6 Important Financial Tips for High Schoolers

If you’re in high school, you’ve got a lot on your plate right now. Personal finance can feel overwhelming, or like you don’t even know where to begin, but it doesn’t have to be that way!

Here are six important financial tips to help you in this stage of life especially.

1. Be smart with debt

One of the greatest gifts you can give your future self is making wise financial choices now. This includes protecting your credit score and staying away from the slippery slope of unnecessary debt.

Building your credit score is important for many future financial milestones, but protecting your score is of even greater importance in the long run. That could mean holding off on getting a credit card until you have a firm grip on responsible spending.

Additionally, look for debt alternatives. For example, instead of taking out a hefty auto loan to finance a shiny new first car, consider buying used. That makes paying for it partially, or in full, with cash from your savings much more doable and saves you a steep monthly payment at a time in your life when income is probably fairly low.

2. Start small with goal-setting

When setting goals, financial or otherwise, it’s important to be both ambitious and realistic. If you only set goals that are especially difficult to achieve, it may be discouraging and make you more likely to give up on them.

Goals look different for everyone at different times. Maybe your long-term goal is college, a new car, a house, enough money to move out, or something else. But try setting some shorter-term goals as well, such as saving a certain amount of money each month and picking up an extra shift at work to accomplish it. This gives you something smaller to work on while also getting you closer to the main goal you’ve set for yourself.

3. Make an effort to be financially literate

Personal finance probably doesn’t sound like the most exciting thing in the world right now and that’s understandable. But putting in a little effort now to learn some of the most important terms and concepts can really help you out as you move through life.

There are lots of fun and engaging ways you can learn about banking and personal finance, from articles to books and even games! Your school may even offer a personal finance class, so check with your teachers or counselors.

OMB also has an entire page on our website dedicated to students. There, you can find information about checking and savings accounts, auto loans, and even a list of some of the most common financial terms you may encounter, plus their definitions.

4. Develop a budgeting system that works for you

Budgeting is an important part of financial success. It involves totaling up the money you’re bringing in and separating it into different spending and saving categories. This allows you to allocate where your money should go instead of just spending money until it runs out and wondering where it all went.

Just like goal-setting, there is no one-size-fits-all system for budgeting. Do what works and makes sense for you. There are several tools to help you budget, such as mobile apps, computer programs, spreadsheets, and workbooks.

One of the most important concepts in budgeting is paying yourself first. This just means setting aside some money for yourself, typically to save, after you’ve covered all your bills but before you start spending. This teaches money management and budgeting while also helping you work towards your long-term financial goals.

5. Learn to prioritize

Success requires discipline, and financial success is no different. It’s important to consider what you are giving up in exchange for something else, a concept known as opportunity cost.

For example, when you get a job, the opportunity cost of the money you are making is your time. When you’re considering buying that brand new flatscreen or those designer jeans, think of what you are giving up in exchange to help you decide if the purchase is really worth it to you.

Prioritizing will become even more important as you get older and start having recurring expenses such as utility bills and a rent or mortgage payment. Paying your bills on time and in full, as well as setting money aside for savings, should typically take priority over other spending.

6. Don't wait to save

Last, but certainly not least, is starting to save now. If I can leave you with only one lesson from this article, let it be the power of compound interest and the positive impact of beginning to save sooner rather than later. It is never too early too start.

Simply put, compound interest is earning interest on top of the money you initially placed in savings, plus the interest it accrues. This creates a snowball effect over time.

As an example, let’s say you start with $100 and you’re earning a 10% interest rate on it each month. After one month, that $100 has become $110. Now you’re earning interest on a higher balance for month two, and so on.

You can see in this example that the $100 you started with turns into $133.10 by the start of month 4. That is the savings-maximizing capability of compound interest and why you should begin to look into retirement accounts or other savings products now. By the time you’re ready to retire or make a large purchase later in life, you won’t even have to sweat it.

Whether you plan to head off to college or jump right into the workforce, nothing will be a better financial teacher than the real world where you can put these concepts into practice. But the more prepared you are now, the easier it will be to navigate any financial challenges and opportunities that come your way.

OMB is here for you at every stage in life. If you’re ready to open an account, apply for a credit product, or just have questions about your finances, you and an adult can contact us here or stop by one of our branches.

Finally, give yourself grace. Mistakes will happen, even when it comes to your money. It’s how you learn from these mistakes and apply the lessons you learned next time that counts!

OMB and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decision