By Stacie Rhodes

Editors Note: Over the next few months, Stacie Rhodes will be sharing strategies for financial readiness for each decade of our lives.

I am excited to continue the conversation around financial freedom through the decades. The last edition addressed the parents – providing action steps to take during the teen years. Today we focus on the teens. 

Teens, you are not too young to start making smart money decisions. Your money habits were established by the age of 7, and your parents likely struggle with transparency for a myriad of reasons – shame, embarrassment, illiteracy, etc. But you are not powerless. You can start changing your financial future now.

Dear teen….

  1. Start making money goals. In 1979, Harvard conducted a study on goal setting and analyzing their graduating class to determine who had set the goals and planned for their accomplishment. The results were fascinating: 84% of the entire class had no goals, 13% had goals, but no written plan, and only 3% had both written goals and concrete plans. When they followed up ten years later, the 13% who had goals but no plans were making 2x as much money as the 84% with no goals at all. However, the 3% that had both goals and a plan were making as much as 10x more than the rest of the 97% of the class. Setting goals and making a plan is a game changer. You are never too young to make a money goal. Save $10 in your piggy bank this month, only buy two fancy coffee drinks this week, track all the expenses you had this month, open up an individual retirement account, and put in $100 by the end of the year….no matter how big or how small, start somewhere. What would be your money goal?
  2. Spend less than you earn (or the balance in your account). The average amount of credit card debt for Generation Z is $1,963. Stopping yourself from buying something on a credit card (or promising your parents to pay them back later) when you do not have the money in your bank account requires you to choose contentment with what you have, not what you want. Your friends and peers will not have this mentality, as our culture is built on marketing, that you do not have what you need to be happy. And they are right – there is never enough money to make you happy. But you can choose to enjoy what you do have rather than obsess about what you don’t. How are you deciding what to buy – needs or wants?
  3. Invest in your “future self.”  Albert Einstein called compound interest the “eighth wonder of the world.” If you could save $1,000 per year for 50 years in an individual retirement account (IRA) and earn an average of 10% of interest each year, you would have $1.1 million at the end of 50 years. But that requires a sacrifice of what you may want to spend that money on this year for the sake of your future goals. The longer-term your perspective, the better decision today. What would you be willing to give up today for the sake of your future self?
  4. Give a little bit away. In a 2019 study published in the Journal of Abnormal Psychology, depression rates for Generation Z (those born between 1996-2013) increased by more than 47% for those between ages 12-13 years old and 60% among teens 14-17 years old. While research continues to explore the core of this increase and how to combat this trend, many studies have proven that giving to others can have significant health benefits by boosting self-esteem, elevating happiness, and combating feelings of depression. How could you help someone else (even if in a small way)?

As I continue to reflect on the sacrifices of my parents, I remember all the little cost-cutting measures my mom took – reusing plastic bags, saving aluminum foil, getting every drop of soap out of the bottle, etc. I am humbled by deliberate choices that reflected a commitment to responsibility. How my parents chose to model and voice their value systems dramatically impacted my personal financial journey and established an unshakeable foundation that set a precedent for my path forward. You may have an incredible role model in front of you, or you may be learning everything on your own. Regardless, only you can change your financial future with your financial habits. Start now.