Money Matters
Developing
financial literacy.
by Paul Simino
TWEENS
& TEENS News May 2007
There’s no doubt about it—
the things we learn in our tweens and teens
have a way of staying with us throughout our
lives. Well into our middle years and beyond,
we rely on the lessons about family, friendship
and even money that we learned as kids to
help us muddle through.
Ah, money. We love it, or at least what it
can buy on iTunes. But many of us struggle
with how to handle money wisely and to our
best advantage. If we burn through cash as
young people, chances are pretty good that
we’ll diminish our bank accounts just
as quickly when we start cashing our Social
Security checks.
It doesn’t have to be this way. However,
if we want to gain intelligence about money
management as grown-ups, we must begin learning
the hard lessons when we’re young enough
to qualify for student discounts.
If you are an adolescent, there’s a
good chance that you haven’t yet figured
out the importance of money. And there’s
an even greater chance that you really don’t
have a strong grasp on what it costs to support
even a modest lifestyle. The reason is pretty
simple: Most young people have their basic
needs met by others. If you don’t have
to pay your own rent or buy your own food,
there’s no good reason why you should
know what it means to cover basic expenses.
Most of us get a sudden and sobering crash
course in money management when we leave home
and face rent, car payments, electric bills
and other expenses. Though paychecks may have
seemed fantastic when they were anticipated
during your job interviews, the notion of
getting paid takes on a different meaning
as soon as your living expenses exceed the
amount available in your new checking account.
If you are thinking about eventually heading
out on your own for the first time, then you
should probably heed the following advice—
even if some of it is hard to swallow.
Don’t Leave On A Whim
If you are living with your parents and you
feel the time has come to leave the nest,
don’t go anywhere without a plan. More
specifically, don’t run off without
adequate money.
Spend time planning your departure, and earn
some money before you move on— even
if that’s after college graduation.
Stash some money away while your parents still
cover your basic living expenses. There’s
nothing worse than leaving the nest without
a plan, and just a wad of about $30 in your
pocket. It’s hard to make ends meet
without an ample bank account, so at least
be somewhat prepared.
Have A Destination In Mind
Don’t just go. Living on your own for
the first time is tough. It’s much,
much harder if you quickly find yourself with
no shelter and nothing to eat. If you don’t
have enough money to buy or rent your own
place, do you have someone you can stay with
for a few months or a year? Someone who can
perhaps ease your transition toward independence?
Realize, however, that nothing is free. Be
prepared to pitch in with rent, groceries
or something else you can contribute to your
temporary host.
Get A Job
Get a job before you leave home. Things are
going to be tough enough without adding “find
a job” to your to-do list. First get
the job, make sure it’s something you
can rely on, and then venture from the nest.
Have Reasonable Expectations
You’re not going to be able to do everything
you want as an independent. Entry level jobs
usually don’t pay very much. You’re
probably not going to be able to afford a
decent place to live and have a car and go
out to dinner three nights a week and pay
for dates on the weekends.
Make some intelligent choices, such as finding
a place to live that’s close to work
so you don’t need a car, learning how
to cook your meals, determining that pasta
costs less to buy than sirloin steaks.
Double Up
Two people can live more frugally than one.
Three people can live even cheaper, if they
share expenses. Find some friends, get a place
together and help each other with spending.
Hint: It’s never fun to live with people
you can’t stand. Make sure you all get
along before you sign the lease.
Pay Your Bills
People with bad credit have to pay more—
for everything. Remember this wisdom before
you opt not to pay the electric bill this
month. The power company may demand a hefty
deposit before turning the juice back on once
it has been shut off. A new landlord may not
want to rent to you, or may charge you more
rent, if you failed to pay your last landlord.
In other words, pay your bills, even if it
hurts.
Bite The Bullet
If you don’t have enough money at the
end of the month to pay all of your expenses,
you may have to get a better-paying job, take
a second job or hit up your parents for some
financial help.
Don’t want to work more hours? Don’t
be too quick to borrow money from your parents.
Remember, you’re trying to make it on
your own. Act like it.
Take The Long View
People with skills earn more money than people
lacking skills. Because skills don’t
fall out of the sky, you may have to return
to school part or full time, find a job that
offers some sort of apprenticeship training
or take advantage of on-the-job training.
The sacrifices you make now will pay off later.
Make the investment.
Don’t Buy What You Can’t
Afford
If you have the extra money, buy those new
shoes or sign up for cable. But if you don’t
have the money, wear out those old sneakers
or listen to the radio. The quickest route
to your old bedroom is to buy things that
you can’t afford. All the easy credit
in the world won’t change that reality.
Don’t Do Dumb Things
Do you smoke? Well, you can’t really
afford that anymore. Do you drive too fast?
You can’t afford traffic fines, either—
or escalating car insurance rates. Haven’t
finished high school yet? Don’t quit
to take some low-paying job. Think before
you act.
Too many people live paycheck to paycheck,
considering only the short-term funds needed
to make ends meet. You will need a longer
view than that. Think about what you’ll
need to do to make next year more profitable
than this year. Try to have money left over
at the end of the month. Invest in yourself—
and your future.
Here’s some final advice. Though not
exactly financial, it’s important just
the same. Don’t burn your bridges. That
means, don’t leave home angry and maintain
your relationships with your family members
and friends, even if it seems difficult. When
things get more difficult, your family members
and friends are the people who can best help
you out of the bind, including getting you
back on the financial track.
Paul Simino is founder of OneSimpleLoan.com,
a national student loan and debt consolidation
firm. He recently filed a landmark lawsuit,
challenging the U.S. Department of Education’s
rules limiting student loan consolidation
choices.
