When I turned 14 and it became legal for me to get my first job, I did. Throughout my teen years I held multiple jobs, often times simultaneously. During those years, I mastered bagging groceries (there is an art to this!), making the perfect cup of coffee, became knowledgeable about fish and reptiles, stacked underwear precisely by the dozen and provided the perfect bra fitting, gained skills and an admiration for great lawn care, and mastered creative playtime with youngsters. If there was one thing my parents taught me, it was the value of hard work.
I look back on those formative years and have to laugh. Although I was working really hard, I really wasn’t working very smart. I was a kid, living at home, and had all of my expenses paid for…I guess in a way you could say I had the best gig in town. I had such a great thing going, that I was even given spending money on the weekends when I wanted to go out with my friends! Although I had the opportunity to save a ton of money, if I’m being honest, I didn’t save nearly as much as I could have or should have.
I would love to sit down for a cup of tea with my younger self today and teach her the value of working smarter (not necessarily harder), and making her money work for her. Here are just some of the things I would say to her…
1. Establish a plan and stick to it. I know your parents tell you to save a little, spend a little, and donate a little…but that’s not a plan. Your number one priority right now should be socking away as much money as possible for the future. I know it doesn’t sound fun, but trust me, this should be your only priority. Suggestion: Save 60%, Donate 10%, and 30% is for discretionary use (anything left over from discretionary at the end of the month should be put into your savings!!)
2. Open a Roth IRA. Work with a financial advisor who will help you invest a portion of your savings into this retirement account. I know retirement is at least 50 years away, but trust me…the older you get, the faster time goes. Building a foundation for your financial future is critical and time is on your side! Your money will grow exponentially over time…it won’t grow nearly as quickly if you wait until later in life to invest.
3. Delay gratification. Think twice before making an impulse purchase. When you go to buy something, pick it up and ask yourself… “How will I feel about this item in 1 week? How will I feel about this item in 1 month? How will I feel about this item in 6 months? How will I feel about this item in 1 year?” The answers to these questions will hopefully lead you to realize that some impulse purchases are just not worth it…or in other cases, it will completely justify why you should make that impulse buy!
4. You have a great resume…but where is your budget? In other words, you have created a document for which you can track and evaluate your career success…why haven’t you created a document like that to track and evaluate your financial success? Don’t wait until college to put together a budget…start now! You will likely never have the same fantastic ratio of income to expenses as you do today! And don’t forget to thank your parents for this gift.
5. Great job working so hard…just remember that “hard work” doesn’t necessarily equal “smart work”. The sacrifice you make today will provide you with life lessons and insights beyond what you can learn in a textbook – it is a gift that money cannot buy.
Bottom line, make the most of the opportunities you have before you…the choices you make today will impact you tremendously when you are on your own and need to support yourself.
Although I cannot have afternoon tea-talks with my younger self, I do hope that my kids will learn from me one day. Already we have started a savings and investment account for our daughter; albeit a small gift today, it will be a big gift for her in the future. We all have to start somewhere, and the lesson is that it’s never too early (or late!) to start saving!
Article provided by Jennifer Hrbek
Jennifer Hrbek is a Director at the Women’s Business Development Council (WBDC), a non-profit organization that supports economic prosperity for women and strengthens ommunities through entrepreneurial and financial education services that create and grow sustainable jobs and businesses across Connecticut. Head-quartered in Stamford, WBDC has offices in Derby, Danbury, Hartford and Waterbury. Visit WBDC at ctwbdc.org, follow on Facebook, Twitter, LinkedIn and Instagram @ctwbdc.