Financial Learning for the Teen during the Time of Crisis
The globe is currently undergoing a financial crisis due to the novel coronavirus. The past month, upwards of 22 million Americans filed for unemployment, shattering the record-breaking job growth since the 2008 Great Recession. Those numbers are staggering – and due to the unprecedented amount of joblessness across the USA, the government signed into law the CARES Act, resulting in the average middle-class American receiving $1,200 in their bank.
Students across the globe are heavily impacted by this pandemic and the unemployment sweeping the nation. They’re asking, “How did we end up here?” and undoubtedly, “How can I be secure in my future?”
Well, we don’t know the answer to those weighty questions – but we can say that the youth of the USA can utilize this time to learn how to handle finances in the wake of such a disaster. Smart financial choices can turn the tide of worry during uncertain times, and we intend to ease that worry by providing some helpful financial tips for teens!
Don't Spend on the Next New Thing, Save!
Our first tip is to combat the era of gotta have it now! that many teenagers are subject to from social media and targeted advertising. Many things that seem like a good purchase at the time may lose its luster faster than lunch-hall cookies.
Setting a standard of purchase gently used items goes a long way for a stingy pocket.
Tip 1: Purchase Used
Not only does it save money right now, items that are gently used will not depreciate in value as fast as a brand new item. The resale value of a brand new car that has just been purchased and driven off the lot can depreciate in value upwards of 10-15%, then up to 25% a year while a used car depreciates a bit slower over the years. That means that when you finish paying your car off, you will be able to sell it while maintaining a bit more cash in your pocket. Don’t forget that GAP insurance!
Purchasing used does not only apply to big purchases like cars. It also goes for the simpler things in life, like clothing or homegoods. Heck, you could even purchase a phone at a great phone if you’re extra thrifty! This benefits the environment as fast fashion and homegoods often end up polluting the world we live in. Reduce, reuse, recycle, amirite?
Tip 2: Save a little, save a lot
Savings accounts are like your best friend – it’s there in an emergency, it helps you make good decisions, it buys you things, helps you with your homework…..wait.
Having a savings account can be one of the best decisions a young person can make, especially if you plan on going to college. College can be a wonderful learning and social experience, but many young adults are shocked when they get out from behind that diploma and need to start paying off thousands of dollars in loans. Starting your career with what’s equivalent to a modern-day mortgage can be disheartening and can make it hard to do everything you want to in life. Whereas student debt is kind of the standard now, it doesn’t have to be.
Working throughout high school either at a job or at maintaining an allowance can mean you have access to a bit more cash than your buds. However, just letting your cash burn a hole in your pocket is not the best method of saving up.
Living below your means can result in a decent savings account by the time you go to college, and setting aside an set amount of income monthly, or even weekly, can benefit you for years to come. This is called a Savings Schedule, and it will result in your income accruing interest over time – that means your money will make you more money (slowly). The key is to let the savings account rest while you keep dumping a small amount into it on a set schedule. The name of the game is delayed gratification, and let us tell you that there are many Americans who are relying on that savings account to keep a roof over their head at the moment.
Resources to Help YOU Succeed!
Tip 3: Ask Trusted Sources
There is an idea floating around among society that your parents may actually know a thing or two about making money. A good proof of that is if you’ve had a comfortable life thus far. That doesn’t mean you necessarily got everything you wanted whenever you wanted it, but that does mean that you maintained a stable lifestyle where you never really wanted for the basics: shelter, food, and consistency. That doesn’t mean that your parents (or whoever is your guardian) has to make a lot to live frugally. Even the jobs that society looks down upon can be very lucrative if the individuals working them are great at personal finances!
If this was (or is) not your life, then that is okay. You do not have to repeat the mistakes others have made. (This goes for more than just your finances.) Educating yourself is the key ingredient to getting out of a rut, or maintaining the kind of lifestyle that you desire post-college (or post-high school! We dig that, too).
Tip 4: READ!
The older generation is a great resource for discovering information that will help you along the way of becoming a financial whizz. In fact, they’re so good at it that they’ve written countless books about the subject. We know, reading when your out of school? ICK! But get used to it bud, because shared knowledge from the experts has to come from somewhere. We’ve compiled a list for you to access some of our favorite books for teens learning about finances:
- Total Money Makeover by Dave Ramsey
- The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of by David and Tom Gardner et al.
- The Complete Guide to Personal Finance: For Teenagers by Tamsen Butler
- Why Didn’t They Teach Me This in School? 99 Personal Money Management Principles to Live By by Cary Siegel
- The Wealthy Barber by David Chilton
- The Millionaire Next Door by Thomas Stanley
Remember, you are the key to your own financial success. No one can out work (or, out earn) bad financial habits. Starting early on your road to financial freedom can be one of the best decisions you can make!
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