Thoughts From Teens: Personal Finance Discussion

Today marks the first post from my new blogging category: Thoughts From Teens. Posts will be written by one of my kids, or a teen we know. The goal of this category is to share life from a teen’s point of view, which you might find is quite different from your own. I am also hoping that through comments, the teens both writing these posts and reading the posts can learn some things from all you knowledgeable readers too.

The post today was written by my 17 year old son Nathan, who is starting his senior year of high school today. The topic was inspired by fellow blogger MoneyCone, who was curious what a 17 year old thinks about finance in general.

Disclaimer: this is my first experience writing something of this nature. If you don’t mind, I would really appreciate if you tell me what you think in the comments section. Also, if there are any other topics you are curious about from a teenager’s perspective, please comment on that too. Thank you for reading…Nathan

Personal finance is something of a daunting mystery to me right now. Although I took a class on PF in 10th grade (class being a very loosely used term, our teacher was more interested in educating us on her board game collection than on actual finance), and took a two week crash course on it as part of the health curriculum, I still feel rather in the dark about ways to effectively manage money when I’m forced to become self-sufficient. This isn’t to say my parents haven’t educated me on personal finance, they have, but there are still many questions I find myself asking such as:

What in the world should I invest in?

I ask myself this question because of many exterior influences: the floundering stock market, a conversation I had with a former Merill Lynch higher-up about investing in commodities, radio commercials touting the price of gold in a volatile economy etc. However, Cracked.com assures me that investing in mutual funds has always been, and will remain, the safest way to invest your money, but it leaves me with other questions- mainly “what is a Mutual Fund?”. Easily answerable questions aside, it’s still intimidating to look at the Finance page of the newspaper and see all of the companies and their corresponding values. Choosing which companies to invest in seems like a guessing game to me. In the days of downgraded credit ratings and mass bailouts, investing in any formerly financially stable company seems impossible. Investing in other things, such as commodities or foreign currency, is even more foreign to me than stocks. These investment decisions will continue to bother me until I figure out a way to master them, if I ever do.

What amenities should I have?

Perhaps amenities is a misleading word because what I am referring to is things like Internet access, phone service, cable TV, etc., but let me digress… Since I currently plan on getting a teaching degree, I’ve begun to realize that living the same life that my parents have given me is going to be next to impossible. As a result, I’ve started to think about the things I will or won’t need in the future. My thoughts have led me to believe that maybe entertainment devices- DVD player, multiple game systems, maybe even the TV, won’t be necessary to have around in the future. Online streaming capabilities have rendered our DVD player all but unnecessary and the expansion of such capabilities, not to mention an increase in Netflix prices, have led me to believe a movie reader won’t be needed in the future. And don’t get me started on home phones. Landlines are just money vacuums now that nearly everybody has a cell phone. (Unless, of course, you enjoy being solicited by telemarketers; then a home phone is vitally important.) At this point though, it is hard to know what ‘amenities’ I will want or need in the future.

Should I get a credit card?

In the aftermath of “The Great Recession”, I’ve heard many stories about families going so far as cutting their credit cards into pieces and using paper money exclusively to keep expenses controlled. Since I started hearing these stories, I too have thought about avoiding credit cards. These thoughts were quickly ignored though by the overwhelming consensus that you must have a credit card in today’s environment. Everything from applying for loans to buying a car or house is partially influenced by your credit score. Not having a credit card is a red flag as far as I can tell. My mom has discussed with me how to remain out of debt even if you do have a credit card, but it involves actually paying your bills off each month. It is amazing how many people don’t do this, and I feel confident that I know enough to avoid debt. Knowing is half the battle, and since I know how to avoid falling into debt, I see my future finances as rather stable as long as my purchases don’t get too impulsive (no promises there).

Overall, I feel rather positive about my financial future. The only thing that I truly worry about besides what I mentioned above is student loans. These loans will certainly saddle me when I first leave college but my parents, who were no stranger to loans, have also equipped me with ways to pay off debt without it having too profound an effect on my day-to-day life. (Note from Kris: This does not mean we plan on paying off his student loans, we have equipped him with knowledge, not an endless supply of cash.) Although I tend to be a cynic, I treat my financial security with optimism and will probably continue to until I actually have to support myself. Having parents as adept as mine at keeping their finances in order has certainly helped, and them telling me their strategies has certainly helped also. I recommend that all parents do the same for their kids, as we really are listening, at least most of the time.