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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.
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.
Okay, I have to admit, I’m not a teen anymore. But I have to say nothing really changed since I was, considering I’m 22. I have to say that you have nice tips. However, I’d love to know where you live, cause where I am, a student get’s paid 3,8€/hour. Also if you’re in high school it’s impossible to work during week, because of the lectures (you don’t get hired if you can’t work full shifts). So you’re stuck with working weekends and holidays/vacation.
When you get to college you have to plan, plan, plan if you want to work during weeks and you need a boss who’s okay with you not working every day (because some lectures are obligatory).
So leaving your parents house is legit impossible until you finish your education and get a full-time job, or have a partner who’s able to pay for everything lol
Anyway, sorry for the rant… Also, I’m sure your tips will help a lot of teens 😀
I live in the US. When I was a teen, I made $5/ hour but before that I was babysitting for $3/hr. It was a bit different though because there are a ton of side jobs you can do. I worked in the school store, had a side job at a retail store, and babysat through highschool. In college, I definitely planned school and work around each other. It’s a bummer that there aren’t many companies by you who are flexible. It’s not very often out here that a teen doesn’t have a job before graduating high school. I lived with my parents throughout college to save money and worked about 30 hours per week during my undergrad and about 50 hours per week during my grad school which I did all online. Unless you’re in management or an office job out here, most companies are very flexible with hours of work. It’s definitely the norm to be in school and work or even work two or three jobs at a time. Most companies just expect that you also have other responsibilities.
They need to get their phone bill in their name along with car insurance. Cr good credit score as they pay each month. We co signed for each kids lap top. Went to bank they got a loan. They paid it off. Big credit score boost.
Interesting. I kept my phone bill and car insurance bundled with my parents actually until I bought my house. I still paid my portion but it would have been double the cost if I wasn’t bundled.
These are awesome tips. My parents were worried when I told them I got a credit card. I love shoes so they were afraid I would not be able to manage it. But I did! And like you mentioned, I only spend what I can afford 🙂
I was just wondering if anyone was catering their blogs toward college students. There’s so much they information that can be geared toward them. You nailed it and definitely made me do a double take on “get a second credit card”… Lol great post.