Money Management Advice For High School Students

Tre Cobbs, Staff Writer

High school is an important time, specifically the last couple of years when you are deciding what your plans are after high school whether it be furthering your education or going right into the workplace. A lot of developing happens in high school, and I believe there are certain topics that need taught, such as the importance of credit, budgeting, investing, and saving for retirement. These are just a few of the topics that one should be well-versed in but are often not taught in high school.

For starters, credit is important to know and understand at a young age because it will play a factor when you go to purchase things you may need such as a house or a car. While these things are usually too expensive for most people to pay all at once, with credit, it is possible to pay over time. If credit is mismanaged, you will be less likely to qualify for loans or credit or end up with a loan with a high interest rate. I did not learn about the importance of credit until college, which is far too late in my opinion. It is important to build credit as early as possible. If you have not started building your credit, you can get a low-limit credit card and start using it for small things like gas and groceries. Also, if your parents add you as an authorized user on their credit card, it will help build your credit as well. The importance of credit is only one topic that should be taught in high school.

Another topic that needs taught at a young age is budgeting. Some people are very bad at managing money and knowing why budgeting is important and tips for it can be really helpful. Budgeting helps you control your spending habits and will keep you on track for your financial goals. Over the past couple of years, I have been following the 50/30/20 rule which is a budgeting framework. Up to 50% of my income is for my needs, 30% for wants, and 20% for savings and debt repayment. This budgeting process has allowed me to manage my money efficiently. I stick to my budget and rarely wander from this framework because it has worked so well for me the past couple of years. Find a budgeting process that works best for you and stick to it.

Investing is another really important concept that needs emphasized in high school. For those who have an income in high school, if they put a small portion of their paychecks in a savings account or invest the money, they will be able to have that money when they need it. When it comes to investing, one must be able to say goodbye to the money for the time being, but realize that the potential for the future return is high. There are a lot of different investment vehicles that should be learned about such as stocks, bonds, mutual funds, etc. I believe that this is an important topic to learn early on so you are better equipped to handle your finances in the future and realize how beneficial investing can be.

Saving for retirement is something else that I wish I would have learned in high school. It is never too early to start saving for retirement. I know that may sound crazy because some people are only 14, 15, or 16 years old in high school, but as long as you have earned income, you can start contributing to an IRA. Starting to save for retirement early will allow for more financial freedom in the future. I always hear people say to start saving for retirement as early as possible and it is important to understand what an IRA is and how the money in an IRA will grow tax deferred the whole time it is left in the IRA.

These are just a few of the topics I wish had more emphasis in high school because they are truly important and it is better to learn them young than be graduating college and have no idea how to survive in the real world. I have seen so many people come out of college with no knowledge on the topics. It is never too late to improve upon your financial literacy, understand the importance of finances, and make strides to improve your own life when it comes to these different financial topics.