Teen You're Richer Than You Think

Lesson #3

Once young people realize that this may be the richest time of their life, money management soon becomes important.   

One of the top excuses for young people not taking their finances seriously is they believe they don’t have that much money to manage. They think they can worry about money management when they are older and are working full time.

They need to realize that in high school they are richer than they will be for quite some time. Get high school students to look at their discretionary income levels and they soon realize how rich they are. Let’s take a look at a high school student who nets $5,000 in a year working both part-time after school and during the summer.

If that student lives at home, rent-free, with their parents or guardians, all of their $5,000 is theirs to spend however they wish. From deciding to go to the movies or buying tickets to the dance, if you have a job and live at home, it’s your choice where to spend your money.

Now, fast forward to when you are out on your own making the big bucks and you have increased your annual income tenfold to $50,000. You may think you would be living the high life, but you will soon realize your real days of financial freedom are right now, in high school. $50,000 gets eaten up pretty quickly by income taxes for starters. Your tax-free holiday ended when you started making big coin. At $50,000 you’d be looking at approximate tax bill of $9,000 under current rates. Add your Canada Pension and Employment Insurance deductions and that’s 11 grand gone. It’s taken right off the top and you haven’t spent a dime yet.

Listen to the lesson.

The next hits to your wallet are all big and they are all for things you need — not want. It was great when your parents let you crash at their place for free. Sadly, those days are now over. It’s not unreasonable to expect to pay $1,250 each month for a roof over your head. There goes another $15,000 out the door for the year and you haven’t even been to the movies yet.

Audio version.

“No worries,” you say. “I still have $24 Gs to spend where I please.” You’re right, but there is one problem — you haven’t eaten yet.

Take a look at …