This is a guest post by seventeen year old Eva Baker, founder of TeensGotCents.
Eva Baker is a high school student passionate about preparing for her financial future and helping other teenagers prepare as well. When she isn’t rock climbing at the gym or pinning ideas for her non-existent wedding, she documents her financial journey over at TeensGotCents.com. Find her on Facebook, Pinterest and Google+!
There are so many things to buy. So. Many. Things. As a seventeen year old in a culture saturated with commercials and advertisements I am well aware of the latest and greatest things that I absolutely must have now. But wait. I don’t have to be an adult to see where that road has taken many people. I hear about families that have $70,000.00 in credit card debt on top of their student loans. College graduates with great jobs that can’t buy a home because of the debt they have accumulated. This is not the road I want to travel. My plans involved no credit card debt, no student loan debt and living within my means. I don’t have plans to be super rich or to travel the world. I just want to be free. Free to help others in need, free to give to worthy organizations, free to pay my bills on time and eventually take the grand kids to Disney regularly (and pay cash for everything)! That kind of freedom simply does not exist when you are buried under a mountain of debt. So, here’s the plan:
The envelope system.
I use the envelope system as a way to help myself make good financial choices. Something about spending cash helps me to make better decisions than sliding my debit card. It also helps me to direct where each and every dollar goes. I have to make a purposeful choice when I put my money into an envelope. I plan to use a cash system long term in order to keep up the self control that I need to be successful in my financial goals.
In 2012 I was determined (after listening to The Total Money Makeover by Dave Ramsey) to save up my first $1,000.00 as an emergency fund. It took me almost the whole year but I did it! The emergency fund makes sense. Things break and accidents happen. If you have no savings whatsoever for this then you will probably end up using a credit card. Which is only a good idea if you want to pay for that new outfit for the next 16 years.
No credit card.
If I don’t have one I can’t go into debt with one. I have read advice on keeping one for emergencies and I suppose that could be wise. But it needs to stay at home at the bottom of a drawer so that you never actually use it. Or see it. Depending on your personality it may be best to not have one at all.
No student loans. Ever.
I have committed to going to school without incurring any debt. If it takes me longer than the normal amount of time to finish school, then so be it. NO. STUDENT. LOANS. I know that such black and white thinking may seem immature on my part, but I believe that this will serve me best in the long run.
Save for retirement.
Saving 15% of my income is also a long term priority. If I start saving now it is amazing to see how that money grows over the course of a lifetime! It’s pretty exciting! I realize that I may not be able to save when I am in college because of the expense, but I can save now. I currently have $30 in my retirement envelope and I hope to have a lot more by the end of the year! That doesn’t seem like much, but over the next 50 years it’s gonna make a huge difference!
Don’t marry an idiot.
That really is self explanatory isn’t it? But the truth is that I can’t marry someone who refuses to be wise and disciplined with our finances. Obviously, there are all sorts of other things that I will be looking for in a husband, but this is one key issue for me. I’m not killing myself now just so I can marry someone who wants to spend everything we make and get us into debt. No thank you…
Sometimes I wonder if I will look back on the things that I am writing now and chuckle at my lack of sophistication. Maybe I will. But I don’t think that will be the case. And if I don’t follow through with this and have credit card debt and student loan debt and all of those other problems….well, 17 year old me is gonna punch 30 year old me right in the face!
Editor’s note: How awesome is that? A 17 year old with a retirement saving envelope?? Congratulations Eva, you are definitely on the right track to financial freedom!
The only thing I disagree with is not taking student loans even if that means staying at school longer. Studying has a cost, room, board, etc.. and since you should make more once you graduate than as a student job, it can make sense to borrow for your education. Not for parties and beers obviously.
Since you are dual enrolling and taking free college credits I have no doubts you won’t need the loans anyway. Thank you for sharing!