Advice to a Teenager
Thanks for the e-mail.
Your Dad, Mom and I all remember when we turned 18, which in some ways seems like a million years ago and in other ways, just like last week.
Your parents wanted me to pass along to you something that might serve you well, now that you are an adult. What I am about to give to you, I would have spent a million dollars for, if someone would have given me this when I turned 18. What I am going to give you, might seem like simple advice, but it is going to save you thousands and thousands and thousands of dollars as you move out into adulthood. Four simple pieces of advice.
1] Keep your life simple and always be creating free space. You actually keep your life simple by creating the free space. Life is going to begin coming at you hard and fast and it will attempt to fill you up with Possessions and to take up all your Time and all your Finances. Don't let this happen. Do not allow circumstances to take up all your time or all your money---your budget. Strive to keep the number of possessions you have low. Small in number and high in quality, whether you are talking about an iPod, a TV or a car. Always try to keep 20-30% of your time free to do things that benefit you, such as rest, relaxation, travel, meditation or a special project or helping others. Try to live within 80% or less of your money. I will show you where to put it in items 2 and 3 below. People who live with budgets that eat up 100% or more of their income are prisoners and this creates stress. If you always have a free space of 20% or more of your income, you will always feel like you just won the lottery. For the first time in my 59 years I am living on less than 75% of my income and I LOVE IT.
See Notebook piece on Simplify Your Life: click here
See my sermon Free Space [text and video]: click here
2] Do not get involved in credit card debt. Create your own credit card company. As you get going in life now, you will have a job and income. Start right away in life by creating your own credit card company in the form of a second checking account that has a debit card. That debit card IS a de facto credit card but the debt is paid with the money you have in that account.
No due dates
No interest. Credit card interest will TAKE from you thousands and thousands a year for the so-called privilege of using THEIR money. Credit card debt is eating this country and its citizens ALIVE. It is destroying the entire nation, so do not let it hurt you.
Have your normal checking account and then have a second one that is your Jane Credit Card Company, where you are the owner. This is where you put most of your freed up money. You still build a credit rating by using this debit card.
If you want, you can still get a regular credit card but NEVER let a day go by that you have not paid your balance from your second debit account. I have a paid up credit card that I use mostly for car rentals and securing airline tickets, but the moment I use it, I wait a day till it shows on the card and then pay it. Keep the balance at zero. Be sure to get a card that has no yearly fee.
Do not use cash machines----way more trouble than they are worth.
3] Establish a savings account. If you have not done this already, get yourself a savings account. Just having it will make you feel good. This will be your future and the future for your children. I do not care if all you put in it is a dollar or two a week or a month-------have it. Whatever money you put in here can never be spent. You can have the interest it makes, but never touch the principle.
If you do some simple math about what could go into this account over the course of your lifetime, it will blow your mind. You could be well taken care of in your later years. Savings can build fast. All the rich people of the world of days gone by knew as children the POWER of a simple savings account. It will start out small and in these next few years, you might only have a hundred or two in the account, but it will sneak up on you and surprise you with its power. As your Jane Credit Card Company grows, transfer some into this PERMANENT savings.
4] Practice winning the Mega Millions Lottery. This is one of the most power tools I have ever had in my life, for even if you never play the lottery in this lifetime, it will teach you VOLUMES about yourself and make you a wise steward of money.
I want you to pretend that you have won 10 million to 20 million in the lottery. Figure $360,000 take home pay for each million won. So your winnings for 10 million will be approximately $3,600,000 and for 20 million, $7,200,000. HOW WOULD YOU BUDGET THIS MONEY?
Write out a budget for each amount [10 million, 11 million, 12 million and so on up to the 20 million]. Your budget should include about 6% of the take home for taxes because they will not deduct quite enough. Now budget the rest. You might consider a home, a car, savings, gifts, clothing allowance, and so on. Make out these budgets, put them in a file and put them away for about one year.
At the end of this first year, take out your budget and review it. YOU WILL BE SHOCKED. You will see the foolishness of several of your budget selections. You will say, "What was I thinking?". Redo the budgets. Put them away for another year. Review. Again, your will be shocked. Why? Because you, as you become 20 and 22 years of age, will be WISER and you will learn more about life and what is really important. This wisdom will be reflected in these budgets. I did this for ten years and was shocked EACH TIME and knew that if I HAD won that much, I would have been making many mistakes. It was ten years before I really came to like my budgets. EVEN NOW at 59, I am making changes to those budgets because I keep learning more and more about myself and life.
See, "I've Just Won the Lottery, Now What?" Click here.
This is all an exercise in good Stewardship and will serve you in the other 3 areas we discussed.
So now you have it........the wisdom of the ages or maybe just the aged.
Welcome to adulthood. I pray God give you great wisdom and many blessings in the years to come.
PS: One more thing. Get or use a good paper shredder---the kind that makes confetti of your paperwork and never throw anything in the trash with your name, address or financial information on it. I shred virtually everything. Protect yourself from identity theft. I actually have a LifeLock account which prevents anyone from stealing my identity, even if they have my social security number and financial information.