The Secret to Becoming Rich – Teenagers Edition

Many of us are bombarded with images of wealth and social media feeds designed to show the best aspects of our friends’ lives. But what we sometimes forget is just how much of an impact these images can be having on our kids.

From celebrity lifestyles to the fear of missing out on something amazing with friends (“FOMO,” for the uninitiated), teens especially spend an enormous amount of time surrounded by the imagery of wealth and the appearance of an exciting life – without necessarily getting an accompanying lesson in the work it can take to get there.

But there is a way.

The secret isn’t to become an Instagram star. It’s to develop the right habits around money and financial management.

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From recent college grads saddled with debt to wide ranging concerns about financial competence among consumers, there’s spreading worry that kids aren’t prepared for money management and decision-making.

Putting media (including social media) in context

You probably don’t need a professional research paper to tell you about the downsides of social media.

While keeping in touch with friends and seeing inspiring photos or stories are great, seeing highly curated versions of people’s lives can become demoralizing. In fact, studies have shown that high social media usage is actually associated with anxiety, depressive symptoms, and low self-esteem in kids and teens.

The reasons are complex, but social comparisons can be part of it.

That’s why it’s important to remember that what’s being presented isn’t necessarily “authentic,” in the sense that disclosures of image filters, bad days, and credit card debt rarely make it onto peoples’ posts.

Always remember that the appearance of wealth is not the same thing as actual wealth, and the portrayal of a “perfect” life is just that: a portrayal.

The Secret to Becoming Rich Teenagers Edition - Info Image

What to do? Strike your own path

Everyone’s story is different, but the foundation of most success stories is anything but glamorous. Building a career, saving money, and nurturing those savings is relatively simple, but it takes time, effort, and dedication.

What helps? Finding a path that makes sense for you.

Pursue a vocation you’re interested in (it’s a lot easier to work hard when you like what you do!), but be strategic about it. You can make pursuits like being an artist work, but they probably won’t happen like they do in the movies, with a loft in the city and leisurely coffees at stylish cafes.

In fact, the MacArthur-winning sculptor Teresita Fernández advises the opposite: move to a cheap place, apply for grants while keeping your costs down, and spend your effort making art rather than maintaining a lifestyle.

Art is perhaps a tougher road than most, of course, and depending on your personal ambitions your personal map might look a little different. But the core of this message – the pursuit of an activity rather than an endpoint, practicing frugality, and choosing your life over a lifestyle – is applicable to anyone in any career.

Build a savings habit – and trust in the process

A key part of making this work is the importance of processes rather than end-goals – and the same can be applied to financial decisions.

Most marketing messages (and really, most of our lives) are built around goals. Earning an “A,” getting into a great college, landing a promising job – all of these goals are focused on a specific (and laudable) objective.

But the savings habit may actually work best when you don’t have a specific goal in mind.

Think of it this way: if you can only afford to put away $20 from every paycheck and your objective is to buy a $10,000 car, you might start feeling demoralized pretty quickly, even if you’re doing an amazing job keeping your finances in order in the meantime.

On the other hand, if the goal is just to save $20 every paycheck, then you’re already achieving it. Sure, if you want to find a way to save more, that’s great, but if you can’t right now it’s okay. You’re hitting the sustainable target you’ve set for yourself and building a habit that can last a lifetime.

Use that as your metric for success. If you stick with it and recognize yourself for the control you’re taking over your money, you’ll be well on your way to a richer life in no time – and it’ll likely be a far more sustainably wealthy life at that.

Keep your priorities straight

As we’ve noted, the secret to wealth isn’t surprising: the first step is just to save and keep saving.

From there, if it makes sense for your situation, investing prudently – in a way that balances the risks you’re willing to shoulder and the rewards you’re seeking – is the second step. You can do that with the help of a financial advisor, or, if you’re just getting started, by learning about the low-cost investment options that might make sense for you.

The third step is just as important, but it’s also the hardest: don’t move the money.

As your wealth builds, it can be extremely tempting to dip into your savings to smooth over emergencies like car repairs or to participate in once-in-a-lifetime opportunities like a trip abroad.

But building wealth is predicated, in large part, on time. And that means letting time do its work. Keep your long-term savings separate from your everyday financial life by building an emergency account, saving separately for trips and activities, and living within your means.

It’s not glamorous, but it works

This information probably isn’t all that surprising, and it definitely isn’t rocket science. But oftentimes it’s the simplest stuff that’s the hardest to do – we get demotivated, distracted, or even lazy.

That’s why a sustainable plan and consistency are so important.

So, if you want to build wealth and work towards true financial independence in the future, find your own path, trust in the process, and stick with it.

Take one small step today, another one tomorrow, and build from there.

Ready for more?

Download our free guide to sound financial habits, with special tools and insights for kids of all ages. It contains a wealth of information about building lasting financial skills. Download it today and get started on a lifetime of better money management!

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From recent college grads saddled with debt to wide ranging concerns about financial competence among consumers, there’s spreading worry that kids aren’t prepared for money management and decision-making.

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We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

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Important Disclosures

The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.

Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Further reading

Data and quotes in this article were sourced from the following:

Social media and mental health: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4183915/ and http://universe.byu.edu/2016/10/11/health-officials-say-social-media-can-affect-students-mental-health1/

Teresita Fernández commencement address (audio and a selection of excerpts): https://www.brainpickings.org/2014/12/29/             teresita-fernandez-commencement-address/