If you are a high school student or if you are a parent of a high school student then you should really need to know about financial literacy for high school students.
As a high school student, you are growing up and will soon be an adult so you should focus on setting yourself up for success by learning about personal finance.
Personal finance might sound daunting or straight up boring but it’s important because it will help you achieve your goals in life!
The best way to start your personal finance journey is to think about where you want to be in the future, let’s say 10 years from now.
Would you own a house? A car? Whatever you want out of life will most likely have a cost to it so you have to make sure that you have a financial plan to achieve your goals.
Let’s get into the most important topics on financial literacy for high school students…
High School Students Should Learn Credit
As a high school student, you most likely don’t care about credit as yet because you don’t need it but one day you will and this is why you should take it seriously from now.
Credit is really important because if you want to purchase a house or a car then you will most likely need good credit to do so.
The important thing is your credit history, which basically states how trustworthy you are to pay back your debts.
When you turn 18 you should start building up your credit by purchasing small items with a credit card and start paying off small bills.
This will help develops a strong credit history which will be very beneficial for you when you are ready to buy a car or a house!
The important thing is that when you start purchasing things on a credit card or have bills in your name, you have to pay these off on time and never have late payments.
Late or missed payments will have a negative impact on your credit score which you don’t want so make note of when your bills and credit card payments are due.
Also, you should only use credit if you have the means to pay it in full at the end of the month so you don’t have to pay any interest which is basically throwing money away.
If you start using credit to make purchases that you can’t afford you will start accruing interest which makes it harder to pay off your debts and you just dug yourself a deep hole.
Definitely don’t let this happen! Use credit wisely to achieve your financial goals not set yourself back!
Set Achievable Goals
As a high school student you are at a very special point in time, the point where you decide what you want to do with your life.
It’s a scary yet exciting time where you are becoming an adult and have to make big decisions for your future.
Yes, you can always change paths later on in life but if you have goals you want to achieve and start working towards them now then you will be ahead of most people.
You should consider what kind of financial shape you want to be in when you are 25, 30, 40, and so on.
Think about things that you value. Do you want to become financially independent? Wouldn’t it be great to have a solid foundation financially so you are not constantly worried about money?
If so then now is the time to start developing smart financial habits to achieve your goals!
One of the basics of personal finance is to save a certain amount of your income each year, which is usually in a percentage like 10% a year.
This is the simple concept of paying yourself first, which means that you put money aside for yourself first before you pay any bills or spend money on other things.
Another great option is that you can start investing your money in the stock market. If you are under 18 years old then you can have an account under your parents.
With stocks, you can invest your money so it can grow over time and support you for years to come!
One of the best investment options you can start with is index funds, which just tracks an index like the S&P 500 and is a very passive and hands-off approach to investing.
This is a great option for beginner investors and it’s the advice that Warren Buffet gives to most investors!
You should definitely set a habit to invest money every month to start making money on your money, better yet, set up automatic deposits so you don’t forget to invest.
If you want to start saving and investing then I recommend checking out Greenlight.
Greenlight is an awesome bank account for those less than 18 that allows you to invest your money with your parent’s permission.
If you are a parent reading this then I highly recommend using Greenlight for your kids so they can learn more about saving and investing with you having full control.
Building A Habit Of Buying Value
A constant struggle most people have is purchasing things that don’t need or even really want.
This causes people to spend their money frivolously and even go into debt!
So, one of the greatest habits you can learn as a high school student is how to buy things based on value rather than on the price.
Purchasing things based on value simply means that you are opting for the product or service that is the better deal and better quality.
For example, when you are buying clothes, appliances, tools, etc… go for the item that gives you the most bang for your buck.
By doing this, over time you will start acquiring high-quality items at a good price that you do not need to replace often.
For example, let’s say you have a choice of a fancy car and another car that isn’t flashy but one that you can afford right away. Which one would you choose? I mean we all like nice things and you can pay off the fancy car over time so it isn’t a big deal, right?
Well, a choice like this can have a big impact on the finances of a young person! Let’s see how…
Fancy and faster cars usually have less gas mileage than cheaper cars so if you get 25 mpg with the affordable car and 10 mpg with the fancy car then you will pay less than half the price in gas with the affordable car.
Also, maintenance costs for fancier cars are higher and insurance as well!
So, you can see how this starts adding up. It’s not just the initial cost of the car, it’s all the things after the purchase you have to think about as well which can either cost you $1,000’s or save you $1,000’s depending on your choice.
This is just based on one purchase to buy based on value. Think about how much money you can save if you apply this same principle to all your purchases!
I’m not saying you can’t enjoy your money… not at all… All I’m saying is that you should be mindful of your spending and make sure you are spending your money on things you need or really want.
Be Financially Savvy And Start A Budget
One of the best things you can do for your finances is to set a budget.
I know that as a high school student you probably don’t have much income or spending yet but developing a budget will help you become more financially literate.
By creating a budget you will make financial decisions easier for yourself as you become an adult and start making bigger purchases.
Budgeting is simply planning your spending before you actually spend, that’s it!
To budget, you should create spending categories like bills, fun, rent, food, savings, etc… and then allocate a certain percentage of your income to each category.
You can then make adjustments later on but what’s important is that you are not spending too much money in an area that won’t benefit you in the future!
Saving money is one of the most common habits amongst millionaires so do your best to set a budget to spend less and save more.
More money doesn’t always mean more financially stable, a high salary with poor budgeting habits can leave you bankrupt.
It’s not about how much money you make, it’s about what you do with the money that counts.
As a high school student, you might have some income coming and some expenses so start a budget and get familiar with the process.
Set certain amounts to save, invest, spend, etc… over time you will develop a very beneficial habit.
This is one of the most important tips on financial literacy for high school students!
Learning To Be Financially Smart
If you are a high school student reading this then you are doing great but to really understand financial literacy for high school students you need to learn much more.
I recommend reading blogs and books regularly to dive into the world of personal finance and learn valuable information.
Learning is one of the most important principles among the wealthy, if you want to become successful then you need to constantly learn!
There are many great books on personal finance that you can read to get started. Some of my favorite books are Your Money Or Your Life, The Automatic Millionaire, and The Millionaire Next Door.
You also have to become patient, becoming financially successful takes time and you have to be calm and patient to let compound interest do its work.
There are also free personal finances courses you take online to learn more about personal finance. Check out Edx, Coursera, and Udemy to find some courses you can take.
Simply, keep learning and great things will come!
These are some tips on financial literacy for high school students!
With these tips, you can start building a solid financial future for yourself and you will definitely thank yourself in the future.
To start, write down what your financial goals are and then start thinking about how you are going to achieve these goals.
Now, start working towards these goals and build habits that can help you achieve your goals!
You might not be able to save a lot of money now but you will develop a habit of saving that will benefit you for life.
The most important part is that you simply get started! Take action and start making small changes now to get into the personal finance mindset.
What do you think about these tips on financial literacy for high school students? What other finance tips should high school students know? Let me know in the comments below!