One thing I would tell myself as a kid going through high school or college: It’s OK to start having financial goals and to start saving money.
I think the concept of saving money at a young age is strange and unfamiliar. Most teens get allowance money or work part-time jobs so they can spend money on the things they want or what their friends have as well. Let’s be honest, most teens do not or have not established a habit of saving money. For example, teens like to spend money eating out with friends, watching the latest most-talked about blockbuster movie at the theaters, buying new clothes, shoes, gadgets, etc.
There is nothing wrong with having fun, buying what you want, and in general, living out your early teens. We all should be having fun with our lives and buying what we want. But for the sake of this post, I want to keep focusing on those who are going through high school or college.
When I was in high school, I started a part-time job as a bagger at a local grocery store making around $9/hour. For my state, I think the minimum wage is fairly high compared to other states. Now here’s a thought – Let’s say I worked a 6 hour shift. I earned $54 before taxes and union dues. Let’s say after taxes, I take home $45. As a teenager, I enjoyed eating out with friends, going shopping and buying a new pair of jeans and/or seeing the newest Fast and the Furious movie. A burger, drink and tip will cost me $14, a cheap pair of H&M pant will cost me $20, and a ticket to see a movie at the theater will cost me $13. Total cost? $47, all in a day’s worth!!! That means I worked 6 hours to spend a day at the mall and at the theater and I ended up not saving any of the money I earned. Instead, I actually had to dig into my account to buy for the remainder $2.
In a nutshell, that is how a lot of people – not just teenagers – behave with their money. Once I realized I was dedicating my whole day just for $50 or $60… I started to treat my money differently. Do I really need that pair of jeans? Do I need to buy new shoes right now? Is this new iPhone worth working over two weeks for? And just to throw in another 2 cents… The state of Washington has one of the highest minimum wage standards. There are plenty of other states where minimum wage is $3-4/hour. Imagine having to work 12 hours with no tip just to be able to buy a hot meal, a pair of jeans, and a movie ticket!
Changing How I Treat Money
I told myself it was more worth it to save my money. I didn’t need the latest new iPhone and a new pair of jeans wasn’t necessary. I found that it was more important to me to save my money, start an emergency fund and try to save my first $10,000. It didn’t mean I stopped hanging out with friends or stopped buying things overall. I budgeted my money and tried not to splurge. I was realistic with myself on what I should be buying and not just emptying my wallet for a day of fun.
Although I changed the way I treated money, it didn’t necessarily mean the people around me did.
The Concept of Saving Money Isn’t Hard… It’s the Judgement of your Peers
One thing that was hard about saving money was the judgement and concern of my friends AND family. At least for me, I started working a part-time job before my friends. It was hard for them to understand why I chose to save money rather than save it. I was attempting to be frugal and mindful of what I wanted to spend my money on. After all, I forfeited my Friday nights and weekends dedicated to working my shifts. I worked really hard for every dollar. I even started couponing to help me save $.50 cents or a $1! Regardless, it was hard for those around me to see that I chose to save my hard-earned dollars rather than spending it all.
It is hard to defend yourself when your friends may not have the opportunity to learn about the significance or responsibility of saving money early on. Sometimes just by being asked why you’re saving money can make you feel guilty. I mean, what 18 year old do you know clips coupons, anyway? But if all they were going to do is call me cheap, well, that’s fine! I can still keep saving money.
If you can get over the hump that you may at times face others who question or cannot understand why you are starting “adult” habits (which is funny, because there are plenty of adults who are very bad at saving money), know that saving money can only benefit you and will put you in a great financial position.
I wouldn’t have been able to save $10,000 by the time I was 21 working only part-time jobs if I kept spending money or if I fell to peer pressure. I would not have a net worth of $70,000 at the age of 24 without kick starting my desire to be financially responsible at the age of 16/17. By starting today, whether you are in high school or in college, you’ll have a tremendous head start to being financially independent compared to the rest of your peers.
The earlier you start saving money, the better you are financially. Just to throw off a few reasons or benefits to saving money early on:
- Your money has a longer opportunity to grow and compound.
- If you start saving in high school, you won’t necessarily need to dive right into a job while in college, therefore allowing you to focus on your college schoolwork
- If you’re going to college or you are already in college, you can start paying for your books, tuition expenses, bus passes and loans
- You can have an emergency fund to help cover unexpected costs, like car issues or replacing a broken phone – since teenagers will most likely be driving old cars or consider their phones as an absolute essential and need their phones to communicate with their friends/family/managers.
- Saving money as a teenager helps create very important saving habits that can have a lasting effect and positively impact your future.
Tips on saving money as a teenager
- Wants vs. needs
Figure out your wants (what I think is a really must-have) vs. needs (what I really should prioritize my money on)
- Create small and realistic goals
Example: I want to try to save $50 in my savings account. Or, I want to try to limit my spending to $30 this week. Or, I want to open a checking and savings account and try to get $100 into my savings account. Or, I want to put away 20% of my paycheck into savings.
- Keep track of what you are spending money on and then create a budget.
Did you spend $200 on food in the past 4 weeks? Could you try to decrease it to $150 for next month? What about looking into making sack lunches?
- Can it be coupon’d?
Can you use a Groupon, Amazon Deal, or a local coupon in the grocery ad to save you some money? Being a smart shopper can help you save more of your money and pay less for the same goods.
- Save it before you spend it!
When you receive your paycheck, aim to put 10-30% of it away, if possible.
- Reward yourself
Now that you have put away some money, you can choose to spend with the remainder amount. Remember, there isn’t anything wrong with treating yourself to a nice, juicy hamburger. As long as you are responsible with your money first.