The Only 3 Money Skills for Teens You need to Know to Get Rich
Introduction
It's a surprising fact that many people in America who earn over $100,000 a year still struggle to make ends meet. Perhaps you know someone in this situation, even your own parents.
Unfortunately, financial struggles are a common problem worldwide, caused by low income, high inflation, taxes, and living expenses. Housing, whether owning or renting, is also a significant expense. Furthermore, unemployment rates have risen globally due to COVID-19, causing many people to lose their jobs and struggle financially.
As he emphasized, financial education is essential for everyone, and it must start when they are young and should continue their entire life. Nevertheless, the question is whether people are getting exposed to enough financial knowledge when they are teenagers. A study found that 41% of students don’t have any financial literacy classes in high school (Reinicke, 2022).
I learned more from that single problem than from the entire free courses you can find online. If I had asked for help, I'm sure I would have found the solution much earlier, but what would have been the point? For every topic in each subject, there were dozens of different types of problems.
Similar to my experience with learning atomic physics, when you learn something by yourself, you'll have a better understanding of every tiny detail, which increases your chances of mastering that study area. That's why I strongly believe this book will be the perfect guide for you as it covers the only three things you must do if you want financial well-being: earn, save, and multiply money.
Therefore, I have created the content of the book specifically targeting teens by utilizing my years of experience, and knowledge, as well as the mistakes I made in many fields. I graduated in 2019 with a physics degree plus theoretical mention and my final project was about black hole collision. In 2022, I have experience in various fields including IT, real estate, and education.
However, as a physics student, I didn't care about money or what would be my first job after graduation. As I started working a typical 8-5 job for slightly above minimum salary, I realized that doing that for 40 years just to retire and finally having free time, didn’t sound very good.
As he highlighted, first list down your long-term and short-term financial goals and how important they are for you.
Notably, here is a list of areas you will be mastered at the end of this book.
❖ Basic knowledge of money
❖ Part 1: How to earn money
❖ Part 2: How to save money
❖ Part 3: How to multiply your money
Chapter 1 - Fundamentals
According to him, there is a direct correlation between the two, much like a friendship. Think of what a friend would do if you helped them. Chances are, when you’re the one in need, they’ll help you too!
By treating your money well (i.e., budgeting, saving, and investing wisely), it reciprocates by helping you achieve your goal of purchasing the phone. This could manifest in many different ways, such as accumulating interest in a savings account or investment, or simply being there when you need it.
This perception will unconsciously sabotage your efforts to build wealth. If you harbor negative feelings towards wealth or those who possess it, you might shy away from opportunities to increase your income or make sound financial decisions.
Your money mindset plays a vital role in their financial life. This is why it’s important to learn how your psychology affects the way you think about money, the way it translates into your actions, and into how you make financial decisions.
Brief History of Money
This book is all about money. So, I believe that it is essential to have at least a brief understanding of the history of money. Money is a medium of exchange that allows people to trade products and services. Additionally, money acts as a unit of measurement, and a way of storing value.
However, this system had several disadvantages. Determining which item is equivalent to the value of another was really difficult. For example, if a weaver wants to trade a large and valuable piece of cloth for a variety of smaller items, such as vegetables, meat, and firewood, it becomes problematic because the cloth cannot be easily divided into smaller, equivalent portions. This complicates the exchange process and might force the weaver to trade for more than needed or seek multiple transactions.
Fast forward to the present, mobile payments emerged, allowing payment transfers without any physical involvement. Now, users are able to transfer their payments using a portable electronic device, such as a smartphone or tablet device. Payment service providers like Apple Pay, Google Pay, Venmo, and PayPal are now widely used. The evolution of money has passed through multiple stages and it is expected to continue evolving. From the early barter systems, which faced significant challenges in determining the relative value of diverse goods, to the development of commodity money like gold and silver, and eventually to the fiat currencies and digital money we use today, each stage has addressed the limitations of its predecessor.
However, they also bring new challenges and uncertainties that need to be carefully managed. As we look to the future, it is clear that the concept of money will continue to adapt and transform in response to the changing needs and dynamics of the global economy.
Psychology of Money
Each person has their own thoughts and beliefs about money.
What do you think and feel about money? How do you treat money?
One of the most common ideas about getting rich is that you need a ton of luck to make a ton of money. That's why the lottery is so popular! Society often believes in the lottery and relies on luck to hit it big. Even though the chances of winning are super slim, many people spend money on lottery tickets, hoping for a life-changing jackpot.
● Spender vs. saver: Spenders are individuals who cannot wait to spend what they earn, while savers are willing to wait before making a purchase. It is dangerous to go to extremes in either direction. Imagine you are earning well, but you are spending everything you make. Gradually, you're going to be broke. On the other hand, if you save everything you make, you will miss a lot of experiences that bring joy to your life. ● Nerd vs. free spirit: Nerds are good at realistic budgeting, while free spirits love to live life to the fullest. Finding a balance between these two aspects is crucial. Even nerds should keep a space in their budget for non-essential expenses such as vacations, while free spirits need to focus on the necessities over unnecessary expenses. ● Safety vs. status: Individuals who prefer safety always seek the security that money can bring. They need the confidence that they can withstand any unexpected events like job loss, medical emergencies, and so on. If you are a “safety” person, you can live without any fear, and it provides more chances for you to be generous, invest, save, and spend.
● Your family and childhood Do your parents talk about money with you? Do they have a sound understanding of financial education? If your parents talk about money with you and have a sound understanding of financial education, you are fortunate
X I’m still young; I don’t need to think about retirement.
X Debit is always better than credit.
X It's not worth saving if I can only contribute a small amount.
X Investing is only for rich people.
X All debt is bad.
X Credit cards will get me through any financial crisis.
X The stock market is too risky for my retirement money.
X I have enough in my account to cover my expenses so I don’t need to budget.
By the end of this book, you will realize that these are only holding you back from unlocking your financial freedom.
● Assessing current beliefs and mindset: Taking the time to really reflect on your current beliefs and mindsets about money is an important step in changing your financial habits. Don’t just focus on the negative ones, recognize your positive beliefs and mindsets as well for a more holistic approach.
● Identifying limiting beliefs and barriers: Identify which beliefs and mindsets are holding you back. This will give you clarity on the aspects of your financial well-being that need to be improved. Then evaluate the challenging beliefs you have. For example, it’s a common belief that if you’re young, you don’t need to start saving money yet. In reality, there is no better time to start saving than now. This also applies to changing your negative beliefs about money into positive ones. It’s never too early or too late!
● Setting clear financial goals and priorities: Establish financial goals that are realistic (but don’t sell yourself short!) Then, check whether they align with your current habits and beliefs. If they don’t, then you’ll know which parts of your lifestyle you need to change.
● Adopting a growth mindset: A growth mindset is essential for achieving financial success. It involves being open to learning and taking risks, as well as having a willingness to make mistakes and grow from them. It's important to remember that financial success is not a one-time event, but an ongoing journey that requires dedication and persistence.
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