Five Smart Money Moves for Teenagers and Students

The best money advice in the world won’t help you if it doesn’t have anything to do with your life. In seeking help with your finances, it’s important for you not just to look at generic words of wisdom but to focus on guidance that applies to you personally.

Today, we are following up on an article we published last week, 5 Smart Money Moves For Young Adults.

Trying to climb out of the nest

Parents and grandparents might scoff at the idea that their children and grandchildren need money advice.  This is especially since teenagers and tertiary students are largely dependent on others for their finances. But with the easy availability of credit cards and the rising cost of living, it is important for young people today to learn to protect and grow their money.

To get your feet firmly underneath you from the start, here are five things teenagers and tertiary students need to consider strongly.

Idea 1: Don’t take debt lightly. 
Here in Singapore, we are fortunate that the cost of tertiary education isn’t as high as countries like the US. Even so, if you took up a student loan or used your parents’ CPF to pay for your education, you might start off your working life with debt. Such debt is unavoidable, but credit card debt is. Take a credit card debt of $1,500. If you’re charged 1.5% a month and only ever pay the minimum monthly requirement of 2% of your outstanding balance, this bill will take an astounding 37 years to clear, and at the cost of thousands of dollars of interest!

Idea 2: Start Saving for Retirement
When you’ve barely started working, the idea of retirement seems ridiculously far in the future. But once you start earning money – whether it’s a part-time job at McDonald’s or giving tuition to primary school students – then try to save a consistent portion of it. It’s a good habit to cultivate while you still don’t have any financial commitments, and it’ll set you on the path of financial prudence.

Idea 3: Track some stocks for fun or profit.
Teenagers learn best about investing by following companies whose products they know. But the best companies to follow are those that have both well-known products and growth potential. For example, the US shares, Coca-Cola  (NYSE:KO) has half a century of dividend increases and the world’s No. 1 brand behind the deceptively simple business of satisfying thirst, while McDonald’s (NYSE: MCD) feeds millions of kids like them across the globe. Closer to home, Breadtalk (SGX: 5DA) owns a well-known chain of bakeries and food outlets (Food Republic, Toast Box, and Din Tai Fung). Teens and college students can invest in what they use and believe in and get a financial education in the process. Using these shares as examples can make learning about finances more fun.

Idea 4: Put a true value on money. 
The best way to understand the value of money is to see it in terms of the work you have to do to earn it. For instance, if you think of an iPhone as costing you 33 hours at a $6-an-hour job rather than $199 — plus another eight to 12 hours of work to cover monthly subscription fees — it gives you a different perspective on spending.

Idea 5: Invest in yourself.
The experiences you have when you’re young will define who you become years and decades down the road. As important as money and savings are, don’t skimp on the important parts of growing up. Often, the money you spend on the right things can pay off well into adulthood, both financially and in the quality of your life.

Get smart about your money
No matter what age you are, being money-smart is a skill that will pay off throughout your life. Thanks for staying tuned, and be sure to keep coming to The Motley Fool Singapore for more advice to help you make the most of your money. Just click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.

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