Basic Money Skills for Teenagers and Students

Mobile phones

These can be a huge trap.  Always check out the fine print and don’t sign any contracts without getting parents to oversee.  Be proactive – shop around.  It’s best to go pre-paid as then you can monitor it better. 

Kids don’t realize that overdue phone bills don’t go away.  Phone companies rarely send more than two or three reminders.  You will think that if you move house and don’t change the address that they have given up and let you off.  This isn’t the case.  They will simply list a default on your credit file and when you go to buy a car or apply for a personal loan, it will pop up and no one will give you credit until it is paid out.

Take responsibility and don’t be a victim. 

If your phone bill has got out of hand, go prepaid and make arrangements with the phone company to pay it off.  Set up internet banking and create a budget.  Once you have worked out how much your bills are and how much you need to live, have a direct debit set up from your primary account to have the money for bills taken out automatically to another account that isn’t easily accessible.  That way, all you have in your everyday account is enough for food, petrol and entertainment.  This is a really easy way to keep it under control.

Save

Internet banking these days is really easy and most banks offer a range of sub accounts so you can even make it really easy to save. 

It’s a good rule to try to save at least 30% of your wages.

While you are still living at home is a good time to take advantage of this and put some money away.

Cash

Try to take as little cash out of the bank as possible.  You might pay a little extra in charges but if you use eftpos instead of cash you will spend less.  Cash really does burn a hole in your pocket.  Make sure your employer pays you electronically and if not, only keep enough money out of the bank for your personal spending and bank the rest.  Once the cash is gone, stay home!

Peer Pressure

Don’t live above your means.  It’s really easy once you get a job to get credit but pretty soon you can end up in a huge amount of debt.  Once you get behind, it’s very hard to catch up.

Cars

Save as hard as you can for your first car and borrow as little as possible.  Once again this comes under peer pressure.  Be confident with who you are and everyone else will respect you for it.  Buy a reliable car preferably on gas and be proud of it.  It will still get you from A to B.  Cars are a liability.  You are much better off buying assets.  With your savings plan, you can start building a share portfolio or save a deposit for a house which will serve you much better in the long run.  I know it’s hard but resist the Commodore!

About the author: Karen Pertulla is the Founder and Director and Licensed Finance Broker at Lakeshore Finance with offices in Queensland and WA. 

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