As we are starting the new year, many students are thinking of goals for the year, but they should be thinking about long term financial goals. Financial literacy can set you up for long term success. Without financial planning, Holly Griffin (11) states, “you’re not going to have the finances to support your life.” To start off the 2024 year, there are many thing HVHS students/teenagers can do to better their financial situation.
Arguably, the best thing students can do without any money of their own is to be added to their parent’s credit card with the condition they pay off their credit balance every month. Yet, Mrs. Mitchell, one of the Personal Finance teachers at HVHS, advises, “don’t get a credit card when you are young.”
To obtain a high credit score you need to show many things including that you have had credit for many years. Getting added to your parent’s card allows you to build up years of good credit history while still in your teenage years. Your parents should not allow you to have buying power with the card, but you will still be getting a credit history.
While it might seem too early to think about retirement, starting to save in an IRA now can be a very helpful thing for students to do while in high school. IRA stands for individual retirement account which has a cap on how much you can contribute each year. For a teenager, many recommend a Roth IRA which you contribute after tax dollars and that money grows tax deferred until withdrawn. The only drawback of this account is that you cannot withdraw money from the account without a penalty until you are 59 ½ unless you meet one of the specific requirements.
Through a Roth IRA your money is making money for you. According to Nerd Wallet, depending on your investment choices, you may be able to earn an average annual return between 7% and 10% [interest].” The earlier you put money into your IRA, the more it can grow and earn for you.
Being diligent about saving money is an effective way students can set themselves up for future financial success. Even if it is not for retirement, saving money is always a great idea. Mitchell tells students to “automatically take at least 10-20% of that [money obtained] and don’t touch it.” Having extra money can help you buy the things you want and/or have financial security for a “rainy day” later in your life.
A good way for students to grow their money while saving is to put it in some sort of investment method. What kind of account they choose should be based on how long they will not need the money. CDs, Money Market Accounts, or high yield Savings bonds are all good places for the money to be making more than it would in a typical savings account.
A simple thing students can do is set up a budget or spending plan in their teen years. Holly Griffin personally created a weekly budget to make sure she would not “go over her limit of spending.” Budgeting is a great way to visually comprehend the money you are spending each week or month.
