Recently we taught a group of high school students all about saving money, budgeting, debt & investing.
After each lesson, we asked them for their takeaways. Today we’re going to bring you five that you probably should know but may not be practicing.
Even if you make more money, don’t spend more money
Well this seems obvious. But it’s inevitable that lifestyle creep happens as you make more money. That is, as you make more money, you spend more money. Typically that spending is on fleeting things-things that won’t matter five or ten years from now. Don’t give your wasteful spending a raise!
Instead, choose to sacrifice now and save that money or put it toward one of your big goals, rather than give yourself a raise to spend it on fleeting things, you’ll end up with a big payoff.
Instead of spending more money, consider saving more money or investing more money. When you get a raise, your goals can get a raise!
Put your emergency fund in a money market
Whether you’ve got a $1,000 starter emergency fund or a larger 3-6 month emergency fund, you need to put it in the right place.
There are checking accounts, savings accounts and money market accounts. Checking accounts are a BAD place for your emergency fund because they’re too easy to access and transfer money back and forth from.
Savings accounts are a better but still not an optimal place for your emergency fund because while they limit the amount of transfers, the .01% interest rate is lame and you can do better.
Money market accounts can get you 3-5% interest and they are still just as liquid as you might need them to be in an emergency.
When you get a raise, your investments get a raise
You’re already living on a budget. You’re living within your means. So, when you get a raise, instead of taking your budget and changing it just add or increase the line in your budget for your investments to be bigger. Continue to live the same way you’re living because it’s working!
We told the kids to do this from the beginning because if you can maintain a less expensive lifestyle, even for a few years, it can really add up in your investments. Plus, they’ll never miss the money if they start this way! You’ll never miss the money if you adopt this idea upon your next raise.
Don’t ever take money out of your investments
Let’s take a moment of silence for all the poor investment accounts that had such potential before they were robbed of their money!
When you take money out of your investments, you will be penalized. You will also rob yourself of the gift of compound interest. Just don’t do it. This should be a non-negotiable rule for you. Allow it to grow!
We taught these kids what it means to be a good investor. A good investor doesn’t have to pause investing because they aren’t handling their money correctly and doesn’t EVER take money out of their investment.
In order to be a good investor, you need to be on a budget and out of debt so that you can truly focus your money on the goal of investing and never have to look back.
Once you become an investor, that is your identity. There’s not ifs or buts about it. It’s just what you do, every single budget.
Put your goals on paper, they are more feasible than you think
Get it out of your head and onto paper. Better to store it on paper than in your brain.
The girls that wrote this on their takeaways were sophomores in high school. They had a “pipe dream” to have their dad build them a tiny house on a small bit of land and they could room together and then eventually AirBnb their tiny house out. When they finally put it on paper, they saw they could actually do it. They figured out they just needed a part time job and they could afford COLLEGE TUITION and RENT that would eventually lead to owning their first small property. It was absolutely doable.
It’s just math. Just get the math out on paper. From there, keep looking at it. We gave the example of Vanessa looking at the math to pay off her mortgage over and over again. It was just math! It seemed crazy, but it worked. They put it on paper and then kept focused on it until it was done!
Paying off debt or saving money is JUST MATH. You can’t argue with math and facts on a piece of paper. Your brain will try to convince you your goal isn’t possible but you’ll overcome that if you just get it down on paper.
You can be completely debt-free your entire life
Yes & Amen! This is a reality.
We started off showing our students the reality of the credit score. The entire purpose of the credit score is to get you to take on more debt so you can improve your credit score so you can take on more debt so you can improve your credit score. You get it.
If they decide from the beginning, they can be their own bank. They can decide never to rely on other people to let you borrow money to borrow money for things you can’t afford. We showed them how they can pay cash for everything they need in life, especially if they are never handicapped by student loans.
Investing is really important
Investment early on produces substantial wealth later on was the exact quote from our 17 year old senior. We showed these young people why & how to invest. When we showed them the math, they decided it was really important. We opened their eyes to what was possible and how to avoid the NORMAL path. Younger folks have the EXTREME power of compound interest but everyone can use the Rule of 72 to get excited and cast a vision for building wealth.
Related: Use the Rule of 72 to Double Your Money
Credit and loans can keep you in debt in your whole life
There are people out there that are drowning in debt and loans (specifically student loans). One bad borrowing decision forces another.
We really wanted to paint the picture for these young folks of how financially secure & independent you can be if you make these SMART decisions now. You can absolutely decide to go against the grain and not use debt.
This lesson is contrary to what every credit company marketing department and, unfortunately, some parents are telling kids. That is that you’ve got to build your credit score. Please refer to the debt score cycle above. What if that’s simply not true? Let’s stop this cycle of asking someone to borrow money.
- “Can I borrow some money to get a couch?”
- “Can I borrow some money to get some clothes?”
What if they don’t need a credit score? What if that’s not important? What if they pay for things in cash?
What they really need to learn is NOT how to improve their credit score. What they need to learn is financial literacy. They need to learn how to MASTER their own money, not to be continually mastered by their money. THey need to learn really good financial habits: budgeting, saving, being their own bank and having financial goals.
The credit score is not going to help them be wealthy, financially secure and independent and smart. A credit score has nothing to do with that.
Book Your Free Call Now!
We are excited to create the time & space to talk to you about your current money situation. This is a free, no-obligation call where we can answer questions you may have and maybe find some quick wins for your budget.
What do you have to lose?
IDEAL BALANCE: How to Budget, Get Out of Debt, Save Money + Financial Systems to Organize Your Money
Even high-achieving, Jesus-following moms need help organizing their finances. We want to help you learn how to budget, how to get out of debt & how to save money. We do this through 1-on-1 coaching where we teach you how to stop stressing about money & install systems that automate your finances. Once you have these money systems, you’ll be able to live debt-free, build wealth & achieve financial freedom. Join us to ditch the bad money habits & take control of your financial future.
Shana & Vanessa are best friends, business partners & Ramsey Solutions Master Financial Coaches.
Leave a Reply