Sep 27, 2010

What Would You Tell a Teenager About Money? (Carole)

A few weeks ago, I was asked to speak about money to the teenaged girls in our church congregation.  Thanks to all of you and your many good comments on this blog since January, I felt like I knew what kind of information would be most interesting and helpful to these girls who are just on the cusp of adulthood.

Here's what we discussed:

1.  Getting a job and saving 50% of what you earn while in your teens.  I also shared with them examples of impressive teenagers I've known through the years and the amounts of money they've been able to save in their bank accounts by the time they graduated from high school.

2.  The cost of tuition at local and out-of-state colleges and universities.  We even took a look at the cost of elite schools like Harvard and Stanford, just so they would know.

3.  Typical salaries of standard jobs:  surgeon, fire fighter, grocery store clerk, pilot, flight attendant, lawyer, school teacher. . .  and what the monthly take-home pay (after federal taxes) would be for each of these jobs.  So. . .is a college education really worth the time and money invested for your particular profession?

4.  How much adult life costs:  housing, groceries, transportation, utilities and insurance.  True to one of my previous examples of teaching children about money, I brought in $3,000 (which is a typical take home salary if you make $50,000/year -- the average salary in Las Vegas) in cash -- in $10 bills.  Together we paid the bills of a typical family in southern Nevada.  Much to their surprise, we ran out of money, long before we ran out of bills.  This was very eye-opening to this lovely group of girls.

5.  How compound interest works.  We walked through how compound interest works in your favor if you're saving money or investing, but how it works against you if you're paying off a loan or a credit card bill.  We also discussed how the length of the loan (or investment) and the interest rate influence your payment (or return) and the total you will pay (or earn) over the lifetime of the loan (or investment).

It was a fun night, and I felt like the girls were right with me.  But I'd love to know what YOU would have said to them?  What do you wish someone had told you at their age?


Nathan Pralle said...

Saving is fine, but if they save, have them put it into something that's not traceable by FAFSA; otherwise, when it comes time to get loans, assistance, etc for college, you get penalized by the government for having funds available. Same goes for the parents. It's the sad reality of the way the system works -- you are punished for being a saver. Totally depressing.

I would try to impress upon a teenager the impermanence of things and situations. Sure, that $40 sweater looks nice now, but in 2 years it'll be ragged or out of style and you will have wished you'd kept the $40. It's so hard to gauge such things when you're that age and haven't been around long enough.

amber waves of grain said...

I think it's great that you ministered to the girls in this way! I am sure the examples made the lesson much more realistic. They will all be thankful that they learned these things.

Carly said...

I think my favorite thing you did was bring in the $3,000 cash and "pay the bills." I would have really benefited from something like that in high school!

I wish I could have sat in the back and watched! It sounds like it was great.

Miss Cupcake said...

My dad did this with me when I was 15. I was the only one of my friends who had a clue about money and I am so grateful he was able to teach me. We sat at the kitchen bar and he took out his paychecks, bills, investments, etc and he showed me everything; how much he made, taxes, deductibles, bills, investments, 401ks, budgets, just the whole gammet. When I went to college, I was the only one of my friends who could do anything related to money. Many of my friends would borrow from the cash emergency fund I kept in my room even though they received an allowance from their parents and I worked for my money.

I hope to teach my children to be savvy with cash. I think it is so important and should be something taught in school. A financial education is far more important than most educations. Good for you. I would love to do something like this.

Packrat said...

Sounds like you did an excellent job.

Did you cover what happens when a family goes from two salaries to one plus adding a baby or two to the financial burden? That always seems to be a big shock to young people.

The one thing that I really wish someone had told me was to pay extra each month to principle on a large loan (the kind with payment coupons with a set amount to pay like a mortgage or car). It makes sense; I just never realized that you could and should do this.

Packrat said...

PS: What I did teach my children: (Nathan hit on this.) Don't waste your money on name brand/high ticket items, especially on something that is probably only a fad.

Brit said...

Hello Ladies!! Just wanted to let you know that I frequent your blog and direct people here all of the time! Something I would love to read about is the importance of utilizing a financial professional such as an investor or financial planner. Is it necessary? Thanks girls!!