This article is part of a series teaching essential personal finance concepts to teenagers. At Money Under 30, we believe that it’s never too early to become financially responsible; we hope this series will be a good place to start.
Nowadays, money comes faster and is more accessible than ever before, to the point you’re not sure what you can or want to do with it. The ways your parents learned about money are different from the lessons you learned for those reasons.
Back then, a good balance of mathematics and self-control did the trick. However, times have changed, and people want things now and want as much of it as possible. There are several lessons about money your parents learned that are still very useful to you today.
1. Live below your means
Perhaps one of the biggest things that isn’t reinforced enough in an era of self-indulgence is the ability to live below your means. You might not be struggling with your finances, but this doesn’t mean you should spend all or most what you have. If your aim is to go to college or buy a house down the line, this is an essential step.
Americans, in general, are struggling to save money, let alone young people. CNBC cites a 2017 GoBankingRates survey which found that 57 percent of Americans have less than $1,000 in their savings account, while 39 percent have no savings at all. Furthermore, 67 percent of people aged 18-24 have less than $1,000 in their savings account while 46 percent have no savings. In fact, national credit card debt recently hit a record high.
As you grow up, you will understand the difference between wants and needs. If you’re the type who likes to shop, eat out, or go to parties, you’ll realize that these things only offer temporary relief.
Do you need to go out to have fun? Can you cook? These are questions you need to start asking yourself if you want to save enough money for college or a car. Only spend when you absolutely have to, not because you’re bored or want what your friends have. When you want to splurge, resist the urge.
2. Money doesn’t grow on trees
You have heard your parent say this a million times, haven’t you? They’re not trying to be philosophers when they utter this common phrase; it’s a fact of life.
Financial author and USA Today contributor, Peter Dunn, says it best when he talks about how schools today teach children to be borrowers instead of being self-reliant. Financial behavior and the way it’s being explained has changed a lot over time, causing younger people to be less accountable for their finances. Don’t allow yourself to fall into this trap.
Once you start working, you will be tested more and more. The more you make, the more temptation arises. Make sure to treat any money you make as a future investment, not as an invitation to spend on things that you’ll stop using in a year or two.
There is no guarantee you will make that money back in the future, primarily if your working options are limited due to age constraints. Maximize what you have and don’t take for granted that you’ll get more of it over time. Money is earned, not given.
3. There is no such thing as ‘too early’
When your parents grew up, it was more difficult to save because options aren’t as varied as they are now. But they managed to start saving from an early age and you should follow in their footsteps.
Go with your parents to the bank or shop with them and learn about what to look for so you can save money on items. You can also get your first debit card once you’ve started high school.
One thing your parents can also teach you is the concept of opportunity cost. Opportunity costs involve trade-offs, meaning what you are willing to give up compared to what you want. Learning about opportunity costs makes decision making more manageable and keeps you in check.
If you learn about money at an early age, things, like saving money, searching for good deals, and being smart with your money, will start to feel natural.
4. Failure is a good thing
You should never be afraid of failure. Your parents will be the first to tell you. As much as they worked, tried to save, and sacrificed for your future, there were some pitfalls along the way.
Some of the wealthiest people in the world either lost money or couldn’t make it at the rate they wanted to when they were your age. Author and sales management expert, Steve Siebold, says it best—failure is often a prerequisite for success.
If you have a skill, build on it. If your job isn’t working out, improvise and offer your services to neighbors, friends, and family in need. Whether through babysitting, yard work, or any other jobs that can make you a few extra dollars.
Failure helps to point you in the right direction if you lack a particular plan or if that idea is not reaping the rewards you hoped for.
5. Good things come to those who wait
Following up on that point, one way to defeat the ‘buy now, pay later’ mentality in today’s culture is by understanding that patience is a fundamental trait for successful money management.
If what you want to spend on isn’t substantial enough to warrant a debit or credit card being used, either use cash or wait until a time when you need it. Also, why do you need to have something now? Is it because you need it or because you want to look cool with it? Having a wish list of the things you want helps you set financial goals for yourself and creates more long-term thinking.
Your attention now should be on earning good grades, excelling in extracurricular activities, and so on. Having that kind of focus now can prove crucial once you reach college. The more you apply yourself now, the better you’ll feel once things start to fall into place.
Additionally, in today’s society, we always seek instant gratification, which is further perpetuated by having quick access to credit cards. By making long-term goals and sticking to them, you can save yourself a ton of consumer debt.
6. Track what you spend
With the internet and social media becoming more prevalent, there isn’t a need to write things down as much because everything is available with the click of a button. If you have a debit or credit card, you get statements each month telling you what you’ve spent, so why the need to track anything manually?
In truth, it’s imperative. Write down every expense that you have accrued for each week or month. Then match those expenses with whatever income you have made.
Even though we place a lot of trust in our online banking statements and apps, you could still easily find a mistake with pen and paper. Balancing your checkbook may seem like the old-school way to do things, but it could end up saving you money in the long run.
These lessons are important ones that your parents and other role models can talk to you about from personal experience. It’s easy to spend more than you have at a time when more things are on demand.
But with lessons like these, you can avoid being caught up in a ‘here today, gone tomorrow’ mentality and make your money last longer than you imagined.
Are there any money tips and tricks you learned from your parents life that helped you?
Read more about finances for teens
Banking 101—A Guide For Teenagers (And Anyone Who Needs A Refresher)
Budgeting For Teens—Grow Your Money While You’re Young
How To Make Money—A Guide For Teens
How To Spend Money Wisely—A Guide For Teens
7 Tips On Saving For College As A Teen
The 8 Most Important Employee Rights Teens Should Know
6 Money Lessons Our Parents Learned In School, But We Didn’t