, it is important to teach children how to save their money from the beginning.

To begin teaching saving to a child, you will need something to put the saved money into like a piggy bank or even a savings account, or both depending on the age of the child and how well they understand the value of money.

When the child gets money, let’s say from chores or an allowance, teach them to save by having them put a percentage of money each time into their savings. For example, you could give them $4 per week allowance and have them put $2 in savings and the other two they can spend or use to save up and spend at a later time.

Not only will this teach your child how to save up for something that they want, it will teach them how to save for a later date.   This concept is very important to learn at a young age because as an adult, we should each have a savings account for a rainy day.  For your children, I bet they will be very happy after saving a percentage of their money for years when they decide to buy a car or move out on their own.  Having taught your child to save their money from a very young age will give them a great head start in their young adult years.

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Say Goodbye to Living Paycheck to Paycheck: Building the Foundation

Building the Foundation

This post is part of a series.  To start the series from the beginning, click here.  To browse through the series, click here.

Like most life skills, learning the value of a dollar is an important concept that if not taught at a young age is hard to grasp.  The best time to begin teaching this concept to your child is when they are able to comprehend what you are asking them to do and are able to do the task requested.

I know, you’re probably wondering where I’m going with this because the series is called “Say Goodbye to Living Paycheck to Paycheck” and of course, children this young do not even know what a paycheck is let alone what it means to live paycheck to paycheck.  Through my years teaching all ages and different tasks, I’ve found that I have best learned the topic at hand when I am teaching the topic to someone else.

Many times, as adults, we want to skip to the end solution.  So, instead of looking at what a dollar is, how much it’s worth, how many dollars you need to pay off your credit card and how much work is required to reach that goal, we often look straight to the end goal by trying to find money really quickly by being dishonest or giving up because the goal seems unattainable.  It is important to always take a step back and analyze.

So, from the beginning.  Your child is starting to understand your requests and act them out.  This is a very exciting time for you as a parent and for your child!  I bet you’ve started with teaching your child how to clean up their toys by taking them from the floor and putting them into their toy chest.

So now that your child knows how to do this simple task, why not teach them another like putting food in the dog bowl, watering the flowers, or dusting their bedroom furniture.  Whatever the task is, you need to decide ‘Is this a task something that is expected or is this something extra’.

Here’s where learning the value of the dollar comes in.  If this task is something extra that is not required of your child but they could do it on occasion when they want to, then this task is a great opportunity to teach your child about money.  If you had said that the task is something expected, I suggest not using the task as a way to learn money because it could teach your child that anytime they do what they are supposed to be doing they will get money.  Instead, use something else that’s interactive like maybe playing a learning game together after an expected chore is completed.

Since your child is young, most likely either 2 or 3 years old, you do not use much money to teach the concept.  Let’s say if your child decides to feed the dog, they get a quarter.  They can then put this quarter in their brand new piggy bank.  (Or you can use any type of token or counting toy to avoid the choking risk.  Granted, stay with your child to teach the whole lesson and the quarter will be in the piggy bank long before your child decides it’s best as an afternoon snack.

Here comes the important part.  Your child will need to have a reason to connect with the quarter.  This is something that can be personalized from one family to another, but one way to do this is by explaining to your child that when they get four quarters, they can go to the dollar store and pick out any toy.  Each time they get a new quarter, take out all of the quarters, count the quarters, and explain again that when they get four quarters they can get something from the dollar store.

Of course, nobody wants to be going to the dollar store every other day, so make limits as you see fit.  Maybe you go to the dollar store every Monday and your child can bring their money with them.  Or maybe once they get to 10 quarters you go to the dollar store.  Of course, 10 isn’t easily divisible in dollar terms but the number is great for learning how to count.

As your child grows and learns, you can do fun things like creating a chart to show different values for different tasks.  You can also begin to teach them money skills that they would otherwise be learning in the first grade by simply explaining each step as you go.

Money Chart

Free Download of the Editable Money Chart

Ex:  This is a quarter.  When you have four quarters *Show four quarters and count, 1, 2, 3, 4*, you can get a dollar *Show a dollar bill* and trade the quarters for the bill.

This concept will be harder to understand but it will begin to teach your child the worth of money and will save you from having to get a roll of quarters from the bank.

Remember, the goal here is to begin to learn the value of money, not to complete the tasks to perfection.  Of course, with the dexterity of a toddler, it is likely that dusting will not be effective.  But, the takeaway is that they do the task and get the money which they have to save to get something that they want.

Happy learning!

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