Teenagers, don’t be fooled by bank lawsuits with cash and free electronics. Instead, do your own research

0

It’s been a tough year for the under 20s. Lockdowns, fluid timetables, and canceled extracurricular courses are the norm now. And there are the masks – so many masks.

As a teenager in 2021, you likely have an overload of concerns, but here’s one way to feel more in control and more positive about your future: educate yourself about money. With knowledge comes power – and less stress. From bank accounts to bills, here are four strategies and tips to help you get healthy financial habits for life.

Be picky about bank details.

Guess what? Banks are after you. Not in a horror movie creep fest way, but banks know that if you open an account, you will likely become a lifelong customer. They will do all they can to entice you.

So don’t be fooled by $ 25 startup bonuses or free electronics. Instead, do your research online and compare options like bank charges, the number of free debit transactions you make per month, whether the account has a debit card that you can use in person and online, and whether you can deposit checks using your phone.

Be especially careful with deals that only promise free banking for a limited period of time, such as bank cards. B. only for the first year. You could end up paying a lot more expensive banking fees in the long run.

Most child or student accounts do not charge monthly fees, but the interest that major banks charge on deposits in the Accounts (what the bank pays you to “borrow” your money) is often miserable. The interest rate for a child savings account at a major bank is currently 0.01 percent, while the alternative bank EQ Bank recently even paid 1.5 percent.

Check with online banks for better returns on your money.

Once you’ve made up your mind, grab your ID – passport or birth certificate, social security number, etc – and go to a bank with a parent or guardian, or call the internet bank with your parent or guardian. If your parent is already banking with this financial institution, you may even be able to apply online.

Go on: Don’t take the first deal your nearest major bank offers you. Search Canada’s best youth accounts online and discover numerous sites that compare accounts for you.

Save, save, save.

If you want to start a habit now, it will save your money. Not all of it! It’s perfectly okay to spend some of your money. But learning how to save a percentage of your money now – say 25 percent – is a life skill you’ll need later when it comes to buying a car, funding an exciting trip, or buying a home .

For example, to take out a mortgage – a loan to buy a house – you must first save a down payment, which is typically tens of thousands of dollars or more. Sounds impossible? It is not. But it takes time and dedication to make dreams possible.

To create a saving habit, open a second bank account and pay yourself first. In other words, as soon as you receive money and before you spend it, you automatically put a percentage of it into another account you don’t touch until you reach your financial goal. If you don’t see this money in your main account, you are less likely to be spending it on frivolous things.

Go on: Play around on online savings calculators to see how money grows over time, or read classic beginner money books such as: Think and get rich or The wealthy barber, to learn more about the power of “pay yourself first”.

Invest early

You are luckier than you think. That’s because you have your whole life to invest and watch your money grow. And if there’s one thing that investments like, it’s time.

Here’s why: Say you’re 15 and save $ 1,000 this year. You ask your mom to put it in escrow for you until you are 18, the age of majority in your province. (Once you reach that magical age, you can invest yourself.)

For the next 50 years, those thousand dollars will earn 5.5 percent interest. Even if that’s all you ever invest, by age 65 you will have $ 15,544! In the meantime, your father, who only has 20 years to invest, would end up with you only $ 2,997. Time plus compound interest makes the difference.

Go on: What does it take to become a millionaire? There’s no shortage of beginner information to get you started. Try TeenVestor and get smarter about money, including a compound interest calculator. There are also simulated investment portfolios and games at HowTheMarketWorks and Wall Street Survivor, as well as books like The Motley Fool Investment Guide for Teens. For cash prizes, sign up for the Young Investors Challenge, a free investment competition for high school students in Canada and the United States

Master your card

There are many reasons for a credit card. They’re practical, for one thing. You need one to buy pretty much anything online. They can also help you build good credit – what banks and other lenders look for to help decide whether they should get you good deal on large loans.

But credit cards can be a major headache and even bankruptcy if not used wisely. So never – never – spend money that you don’t have on a credit card. If you cannot pay the remaining balance in full within a few weeks (credit card grace period), you will save for the item instead. Or draw on the savings you’ve already built. See? There’s a reason you might want to pay yourself first!

Go on: Get a credit card early and learn how to use it properly. Ask to be an authorized user on one of your parents’ cards. Or, with the help of your parents, sign up for a credit card with a low limit of $ 500 or $ 1000. Pay your balance on time and you will develop good bills paying habits too.

Be wise with your money. Get the latest investment information delivered to your inbox three times a week with the Globe Investor Newsletter. Register today.

Share.

Leave A Reply