When you’re young, the one thing that might not be top of mind is your financial future. Most young people don’t realize money mistakes can last for years into the future. Decisions about money can have a big impact at any stage in life.
What we know about our young peoples’ money savvy isn’t uplifting - especially when it comes to their place on the world stage. According to a study done by the Program for International Student Assessment (PISA), one in five teens lack basic financial skills. As they go on to make big-ticket purchases like college, cars, and homes, this lack of understanding can have disastrous effects.
There’s a saying that we can learn by knowing what not to do - and that applies to financial literacy. Let’s look at common money mistakes made in our early years so future generations can see just what pitfalls to avoid.
As a young person with a job and few responsibilities, it can be easy to spend on a whim. Whether that’s clothes or food with friends, there’s a certain freedom in having your own cash to blow. But as tough it can be to hold back, one of the most important basics of financial literacy is this: Pay yourself first.
Open a savings account, create a savings plan, and stick to it. Not only would it help you build a cushion for an unexpected expense, but it will begin laying the bricks to a strong financial base in your future.
So, how much should you save? The general advice is to stick to is 15 percent of your income, whether that’s just allowance or from a part-time job.
Another thing to think about is whether or not you are saving up for something. A lot of teens will put money away for a specific reason, like a new set of wheels. While that is a great goal to have in mind, saving just to spend the money shouldn’t be the only reason to save. Building that safety nest is also key - and will give you peace of mind during a later point in life.
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