How Can a Teen Become Rich and Wealthy? One of the many crucial components of becoming a parent is ensuring that one’s own financial situation is stable.
How Can a Teen Become Rich and Wealthy?
I have no doubt that you will be successful in teaching your children proper etiquette, admirable values, and the need of maintaining a nutritious diet. However, is it possible to teach youngsters about financial security? Do you really understand what you should say to them concerning the money?
I was fortunate enough to have a conversation with Mike Zisa not too long ago. Currently, he works as a financial consultant in addition to his teaching duties at Pennsbury High School in Bucks County. The first book that Zisa has written is titled “The Early Investor: How Teens and Young Adults Will Become Wealthy.”
We spoke about the kids in our community and the importance, as well as the scarcity, of financial education in high schools. Lisa went through the most important things that each and every high school graduate need to keep in mind after completing their education.
The terms “saving money” and “spending money” are not interchangeable
Putting money aside for future use often involves opening a bank account and making deposits of cash, checks, or other forms of payment. There is also the possibility of integrating cash deposits, as well as certificates of deposit with shorter terms (Certificate of Deposits). Investing may even make your money very safe while while increasing its accessibility to you. The act of utilizing funds to buy assets such as stocks, shares, real estate, and other investments that are anticipated to increase in value over the course of time is the process known as investing. Investing your own money was the highlight of your professional career.
Utilize compound interest to your advantage
The term “compounding” refers to the process through which your savings and dividend income produce more profits for you over time. In other words, the process by which money is transformed into revenue is referred to as aggregation. The power of compounding enables enormous increases in wealth! The younger you are, the greater the possibility that you will be able to work with others.
Get a head start on your investments
At this moment, Zisa is being the most emphatic. That was what inspired him to write his book in the first place. The earlier you start investing, the longer you will have to wait before you can take advantage of the long-term benefits of pooling your money. Consider the following: if you begin spending $3,000 year at the age of 25, and the average annual growth rate is 6%, you will have around $680,000 by the time you reach the age of 65. If you are just 35 years old, you are now worth 260 000 dollars. Time is the most important aspect that plays a role in the expansion of wealth over the long term. Start putting money away as soon as possible.
Avoid making purchases that are beyond your financial means
We now live in a world that has an insatiable need and appetite for material possessions. There is no moral failing in frittering away money; but, there is a moral failing in not using the money you have. Your spending is not a factor in the accumulation of debt, which will ultimately lead to financial catastrophe.
Utilize credit cards in a responsible manner
It’s quite probable that credit cards will play a key part in your overall financial life. The use of credit cards is another potential cause of monetary stress. To stay out of serious financial trouble, a lot of people these days use their credit cards to buy things they don’t need that are just for fun. When you use a credit card, you are essentially taking out a loan from the credit card company, which you will eventually have to pay back. A few key considerations to keep in mind in relation to credit cards are as follows:
- Before the due date, you must pay the outstanding balance in full;
- You impose outrageous interest rates if you do not pay the total money in full;
- Avoid making purchases with a credit card unless you already have the money in your bank account to cover them.
- Always keep a watch out for introductory interest rates and promos that provide a good balance;
- Examine the imprint on the credit card (the tiny image that you do not want to read).
Instead of taking on more debt, invest in real estate
Purchase things that will bring in money for you rather than those that will put you in the hole financially. For instance, if you buy in a stock that pays a quarterly dividend, which is a proportion of the company’s overall income, you will get money even though you won’t be doing anything to earn it. If you take out a mortgage, the lender is required to send you interest payments once every two months. This is what is meant by the phrase “passive profits.” On the other hand, if you take out a loan of any kind, regardless of the amount, you have already incurred debt, which you will be required to pay back with interest. The purchase of a first home or even a vehicle often necessitates taking out a loan of some kind, such as a mortgage. The burden of other kinds of debt, on the other hand, might make it more difficult to fulfill your responsibilities and can impede your capacity to amass money.
Create a budget to save money for a rainy day
A simple monthly forecast of projected income and expenditures for a certain time period in the future is all that is required to create a budget. You’ll be able to keep tabs on how much money you spend on different goods and services if you make a schedule for yourself. The formation of a cash account on a monthly basis, often known as an emergency fund, is an essential component of any budget. An emergency fund is a sum of money that has been put aside in the event that one’s life is disrupted by an unforeseen event. The ideal amount of money to keep stashed away in an emergency fund is enough to cover three to six months’ worth of living costs. You should maintain the emergency money in assets that are not very safe but are easy to access. Some examples of such assets are a certificate of deposit (CD), a bank account, or even just a savings account.
Zisa makes a suggestion that one should get an early start on the path to achieving financial stability. In the same way that they should do with other aspects of parenting, parents should set a good example for their children regarding financial literacy. If you live beyond your means and cultivate the habits essential for a life that is less taxing and more gratifying, you will be able to rescue not just yourself but also your children.