This week’s blog is for teenagers and young adults. Growing up in an instant society of fast food, microwaves, texts and other instant forms of communication makes it difficult to develop the habit of delaying gratification. Yet, the young adults who learn how to live on less than they earn and delay purchases often end up being wealthy adults.

How can you develop these habits? Here are some suggestions:

Commit to save a portion of all earnings

  • Put a specific amount or a percentage of every pay check into a savings account instead of putting it all into your checking account.
    • If your employer offers direct deposit, chances are you can make this automatic so that each pay check is split between your checking and your savings accounts.
    • If you don’t see it, you won’t miss it.
  • Make it a little difficult to get the money out of your savings account.
    • Do not tie your savings account to your debit card.
    • Consider having the savings account at a different bank.
  • Have a goal for your savings
    • Saving for:
      • A car?
      • College expenses?
      • A new computer or tablet?
    • Having a reason to save helps you stay committed and makes it easier to save, especially when you see the savings accumulate.

Create a spending plan

  • Planning ahead of time what you are going to spend your money on puts you in control of your financial situation.
  • Remember to allocate a portion of your earnings for those expenses, like car insurance, that you often don’t pay every month.
  • Planning ahead means you are telling your money where to go instead of wondering where it went.

Be creative

  • Be creative with earning money:
    • Do you have a skill that others would pay for?
      • Mechanical skills.
      • Babysitting.
      • Cooking or baking skills.
      • Crafts.
    • Be creative with your spending:
      • Save on outings with your friends by getting together at someone’s home and having everyone bring something to contribute to the food and fun.
      • Barter with others:
        • Babysit for your neighbor in exchange for free meals.
        • Wash and detail your friend’s car in exchange for cleaning services.
      • Skip cable and use Netflix or Amazon Prime (possible savings of $100 per month).
      • Take your lunch to work (possible savings of $50 per week or $200 per month).
      • Make coffee at home (possible savings of $20 per week or $80 per month).

Stay away from debt

  • Don’t buy something unless you have the money to pay for it.
    • Waiting until you have the money may make you realize you don’t want it as much as you thought.
    • Waiting also helps you distinguish between wants and needs.
      • You need a place to live, food to eat, clothing to wear, and transportation to get to work.
      • You want designer clothes, a sports car, a fancy smartphone.
      • Wants are not bad as long as you have already taken care of your needs and you have the money to pay for the wants.
    • Debt is fine for big ticket items like a home yet you still need to save for the down payment

Recognize the power of cash

  • Studies show that we all spend more when we use plastic instead of cash (debit or credit card).
  • Cash gives you negotiating power.
    • As prior blogs have indicated, if you walk into the furniture store with cash, chances are you can obtain at least a 3% to 5% discount, sometimes more.
    • Be assertive and ask for the discount.
    • Be ready to take your business elsewhere if they won’t give you a discount.

 Becoming financially responsible takes time. Don’t try to do it all at once and don’t be afraid to ask for help. You will thank yourself later for the steps you take today.

Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.

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