Financial Tips for Teenagers: 15 Experts Share Their Best Advice

Recognize the Difference Between Wants and Needs

My number one piece of advice is to recognize the difference between wants and needs when making a purchase as well as the reason behind it. This is something I’ve been teaching my teens.

So many teens are bombarded with ads encouraging them to make impulse buying decisions. Instead, teens should learn which purchases are beneficial and complementary to their goals, and to do so, they have to understand what is driving them to that purchase. This helps to instill value in the money they’re spending and avoid buyer’s remorse.

Take on Debt Strategically

Debt isn’t a four-letter word. There are right times and reasons for taking on debt; the key is to do it strategically–with a plan for fully paying it off. Routinely racking up credit card debt with shopping and entertainment expenses that are well outside your budget isn’t strategic debt; buying a reliable, safe, and well-priced vehicle to get you to and from your job could be.

Paying off your debts on time and consistently should help you build a credit score and credit history that impresses lenders so that you qualify for better rates on everything from mortgages to insurance policies down the road. It could even come into play someday if you have an employer who checks your credit before offering you a job.

Don’t expect to have everything your parents have right away and definitely don’t try to keep up with the Joneses – or Kardashians, for that matter. Make smart choices with your money, live on a budget and within your means, save for the big things you want to buy or do and take on debt strategically, with a plan for paying it off.

Develop the Habit of Saving

1) Develop savings habits. Your expenses are low and if you make savings a priority, you will be able to keep the savings percentage in line as your expenses go up. If you don’t develop savings habits now, you will just spend all the money you make once you start making the money.

2) Why do you view money and debt the way you view them? How did you develop your money scripts? If you don’t know what money scripts are, google it. Who taught you and why are they right or wrong? Do research, read, and learn. Don’t just listen to one person (perhaps your parents) but challenge their reasons. What works for one person may not work for another person.

Understand the Value of Time Over the Value of Money

Working in fintech I come across gems of financial advice on a regular basis…I also come across the contrasting advice that’s closer to a lump of coal.

The #1 piece of financial advice I’d offer to today’s teens would be to understand the value of time over the value of money.

When teenagers first start coming into money a $100 bill can feel like it opens up their entire world. As their savings increase, it’s easy to think that they’ve unlocked financial freedom. I’d recommend pivoting to a view where understanding the value of time is more freeing.

For example, it’s not important whether you’re making serious bank in your teens, but how you’re spending your time.

This time could be spent earning interest on an existing account, or the time could be spent finding new ways to monetize a past-time or hobby.

It’s a mistake to think earning money is the be-all and end-all. In reality, taking your money and learning how to use your existing time to leverage that value – or simply learning how to profit from your free time – is a more important message.

This comes back to the old expression that your money should work for you. You shouldn’t work for your money. While the days of living off interest alone or finding lasting passive income may be decades away, the earlier teens internalize this message, the better off they’ll be in the long run.

Don’t Spend More Than You Earn!

It is something I see time and time again as a mortgage broker. Clients come in with good (or even very impressive) incomes, yet very little savings, thanks to overspending and making lifestyle decisions that are eating away at their future financial security. In contrast, I have also met several clients who are not only surviving but thriving on lower wages, and when I ask them how they have managed to put together their home deposit, it comes down to the savvy things they do, and more crucially, the things they don’t do, in order to keep their spending in check.

If you can learn to live within your means as a teenager, you’ll set yourself up for a life where you are in control of your financial future.

Spend Two Hours per Week Studying Money and Finance

In our country, we mandate more training and education to drive a vehicle than we do to managing money. Only 20 states mandate some type of personal finance education as a high school graduation requirement. Teenagers need to make learning about personal finance matters a habit to make up for this knowledge deficit and to keep pace with the ever-changing world of personal financial management.

My advice to teenagers is to spend two hours per week or only 17 minutes per day learning about the economy and money matters. This can be done by reading, listening to podcasts, or viewing YouTube videos on personal finance matters. By doing this, teenagers will learn to make lifelong learning about personal finance a priority for a small portion of their time. Knowledge is power. They should make boosting financial literacy a priority.

Never, Ever, Buy Something You Can’t Afford to Completely Pay Off When the Payment Is Due

If I had one tip to give teenagers about finances: never, ever, buy something you can’t afford to completely pay off when the payment is due.

So many people in life make impulse purchases of things they can’t really afford, and this gets them into financial trouble. Usually serious financial trouble. This tip would be a good foundation for their financial future.

We have three adult children. Here is what we did to teach them financial literacy when they were teenagers.

We gave them an allowance only if they did the work (chores), so they learned the value of money.

We got them a credit card when they were going into their senior year of high school so we could teach them how to properly use a card (pay off the balance completely well before the due date, how to build credit, how this affects their credit score, what an APR is, how devastating a late payment is) while they were still under our roof. The result was they all have excellent credit now as young adults.

We gave them a “daily sleeve” of money every day whenever we were on vacation… With this money, they had to buy their own food, treats, and any extraneous things they wanted… So it taught them to manage their money at a very early age (as well as save mom and dad from having to always be pestered for money on a trip, or asked if they could get a dessert after a meal… They had to make those decisions and make their money go farther.

Start Saving For Retirement

As a parent of three young adults, I have some first-hand experience to share. My #1 piece of financial advice to my kids (and to the teen children of my clients) would be to understand that the money you set aside for retirement now, or in the next few years, is some of the most important money that you will save/invest.

The main reason for that is the money saved/invested now has the most time to grow, and while investment success is a crucial factor, time is your best friend. I would remind teens that as they reach adulthood and into their careers, they may save greater and greater amounts. Still, the money they invest earlier will provide them a better chance to accumulate the type of savings they will need in the future – even if they don’t realize it yet.

Live Beneath Your Means

The best piece of financial advice I can give a teenager is to live beneath your means. It all starts with that. Living beneath your means frees up funds to eventually build a rainy-day fund, invest for retirement, save for a mortgage down payment, start a small business, pay for college and make so many other important financial moves.

To be clear, living beneath your means can be really, really hard. Sometimes it is just flat-out impossible, and that’s especially true when you’re young. However, if you bring that mindset to all the financial decisions you make, it can make a huge difference.

And it is OK to start small. Stashing a little money away here and there. Working a little side hustle to raise a little more income. These actions create habits and those habits can serve you well throughout your life.

Spend Your Money on What Will Make YOU Happy

Considering the explosion of social media and no signs of it going anywhere anytime soon, my advice to young people would be:

Don’t blow money on materialistic items trying to keep up with people on social media. You don’t know their story. You don’t know if it’s fake, borrowed, or promoted. Stay true to yourself and spend your money on what will make YOU happy.

Trading Stocks Constantly Is Stupid

Trading stocks and other financial instruments constantly is stupid and a losing proposition.

The strategy that is by far the most likely to make you wealthy is to buy a diversified portfolio of stocks at low cost (such as in a low-cost index fund) and hold it without trading for many years.

Michael Edesess is chief investment strategist of Compendium Finance, adjunct associate professor at the Hong Kong University of Science and Technology, and a research associate of the Edhec-Risk Institute.

Pay Your “Future Self” First

Pay your “future self” first. Calculate how much you need to put aside on a monthly basis to have a comfortable future. Then set this up as automatic payment for the first of every month. Then spend the rest on whatever you need to that month.

If you spend before saving, the chances are you will have nothing left to save at the end of the month.

Joshua Gerstler is a Chartered Accountant and a Chartered Financial Planner. He is the owner of The Orchard Practice, an award-winning Financial Planning business.

Always Spend Less Than You Earn

The number 1 piece of financial advice to give to teenagers would be to always spend less than you earn. This is the absolute foundation of any financial advice I would give to anybody.

Mankit Tsang is a Certified Financial Planner and a member of the Financial Planning Association of Australia.

Buy Appreciating Rather Than Depreciating Assets

Put at least one third of your gross income into savings – split between short-term (until you have up to 6 months income in a rainy day account), medium-term (property) & long-term (superannuation).

Buy appreciating (property, shares) rather than depreciating assets (eg cars, boats).

Never spend more than you earn – avoid credit cards or buy now, pay later.

Dr. Adrian Raftery is the author of 101 Ways to Save Money on Your Tax – Legally! He is a Chartered Accountant with over 30 years of experience providing tax and accounting services to individuals, businesses, and self-managed super funds.

Live at Home for a Few Years After You Graduate From School

Live at home for a few years after you graduate from school. It will allow you to save money, pay down debt or avoid debt entirely. You’ll be light years ahead of other people your age if you do this.

Moswen James is the founder of Get Help Tax and Bookkeeping in White Plains, NY. He is a Certified QuickBooks Pro Advisor and an IRS-authorized Enrolled Agent.