Teen Financial Tips, (part 2)

 For parents- this is the second in a three part series I’m dedicating to teens. Due to a friend’s crisis situation, involving her teenage daughter’s lack of budgeting, I’ve written yesterday and today’s article for teenagers. In the last three years, we’ve made a cultural shift toward saving money and making the dollar stretch. Unfortunately, many teens were raised in a climate of instant spending for most of their earlier lives.Now, as young adults, they need to learn some thrifty tips before they go out into the world. It’s in a parent’s best interest to talk with teens about saving money and wise uses of money (as well as model it).  If you haven’t already, address these points below with your child and consider having them read this article.

 Saving Money

 When people talk about saving money, too often there’s a negative connotation to it. Like, “Eww, I have to save money now.” In fact, saving money is a smart and positive thing to do with your earnings. No matter how much you earn, even if you make millions, learning to budget and save money is important. Michael Jackson is a good example of this. He died with a great deal of debt and had numerous financial troubles due largely to poor spending habits. In his lifetime, he earned millions of dollars and still never gained money management skills. You can live very well on much less, if you become skilled at ways to save money.

 Saving money can be accomplished many ways. There’s of course, traditional ways to save money, by putting it in an interest earning savings account or a CD (certificate of deposit) or money market funds. At your age, it’s likely you have a savings account. Putting money in a savings account is a good practice for everyone, even if it’s a small amount. Other ways to save money are in wise spending.  What does that mean?

 Wise spending boils down to knowing how to make your dollars stretch. It’s what many adults now have to teach themselves due to the economy. You’ll give yourself a head start in life by learning it now, as a young adult.  If you can look at it like a game you’re playing, trying to make the most out of what you earn, you’ll find this fun. It’s a great boost to your budget when you can make the same purchase as someone else and still have cash left over. When you have a career or family, practicing these strategies can make a huge difference in your quality of life.

Ways to spend wisely for teens

Spend only what you’ve budgeted. First start with a budget. If you earn $200.00 a week at a part-time job, it should not mean you’ve got to spend it all. Sit down with parents or a bank officer and draw up a budget that takes into account savings for college or your future, immediate expenses like gas money and extras and short term goals. Then spend only what your budget allows. It might mean you don’t spend anything some weeks, to save money for larger purchases. Our culture has done a poor job modeling this until recently. Many adults bought and spent as long as they had money or credit, even overspending and extending credit to buy. When the recession happened, their financial world crumbled. Start off smarter in life, by making a budget and spending only what you can afford. It’s likely, in your adult lifetime, you will have financial issues or endure another recession. Wise budgeting skills will carry you through.

Watch sales. Everyone wants “stuff”. The trick is buying your stuff when it’s on sale or when it’s cheaply had with coupons or rebates. There are many ways to find these deals. Search online for “coupons,” “rebates,” “clearance,” or “sale” for an item or a retailer. Make it a point to try to never buy unless you’ve got a deal. Some coupons are only for online purchases, others have to be printed out, a few are rebate codes you have to plug into the purchase screen. Don’t ever pay for a coupon code, though. These are usually fraudulent. And watch shipping costs. Even if there is a sale, high shipping might negate your savings. Consider going in on an order with a friend or a family member to gain free shipping. Some companies, (like Victoria Secret or GAP) offer free shipping over a certain amount.

Get a CVS card and use it for points earned and cash back coupons for necessities like makeup or personal care items. If you are 18 or over, you’ll qualify. Buying the same $7.99 mascara at a “Buy one, Get one free” sale, with a cash back credit of $3.00 means you’ve just saved $11.00. You’ll find these cash back coupons, or ExtraCare bucks, on your register receipts or printed out with them separately.

Cash Back Credit Cards. IF your parents approve, consider getting a credit card with cash back rewards. Remember, it’s not the credit card that gets us in trouble, its unwise use of credit. If you learn in your teen years to use credit to your advantage, you will gain money, not lose it. Many cards have reward points you can use for purchases or that take money off purchases. If you are going to buy at GAP or American Eagle anyway, using a card that gives you rewards points at those retailers along with a sale is like getting merchandise at super savings. It will make your dollars stretch. PROVIDED you pay it off each month in full. If you’ve budgeted $120.00 a month for clothing, spend only that. One to consider is Discover’s Student Card. Talk to your parents about this, and spend time reviewing options. Your parents might also consider testing your financial awareness by letting you use one of their cards with clear understanding of spending limits. Along these lines, don’t get department store cards, their interest is higher and rewards are usually better from major credit cards.

Involve friends. My daughter, age 17, is a savvy shopper already. She’s grown up in a house where saving money meant the difference between having an item or not.  Her friends split deals, shop sales, and compare prices. They enjoy it. You’ll like saving money more if your friends are involved. You might have to win them over by showing them how much you can purchase by being thrifty, but it will catch on eventually.

More teen tips for super wise budgeting tomorrow, as this series concludes.