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Money Tips for Teenagers in 2013 / Advice for Teenagers About Money
Way Back When...
Way back when I was a teenager, I was a full-time student with three jobs. Back then, I could afford to work everyday after school, and still maintain good grades. These days however, life has become exponentially more complicated.
Therefore, teenagers today have to work harder to receive the same financial freedom that I earned when I was younger. If you live under a rock, it might be a different story, but for the majority of teens today, tax deductions and superannuation contributions can pose a significant portion of a teenager's income. This is particularly true if you still attend school and don't have the available time to work non-stop.
Check This Out: 7 Ways to Make Money While at School!
The Right Attitude
The path to wealth creation always starts with an attitude shift, regardless of your age. Your attitude determines your dedication and your work ethic, which will help you make money as a teenager. However, money is hard to come by; Even in a developed country like Australia, unemployment is as high as 8.1% at the time I write these words.
Common sense would tell us that if you want to make more money, you need to do one of two things:
- Make more money, or
- Spend less money
If you're really on the ball you could even do both, but of course, you need the right attitude. You can't make money if you refuse to spend less money, or put in the work and make more of it, am I right?
It Isn't All About The Money (The Rappers Got It Right!)
Having said that, your new attitude shouldn't dictate your life. It's great to have money lying around, but it's also important to take a step back and smell the roses. Working nearly non-stop everyday isn't inherently a bad thing, but it's important to remember the importance of friendships.
Remember that the movies sometimes get it right. I'm sure we've all seen some movies that teach us about the important things in life - those that are worth more than money.
I hate to compare the Bible and rappers in the same situation, for all the concerns I'm sure will be raised in the comments section, but here we go:
Eminem once said:
"What is money?
Money is what makes a man act funny
Money is the root of all evil..."
The Bible teaches:
"For the love of money is the root of all kinds of evil" (1 Timothy 6:10)
Now, I'm not trying to teach you that money is the root of all evil. That would be counterproductive in an article called "Money Tips for Teenagers in 2013".
What I'm trying to say is that greed is what separates a man who is rich, from a man with a lot of money. The rich man is also rich in attitude, as I spoke about above. The rich man doesn't let money control his beliefs or his actions.
Because, really, money is just a medium of exchange. It only has value because we place value upon it. So don't let it rule you.
Dead Prez once said:
Money doesn't only show up as dollar bills or coins;
People you can call on, resources you can draw from, thoughts and attitudes
These are also money.
It's Best To Start Early
As a teenager, you have a unique opportunity to earn income. The taxable income bracket for those under 18 has recently become ridiculously high, at least in Australia. Combined with fewer commitments and lower debt, teenagers can earn lots of disposable income.
Calling it disposable isn't quite responsible though. It takes discipline to save money, especially when the opportunity to buy your own gadgets is a new phenomena. So, disposable income should really be called, savings.
And for most teenagers, you can make money, and still have your parents buy your food and utilities... Which is great, (for teenagers!)
'Borrowing' Is the Opposite of 'Saving'
In the field of economics, there is something known as opportunity cost. An example would be:
If you have ten dollars, you could buy a book or a shirt, but not both. If you buy the book, the opportunity cost of that book is the shirt. Conversely, if you buy the shirt, you give up the possibility of buying that book.
Applying that new knowledge, if you borrow money, you take on debt. This debt will prevent you from accumulating more savings. Hence, the opportunity cost of borrowing is saving.
And that's not to mention interest. When you borrow money, say from a bank, the last thing the bank wants is for you to pay back your debt really quickly. Banks and borrowing agencies make their money from interest, so the longer you owe money to the bank, the more money you end up paying them. A $1000 dollar loan could eventually become a $2000 repayment!
Money Is a Risky Business
Oftentimes, you might read or hear about people who have had amazing success in the field of finance. Less often, you might hear about people that have lost everything they own, because of poor financial decisions.
Whether it's stocks, real estate, or business, money is a delicate commodity. Regardless of how you choose to manage your money, it's value changes every few seconds, it's buying power always decreases, and there's really no proven way to understand which way it will move. This is just the way of the world, and there's nothing we can do to change it.
However, you can manage the risks associated with money, with a good dose of common sense:
- If you don't understand something about finance, learn it. Knowing about tax and superannuation will help you in the long run.
- Control the urge to spend all your money in one place - Spread the risk by controlling your spending.
- Work methodically and prepare for the worst. A solid bank balance will earn more interest, and protect you from unexpected circumstances.
Get Around A Budget
Budget is a scary word. If you don't like it feel free to use the alternative term, Controlled Spending Plan, which is much more friendly.
To make a budget, keep an eye of the money you make and record the money you spend. Sounds simple, and as a teenager, it is. When you become an adult, the process becomes so confusing that entire companies have been built around figuring out other people's finances.
Once you've got a grasp of your own finances, make sure you look for areas that need improvement. Work on increasing the money you have in your pocket at the end of the month. Remember that lots of small purchases can become a significant portion of your expenses if you don't control the urge to buy them. Which leads me to my next point...
Which is on the next page! (Which I haven't written yet, stay posted!)