Today we have partnered with The Wealthy Life to help teenagers (including us) manage their money in a better way 🙂 I know for myself, personally, that it can be hard to hold back on that expensive lipstick at Sephora, or restrain yourself from buying that super cute (super expensive!!) Kate Spade purse! So, we have asked Sybil Verch from The Wealthy Life some questions about money matters that we have been curious about! We are so so excited to be learning from a ‘financial guru’ some ways to make our money go further, and we hope you learn some tips and tricks too.
1. Is it too early to start saving away our money?
It’s never too early to start saving! Whether it’s allowance money, gifts of cash received on special occasions, or earnings from baby-sitting . . . try to save at least half so you have money available to buy the things you want at a later date. Maybe it’s a new iPhone, a bike or a car when you’re 16! Getting in the habit of saving while you are young will set you up for life.
I must add here that I also encourage youth to invest, not just save their money. Investing requires longer term thinking and allows your money to work hard for you as it offers higher return potential. Saving is great for shorter term goals, but doesn’t pay you much (and in some cases nothing).
2. What are your best tips to avoid going into debt?
The best way to avoid going into debt is to avoid spending money you don’t have. Save now so you have a cushion to fall back on if an unexpected expense arises so you don’t have to borrow money (incur debt) to pay for it. If you want to buy something but don’t have the money for it, go out and earn the money before you buy.
3. How can we stay motivated to save money?
The best way to get and stay motivated to save money is to set goals. What are you saving money for? If you don’t know, think of something (I’m sure that won’t be hard). When you have a goal, and really want whatever that goal is, you’ll be motivated to save for it.
4. What are some ways to earn money that are not usually mentioned?
The common ways kids earn money is through allowances, odd jobs like mowing lawns, car washing or babysitting, setting up lemonade stands and receiving money as birthday gifts. Less common, but a great way to earn money is to sell things on-line (maybe your old train set or used bike). A teenager I know gets his dad to help him buy jet skis and boats in the US, then sells them in Canada for more. I’ve seen other kids make things like greeting cards or tie-dyed t-shirts to sell to friends and family members, or expand by selling their products online. Consider services you can offer, like dog walking or house-sitting, and then let people know you’re available for hire. Be careful who you offer services to and check with your parents first.
5. Is it better for youth to have a credit or debit card?
Until you’re of legal age, a debit card is a great way to get used to managing how you spend your money. It also keeps your money safe as you don’t have to worry about someone stealing your hard earned cash out of your wallet. Once you are of legal age (18 or 19 in Canada, depending on the province), I suggest getting a credit card to start building a good credit rating (which you’ll need one day to get a mortgage on a house), but only on the following conditions: 1) you request a very small limit to start, 2) you only spend what you can afford and 3) you pay it off in full each month.
Thanks for the great questions!! I wish you financial success.
*We were so fortunate to partner with with The Wealthy Life for this post!* Check out their website here and watch them on TV!