If you are anything like me you try to avoid technical finance talk at all costs. I don’t want to talk about indexes or stock markets or any of that stuff to be perfectly honest. I do however, love to talk and read about simple personal finance plans particularly if they apply to teens.
I’m getting ready to go to FinCon again this year and was taking a look at the key note speakers for the conference. One of the speakers is someone I did not know but who has written a book that really got my attention. It’s called “The One-Page Financial Plan”. What? One page? Sign me up!
When I contacted Carl he immediately agreed to an interview and sent me a book! 🙂 The book is full of simple and straightforward advice that anyone, including teens, can understand and actually DO. Even though Carl is a Certified Financial Planner, successful author, the Sketch Guy and New York Times columnist he communicates in a way that is easy to understand for those of us who are not experts. Here is his advice to teens:
Me: Can you tell me where teens should start when it comes to personal finance?
Carl: Sure! The first thing is for you to think about what is important to you. Then take a close look at how you currently spend your time and your money. You will be much happier if you will align these two things. Second, remember, money is simply a tool to get what we want. Last, write down what is important to you on one page. It might be something like you want to be debt free or you want to save $50 a month. It doesn’t have to be complicated just what really matters to you.
Once you have these things written down you can make all of your other money decisions based on those ideas. If you really want a mountain bike that costs $450 then write that down and make it a priority. When your friends ask you to go to Disney World with them it’s a lot easier to say no because you have already decided what is important to you. Don’t spend your money on stupid stuff and never get the mountain bike, right?
Me: What should teens do who want to save money but don’t have very much to begin with?
Carl: Be sure to take a look at a chart that shows you the power of saving while you are still young. It will really help motivate you. Keep in mind that you have to have some fun in life though! As you think about your money try to have a balance between having fun now and having something for the future.
Obviously you need to spend less than you make and have a savings account for a rainy day when something goes wrong. I also like to play games with saving money like putting $5 into your savings account every time you go out to eat. (Great idea!)
Me: I hate to ask this question, but, what about investing?
Carl: This really matters Eva and it doesn’t have to be all that hard. Compound interest builds up over your lifetime and makes retirement possible. If you will just invest in the Vanguard S&P 500 Index Fund you can retire on this alone if you don’t need the money for at least 10 years.
Me: What about parents? How can they help?
Carl: When kids are young sometimes they ask questions that seem out of place but are really great opportunities. If your child asks “Are the neighbors rich?” don’t dismiss the question or tell them it’s none of their business! Start a conversation and find out why they are asking. Parents should also be transparent about money and money issues with their teens instead of hiding things from their kids.
After speaking with Carl I am really encouraged. The fact is finances don’t have to be so complicated you want to cry. Managing priorities and making wise choices that also allows for some fun in life is something we can all do. I’m looking forward to meeting Carl and hearing him speak at FinCon’15!