I have two little girls. My goal in raising them is not giving them all the things I didn’t have as a child. What I want is to give them the opportunities that I didn’t have. I want them to travel, to love learning, to try new things, to be open minded. This is some of the financial advice for young adults that I wish my parents had given me.
It took me a long time to learn what was important to me in life, how to prioritize with my money, and in my mid-thirties I am just starting to get ahead. I have some years to strategize about the lessons that I want to teach my kids, but that hasn’t stopped me from thinking about what I wish I had known.
Get a part-time job
I had two different jobs in high school. I worked at a discount retailer as a cashier, and then at a fast food restaurant. There are a few reasons that I think high volume fast food is the best choice. The bigger the team, usually the more flexible the schedule allows. Students have after school activities, class trips and social events to work around and as both an employee and an employer, having a large team with different needs made it easier to balance.
Additionally, employers know that fast food is demanding, and a good reference goes a long way. It’s also one place where promotions can, occasionally, be given to hard working students, letting future leaders shine.
There are other work opportunities that may exist, and finding something in their future field would be beneficial, but customer service remains the most common option for most kids.
Save those paycheques
Teenagers with jobs are in the unique position of earning money while having very few or no expenses. There’s power in that. They can finally buy all the things they want. And I did. I had a savings account, I had good intentions. But I never actually saved. Had I saved smartly, I would have opened more doors for myself that I either missed out on or went in to debt for.
I hope to teach my children to divide their cheques in to three categories: Long term savings, short term savings and spending money. To make this work, I would help them determine savings goals, break them down in to biweekly goals within a specific time frame, and help them manage savings accounts.
Invest your savings
I’m no expert in investing yet, because I’m still focused on eliminating debt. But what I do know is that money sitting in a savings account isn’t doing any good. Get some help in this area if you need it, but enable your kids to invest and grow their money, even if it’s only a little bit.
When I was in college, I got a little advise that helped me spread out my student loan money so I didn’t run out before the end of the semester. Each payment had to last 4 months, so after paying my tuition I took the remaining amount, divided it by 4, and put one quarter each in a 30, 60 and 90 day GIC, while keeping the remaining quarter for the current month. I made a small amount of interest, but more importantly I did not have access to the money until the month it was allotted for so I never had to worry about having enough money for rent.
Live like a mimimalist
A capsule wardrobe will serve them better than a bursting walk-in closet. Owning a few things they care about is more fulfilling than a room jammed with meaningless junk. Learning to spend money thoughtfully on things that will serve them well might be challenging at first, but it will set you up for a secure financial future.
Don’t over pay for rent
I had a number of friends when I moved to the city that lived at home well in to their 20’s, some even longer. They had the privilege of being able to go to school or work without the major extra expense of paying for accommodations. If this is an option for your family, make it easier for your kids by giving them what privacy and freedom you can manage.
If this can’t work for you, roommates are the way to go. Yes, finding good roommates can be a little tricky, but ultimately sharing expenses makes housing so much more affordable. Not to mention the possibility of great friendships developing, and all the fun that comes along with living with great people.
Another great benefit of shared accommodations is that they won’t need to fully furnish an apartment. They may need a bed or a few things for their room, look for a rental with furnished areas and an equipped kitchen to avoid a huge start-up cost.
Make a budget
A savings plan works well when kids don’t have many of their own expenses. But as they take on rent, bills, vehicle expenses and education expenses, it’s important for them to understand how much money is coming in, and that it is enough to meet their obligations without dipping into savings. There are many different ways to budget that work for different people, but make sure it balances.
Credit is important
Maybe I’ll just share this post with my kids. They’ll need to know how to establish credit, manage it responsibly and keep from negatively effecting their scores. I hope that by that time Credit Karma and Borrowwell still provide free credit monitoring services. That will help give them a thorough understanding of their credit scores.
Don’t get locked in
Some amazing opportunities can arise for young people who are flexible. Having a lease, pets, or a lot of belongings to deal with may make it difficult to accept some of the great experiences out there. Many resort jobs include housing and can be a great way to learn and save. Nannying is another option. Or cruise ship and air crew jobs. A lot of young people believe that a marriage, homeownership and babies are the best path, but I really want to encourage my kids to live a little before deciding to settle down.
Test drive your chosen career
Whatever it is they choose to do with their lives, I want them to know what to expect before they commit. Student loan debt can be a huge burden, and I hope they wont get in deep before realizing a job is not right for them. I want to help them find opportunities to try out the job they want before going to school for it. Whether its a work placement, shadowing, or just chatting with someone in the position they hope to hold, it should help them make a better choice. I hope they’ll find a fulfilling career without unnecessary debt.
Best financial advice for young adults
The best time to start planning for the future is today. Someday you will want to buy a house, have a family, start a business or eventually retire. It may seem like those things are far in the future now, but the sooner you start saving and earning interest, the more money will be available when you need it. I can promise you that a day will come when you regret your reckless spending as a teen and wish you had planned ahead. All I want is to help my kids learn things that took me 20 years to figure out so they can have a better life than I did.
I made quite a few financial mistakes as a teenager and young adult that I regret. It took me a long time to make up for some of them. I’ve learned some lessons, and I believe that part of my job as a parent is to make sure my kids have the information and guidance they need to have lasting financial security.