Teenagers generally view personal finance as a topic they can start dealing with when they are older, but putting off your finances until you leave college can mean you miss out on a very valuable head start. The following tips can help you to get ahead of the game and they are extremely easy to implement.
Instead of relying on the bank of mom and dad until you graduate it helps if you can start earning an income as soon as possible. Even a part time job can make a huge difference to your level of responsibility and your attitude to money and money matters.
Spend It Wisely
Let’s face it, there is a tremendous amount of pressure for teenagers to spend money in all the wrong ways, but you can rise above all the outside influences and think about how you want to spend your hard earned dollars. Looking for the best deals and simply holding off on a major purchase until you can comfortably afford it takes discipline but it can be turned into a habit over time.
It’s Never Too Early to Save and Invest
Teenagers need to understand that it is never too early to start saving and investing. A look at the benefits of compounded interest over time can illuminate the dollars and cents of why it is smart to start stashing a little away at a time.
Set Goals For Your Future
Goal setting is also very important to teenagers who are just getting a handle on managing their personal finances. This is because the act of setting a goal makes the target real and can provide the motivation needed to propel saving over an extended period. The key is to ensure that the saving goal you set is important to you and not something that your parents have set up for you as the ideal. This way you will want to see it turn into a reality.
Diversify Your Portfolio
Saving is not enough to bring about the kind of returns that can really make a difference in your quality of life simply because the rising cost of living can easily erode any return you are likely to get on an average account. This does not mean that saving is pointless, but it does mean that it must be accompanied by more sophisticated forms of investment to be effective. You can start off with placing money in a mutual fund or a money market account and eventually get educated on the stock market and other investment options to broaden your portfolio.
You don’t have to be a finance major to pay attention to your spending and saving habits, and these small changes have the potential to make a big impact on your money management style in later years. Start early and start slowly and you can build your way up to financial freedom at a very impressive age.