Personal Finance: Everything Teens and Young Adults Need to Know About Money

financial guide for youth financial literacy money management Jun 08, 2022
Personal Finance

By Amy Collett

“They don’t teach anything useful in school” is a common gripe for young adults struggling to make heads or tails of their finances. Due to a lack of financial understanding and a shaky foundation, many youngsters end up saddled with a mountain of student loans and credit card debt. Millennials, the generation before you, have even been written off as the “lost generation” thanks to their poor financial health, reports The Atlantic.

If you’re a teen or young adult reading this, as a member of Generation Z, there’s hope for you still. You have the chance to learn from the mistakes of your predecessors and acquire the healthy financial habits needed to build a comfortable life for yourself. Read on for some targeted advice.

Learn core financial skills such as budgeting and bank account basics

You must learn and practice money skills to build up a solid financial foundation. Budgeting is all about knowing where your money is going and keeping your expenses to a bare minimum. Bank account skills teach you how to access, track, and move your money around. Other basics like investment skills, debt payoff strategies, and frugality will stand you in good stead throughout life. Understand how taxes work and how your future employer can help preserve your wealth.  

Understand the power of compounding interest – start investing now

The sooner you start investing, the bigger your nest egg will be at the end of the day, thanks to the magic of compound interest. Saving $100 monthly now for 30 years at an interest rate of 6 percent will net you approximately $95,000. Your friend who starts 20 years later and invests $500 monthly for 6 years, on the other hand, will make only $42,000 approx. You both invested $36,000 in total. The main difference is you started early and made more than twice as much.

Live below your means

Live beyond your means and you will be saddled with debts, stress, and anxieties all your life. If you live within your means, you’re still vulnerable to being taken out by a big enough financial catastrophe. As Be the Budget advises, it’s best to live below your means. That means if you have $2,000 spending money every month (after you’ve taken care of your obligations), you should aim to spend $1,000 or less. This not only builds your wealth but also supplies you with an emergency fund for maintaining your lifestyle when times are tough and you miss a paycheck or two.

When it comes time to shop for your first apartment, keep your eyes on your budget and look for places at the low end of your price range. The easiest way to find cheaper accommodations is to view listings online and then filter by the maximum you’re willing to pay each month. Once you’ve found apartments in your price range, you can choose a unit that suits your needs.

Start building a good credit history

Shouldn’t you avoid credit altogether? Unless your parents are loaded, you’re going to need to borrow sooner or later. And when you do, the lender will look at your credit history. The lack of history is as much a red flag as a poor credit score. That’s why a good credit history is so important, even if you don’t immediately need money. It helps you find apartments, impress employers, and even leads to smaller insurance payments down the road. 

Consider self-employment 

Making money is a major part of being financially healthy. In 2021, traditional jobs are on the decline and the gig economy and self-employment are on the rise. When you do enter the workforce, being your own boss and building your own startup may be the most financially viable option. As an aspiring entrepreneur, you need solid people skills, outstanding communication, grit, and a killer work ethic. We strongly recommend starting a business you can believe in, treating people with respect, keeping the promises you make, and understanding the value of investing your time and hard work.  

Take care of your health

Last but not the least, we strongly advise you to look after your health. It could be your biggest asset if you look after it well enough, giving you plenty of energy to work, make money, and just live your life well. But it could also be your biggest liability if it fails, costing you countless thousands in medical care and endless stress and pain. Don’t sacrifice your health in your pursuit of wealth, as some do. Strike a balance instead. Also, it always pays to inform yourself about your insurance options


Take nothing for granted and do everything in your power to build and protect your wealth. Fancy degrees, hard work, and even connections don’t guarantee a smooth ride in life. Fortunes change at the drop of a hat. Fortunately, you’re not alone and there’s always help at hand.  

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