Categories: Budgeting, General Tips
It’s never too early to start building your financial stability and independence—even as a teenager. The earlier you start positive money habits, the better off you will be down the road when you’re getting ready to pay for things like school, a car, travel, a home, and anything else that you see in your future.
Check out these seven tips for healthy money management and building a strong financial foundation for yourself:
1. Save, Spend, Invest, Donate
It’s great to map out a plan for your money, and one easy strategy is to split up what you’re earning at your job or home allowance into categories that can help various aspects of your own financial situation. Anyone can use this, whether you’re making a bit of money babysitting or have your first job with a regular paycheck. Using the Spend, Save, Invest, Donate strategy, you can set aside a specific amount from each paycheck to go to a savings account, to use for your own spending, to invest in financial growth like stocks or money market, and to share with causes that matter to you. If you would rather make a long-term strategy, you can plan for a certain percentage of your monthly or yearly earning to go to each category. You could think of it in terms of helping yourself (save), treating yourself (spend), planning for future (invest), and helping others (donate). Each of these have significant benefits in your financial future.
2. Establishing a credit history
Big purchases like cars and homes often require a decent credit score to help nail down a reasonable lending rate. The best way to start building credit is to open your own credit card and use it for relatively small purchases that you can pay off quickly. For example, you can start by charging $25-50 a month on various purchases, and pay off the entire payment rather than the minimum amount due (so you don’t have to pay interest later). The more you pay off of the entire credit card bill, the stronger your credit score will become. You can also build credit by paying monthly car or student loan payments in full and on time. Many financial institutions offer credit cards and first time lending to young people who do not have established credit so check out your options.
3. Check your account status regularly
It’s good to get in the habit of looking at your checking, savings, and credit card accounts online regularly to see what you have available in your accounts, what interest you’re earning, and what bills are due. Regular account check-ins can help you prevent overdrawing your checking account and can remind you what amounts need to be available for upcoming payments.
4. Earn rewards from credit and debit cards
Many credit and debit cards come with cashback or points reward systems that help you earn more while spending. This is a great way to make your money go further, and you can save up rewards to help pay off credit cards or make special points purchases for fun or needed items down the road. Many of The Summit Federal Credit Union debit and credit card options come with cashback or rewards points. Check them out here.
5. Use your student ID for discounts
Tons of businesses, restaurants, and services offer discounts for students. Whether you’re in high school or college, check online and flash your student ID in-store to get discounts, perks, and other benefits while you’re working on your education. Win-win!
6. Protect your privacy
Keeping accounts, passwords, and personal information private is an important piece of protecting your financial security. Never share your account information or passwords with anyone unless requested for official purposes (like providing your checking account information to set up a direct deposit through work). Keep in mind that it is unlikely any financial institution would call or email to ask for your personal information, so be on alert for scams that seek this info through phone, email or text. When in doubt, double check with a parent, teacher, or representative from your financial institution before sharing any personal or account information.
7. Set financial goals
You’re much more likely to achieve a goal if you actually plan it out. Start small—set a goal to save at least 20% of your first paycheck. Once you realize how good it feels to complete your goals, you can build on each one to achieve even more.
What healthy money habits will you take on? Each one can help you take steps toward financial stability and independence at a young age, and can set you up for a solid financial future. One first step you can take, if you haven’t already, is to open a checking account to get started.