GMR 113: Money Tips for Teens and young Adults
Passing on financial knowledge and wisdom to our children is something we should all be intentional about. In this episode of Getting Money Right, we share some money tips you can use to help your teen or young adult to start out on a healthy financial path. And yeah! Some of this information is also useful for the rest of us!
Show Notes
Kara has two sons, 16 & 20, so we’re going to give some general advice for kids 16-20, but these principles can apply for younger kids in some areas and older young adults as well.
Past Series and Episodes
We do want to highlight a few series of episodes that we’ve done that may also be helpful for young people getting started on their financial journey.
Episodes 75-77: Money Tips for Recent Graduates
Episodes 78-80: Dealing with Student Loans
Episodes 61-63: Dating, Pre-Marriage, and Marriage
Build a Financial Foundation
Start teaching them as early. If they can do basic math, it’s time!
It’s important to tailor your financial education to their level of understanding.
Young (under 10 years old) Start them off with an allowance earned from doing chores.
10/10/80 (Save 10, give 10, spend 80).
Middle School/Highschool- Increase saving as they get into tween and teen years - prepare for that first car, business start-up, or international education opportunities (student exchange programs).
Stop allowance at 16 to motivate them to get a job or starting a small business.
Start them on some written budget or app that helps them to begin managing money through categories (Auto expenses, Clothing, Entertainment).
College/University - Continue managing money through a budget.
A part-time job.
Maintain a B or better grades in classes if you’re paying college or university.
Business classes or mentorship if an entrepreneur’s direction is chosen.
Principles for Success
Learn self-control / delayed gratification’
Avoiding financial mistakes is the best way to ensure a good healthy financial future.
Don’t allow peer pressure or keeping up with what your friends have or what they do, to drive your spending.
Never pay interest you don’t have to (cars, student loans, credit cards.) This one rule will almost guarantee you will become wealthy.
Save before you spend. Build a savings account before you spend on any big-ticket item - moving out on your own, buying a car, taking vacations.
Only spend using a budget and never spend everything you get. Always save and invest at least 15%, but more if you can. If you start saving 30% of your income, you can keep that up for the rest of your life.
Learn about personal finances
Don’t just take financial advice from other people, that includes your friends and family because there’s a good chance they aren’t managing their money well either.
Become a student of personal finances
Read books on personal finance.
Take a personal finance course.
Listen to PF podcasts (GMR)
Investing Advice
From a compound interest perspective, it might seem like the best time to invest in an IRA is age 16, because you’ve got 50yrs for that money to grow, but the best thing you can do is invest in yourself.
That could mean more education and technical skill training, or it could mean equipment for a side business, or it could mean starting the habit of saving for goals, starting with an emergency fund, then saving for a vehicle, then saving for college.
Saving for these goals is actually building the savings habit you will need long-term, plus having the emergency fund will help you through the many unexpected expenses of the teenage years, and if you buy a car, then you’re really investing in transportation that may help you get a better job while you’re in school because you can get around.
Starting an IRA at 16 isn’t a bad idea, but honestly, it usually turns out to be a better investment at this age to invest in:
Emergency Fund
Transportation
Small Business ideas
Education
Researching college
Taking dual credit classes can be worth several thousand dollars, ask your high school guidance counselor about dual credit classes that can give you both high school and college credit. You may also reach out to the local university for info on this.
Determine the best college for your personal financial situation.
Tarrant County College is only $64 per credit hour if you live in Tarrant County, usually, each class in college is 3 credit hours, so it’s about $200 a class. A full course load is 4-5 classes, so you can attend a semester for about $1,000 of tuition.
Live at home.
Local driving.
Local jobs.
Living at home, eating at home, total costs could be $2,000-$3,000 per semester.
University of North Texas is $284 per credit hour, so each semester is about $4,000, that’s 4X more expensive for the same college credit.
Plus living on campus.
Plus food.
Total average cost for a semester at UNT according to their website is $25,680 (in-state tuition, the cost is $38,000 for out of state attendees).
Local University vs. Community College is about 4-5X more in total costs.
Comparison:
Tarrant County College - $7,000 a year.
The University of North Texas - $25,680 a year.
Southern Methodist University - $71,338 a year
Small Business ideas:
Social Media Consultant
Etsy Retailer
Baby Sitting
Graphic Design
Lawn Care
Tutor
Holiday Decorating
Baking cookies or cakes
Car Washing
4 FINANCIAL STEPS TO PURPOSEFUL LIVING
Spend on purpose
We recommend that you, “spend on purpose...so that you know where you are.”Save before you spend
We recommend that you, “Save before you spend...so you experience stability today and in the future.”Increase your financial margin
We always recommend that you, “Increase your financial margin...to pursue your true life’s purpose.”Invest wisely
We always recommend that you, “Invest wisely...to increase your impact.”
RESOURCES
Budget Forms and Tools
David’s New Book - Jesus on Money
David’s New Website - www.stewardshippastors.com