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10 Things I Wish I'd Known About Money When I Was a Teen

07/17/2012 05:52 pm ET | Updated Sep 16, 2012
  • Natalie Pace Author, 'The Gratitude Game,' 'The ABCs of Money' and 'You Vs. Wall Street'

This year, your biggest problems might be school food and scraping together enough change for a movie. However, your life as an adult is just a few years away. Postponing that as long as possible -- by continuing your education -- is a great idea! Your parents (and others) will only be willing to support you if they believe their investment in you is going to pay off. And these 10 Money Tips will ensure that they do!

10 Money Tips for Teens

1. Education Is the Highest Correlating Factor With Income
2. Good Grades = Free Money
3. Money While You Sleep
4. Good Money Habits
5. Be Thankful
6. Get a Life
7. Dream Bigger
8. Choose Your Friends Wisely
9. Charity Is the Best Networking
10. Shopping for Success

And here are the key facts behind these tips...

1. Education is the Highest Correlating Factor with Income: Doctors earn more than factory workers. The more you know, the more you can contribute to your community and the more your community will compensate you for your service. Before you decide on what you're going to be when you grow up, just enroll in college -- even a two-year college -- where you can explore various industries and professions to find the best fit for you.

2. Good Grades = Free Money: Make it your job to get great grades because that opens up the world of scholarships (free money for college) and better schools. Grades may also attract government grant money and, in the best-case scenario, schools will recruit hard to bring you onto their campus.

3. Money While You Sleep: It may be hard to dream of a day when you'll own a piece of the Apple (stock), but if you start your "money while you sleep" strategy now, you'll be on your way to creating a dream come true life. Save 10 percent of every dollar you get your hands on because compounding gains is the ticket to financial freedom. A person who invests 10 percent of their income will have more money than they earn in seven years and their money will make more than they do within 25 years*. That means you can retire before you're 45 if you start at 18! A friend of mine put a down payment on his first house with the silver dollars he saved from his allowance as a child. And that was one of the best investments of his life.

4. Good Money Habits: The sooner you learn good money habits, the easier everything is! The Thrive Budget is a simple formula. Think and incorporate 50 percent to thrive and 50 percent to survive -- even with your allowance. Save the first 10% percent of every dollar you receive. Have a clear understanding that you should only spend 20 percent of your money on clothes, shoes, movies, snacks and other "fun" stuff. You will get your first credit card in college and, using the Thrive Budget and Money While You Sleep plan, you will start compounding gains, beautifying your bottom line and increasing your assets (while you sleep), instead of being enslaved by the compounding debt of the credit card companies (which is a big problem for twenty-somethings). Learn more about the Thrive Budget in chapter 8 of my book, You Vs. Wall Street.

5. Be Thankful: As a teen, even though you feel overworked and annoyed by everyone telling you what to do all the time, you are in a unique time of your life when everything you have is given to you. Your parents, community, mentors and/or school scholarships make it possible for you to get an education, sleep with a roof over your head and have regular meals without working for it. Once you become an "adult," you will be expected to provide these things for yourself. So, be grateful and express your thanks to your parents, mentors, teachers and anyone else who is giving, so that you can get the education you need to build a solid foundation for your life.

6. Get a Life (Before You Give a Life): Since nature has made it easy for teens to become parents, it is important to take whatever preventive measures are necessary to postpone becoming a parent until you are a confident, financially independent grown-up. Get your education, and make sure that you are confident in the career you have chosen to support yourself before you attempt to support a child.

7. Dream Bigger: With all of the opportunities that are available, your ability to achieve is limited most by your ability to dream. Don't stop at the achievement of accountant if you have the capacity and desire to become the chief financial officer. College is your best chance to dream as large and as far as you can, and to fly, with the help of your professors, mentors, university and scholarships, to get to that destination.

8. Choose Your Friends Wisely: There is an adage, "Show me your friends and I'll tell you who you are." Your friends are a reflection of what you hold most dear. You turn to them in your greatest moments of joy, and rely on their support during your moments of grief. Your friends should be your biggest cheerleaders, your best examples and also your most sober advisers. As Gayle King, the editor-at-large of O, The Oprah Magazine says, "When people don't want the best for you, they ARE NOT the best for you."

9. Charity is the Best Networking: You'll learn a lot about the power of networking in your business classes, but the most important and effective networking is rarely highlighted -- charity. Through your charitable contributions and service, you will find your people -- your team. Every job I've gotten, promotion I've enjoyed, business I've launched and capital funding I've received have come directly as a result of my service projects. Also, your service and leadership achievements are another feather in your cap, when you're looking for scholarships and acceptance into the best universities. You have time and talents to share now, so just do it!

10. Shopping for Success: Dress for the job you want, not the job you have. Dress like a teen bound for college, and you'll see other likeminded achievers sitting at your lunch table. Play dress up in the clothes of the career you are interested in just to see how this job feels to you. I knew I would never be a kindergarten teacher because I couldn't bear wearing wash and wear clothes that kids could smear finger paint on! You'll be surprised just how much wisdom you have about what you really want to become. Try on that stethoscope if you wish to be a doctor, or those hip waders if you wish to study the ecosystems of the Mississippi River.

Every cent you own and every moment you spend is always an investment. Even now. So, have fun and embrace these 10 money habits that will enrich your life now and forever. To learn more about money, investing and the Thrive Budget, read my book, Put Your Money Where Your Heart Is or the paperback version of it called You Vs. Wall Street.

*Based on your investments earning a 10 percent gain, which is what U.S. Stocks and bonds have gained over the past 30 years.