When you’re young, money has a tendency to seriously slip through your fingers. It’s often gone almost before you’ve even laid hands on it. As an experienced adult, I cringe. I get it… but I totally cringe.
You’re no different than any other young person. You have to learn and experience. And while there are some young people who are absolutely religious about money, many aren’t.
Sure, we could probably force you all to do things a certain way, but there are both pros and cons to that concept. Bottom line though, don’t do things you’re going to regret… Let’s look at that for a moment.
Imagine, as an adult 20 years down the road you look back on your young adulthood and realize that you had absolutely nothing to show for even a dime of the money you earned during that time. While you’re a teenager, odds are you’re not earning a lot. But that doesn’t negate the wisdom of setting some of that money aside. Why?
- Your expenses are only going to go up.
- Every dime you spend at a young age has much more time to grow and mature at an exponentially higher rate than it will even 5-10 years down the line.
- Did I mention expenses are going to become overwhelming? Because they are.
1. Start with the Basic Questions.
Again, I truly do understand the argument that “you’re only young once”… I do…. but I’m on the other side of that and I’m telling you it’s a huge deal to make sure that while you’re busy living the young life, you’re also being smart about it. Do things that will soften the blow later on.
- Do you have an emergency fund?
- Can you afford to pay your bills?
- What if you need to buy a new car?
- What if you decide you really want something…
You get the idea. We have supported all of you in having a little “play” money. But at the same time, being smart about money is absolutely key.
2. Make a Budget.
As a 16-18 year old it’s likely not going to be real long. You’ll have just a few. It’s all about habit here honestly. Getting in the habit of being smart with your money. Yes, even frugal. Making a budget entails a list of your monthly expenses (think gas, phone, insurance, food, etc). Compare that to your income. What’s left over? What should you do with those funds?
Many first jobs don’t bring in a lot. But even though it’s hard to do and will likely take more patience, saving up a good portion of each paycheck is a great idea. I guarantee you it’s something you won’t ever regret doing. Getting in the habit as a young person with few expenses of even trying to make it a goal to set aside 50% of your paycheck.
Not every job will allow for that. The numbers just won’t add up. You may still barely be able to make ends meet. The point here is to take a percentage of what’s left over after expenses and make sure that as much of it as possible ends up being saved.
3. Set Goals and Stick to Them.
Don’t be flighty with money. Set goals – achievable goals – and stick to them. Become accountable with your money even. There are so many areas in life that we are just better if we stay accountable. This is absolutely one of them.
As a teenager it’s important to think a little more in short term goals, but don’t completely write off the long term either.
- Where do you want to be in 1 year?
- In 3 years?
- In 5 years?
You don’t have to go further than that. But you truly do need to at least give it some serious thought. I’m not saying come up with a detailed plan, just think. I can tell you where you don’t want to be. A young adult on their own for the first time without enough money to even pay the rent.
Yes, there are circumstances that are outside our control. Stuff happens. Life isn’t and never will be perfect. But the idea is to set yourself up to succeed as much as possible. Not set yourself up to easily fail or slip off a cliff into financial debt.
4. Avoid Debt
Speaking of debt… let’s go there for a brief moment. Avoid it. It’s a huge pitfall. There are a lot of options available these days to help you build your credit, but overall pay cash for everything you buy. We have been teaching all of you this because we know how awful the avalanche of debt can be, and I’m telling you it is absolutely an avalanche. If you can save up for a few months to pay cash for a car, do it.
If you’ve followed our advice and created emergency and savings funds, even if you find yourself in an unexpected position to need to replace something (like a car) you won’t have to go into debt to do it.
5. Seek Guidance
What happens when everything goes wrong? What if you can’t figure out how to make the budget work? What if you can’t make ends meet and you don’t know what to do? Seek help. I don’t mean counseling per se, but there are many people out there that only have your best interest at heart and want to see you succeed. Friends, family… who do you trust with that information? Let go of any pride, take a deep breath and ask for help.
You’d be amazed how an outside set of eyes can sometimes work miracles with an impossible budget. Sometimes they can’t, but often they can offer you ideas and insight that never occurred to you.
But Always Remember….
No matter what your money experience is, no matter the mistakes you make, no matter the successes – please remember that your value as a person should never be judged or wrapped up in money. Ever. Period.
Seriously, how shallow is that anyway?
If you measure yourself or others based on belongings, things or finances… there are much larger issues afoot. It should never ever define you… or anyone else.
Who you are as a person is, and should be, wrapped up in how you live – in the choices you make – are you living the life you were called to live? Never forget you have a greater purpose to fulfill, money may help you along that journey… but when all is said and done it won’t mean anything.
With all my heart,
Letters to My Sons are little insights not only for my sons in particular, but they also give other parents a peek into what a typical discussion on a variety of subjects may look like in our home. While not all our morals, values or rules may look even remotely like yours. You may not even agree with them, but the point is simply that these are topics that should be discussed at some level in the teen and especially the adult-nearing years. Often they are concepts that have been taught to our children throughout the years, but we have found that most things need to be addressed head-on to really sink in.