Welcome back to the Self-reliant Steward Podcast. My name is Damia Shimmin.
Today, we are beginning an 8-episode series on the podcast about mistakes teens make with money and how we can help them avoid or overcome these mistakes. Before we dive in, let’s start with our money trivia for the day.
As usual, feel free to pause and think about your answer and then push play when you’re ready.
Trivia: What is the average cost of a new car in 2023? Answer: $48,528 as of May of 2023.
Isn’t that crazy! I can’t imagine spending that much on a vehicle!
Now, let’s dive into today’s topic. The first mistake teens make with money we will discuss here is not having a plan or a budget. Budgets are plans for our money.
I started budgeting when I was around 10 years old. I divided my money into categories, including savings for emergencies, college, my future wedding, a vacation to Hawaii, and a car. For the most part, I only spent money from the appropriate categories. Years later, when I was attending BYU-Idaho, I did not need a car, so I spent my car and wedding savings categories on school.
Although I graduated with several thousand dollars in the bank, I no longer had money specifically going towards a car or wedding. A few months after I graduated, I received a call to serve as a service missionary for The Church of Jesus Christ of Latter-day Saints.
My parents and I realized I would need a car in order to get to all of my assignments. Remember the average cost of a new car? Nearly $50,000! The average cost of a used car is around $20,000. That takes planning ahead, even if you buy an old car. I was blessed to find a 6-year-old vehicle for about $7,000.
I spent the several thousand dollars I had left, besides my emergency fund, which I have been careful not to touch, on paying a portion of the total amount for the vehicle. My parents had to pay the rest. That was poor planning on my part and I felt like I put a burden on my parents.
Is it ok to take from one budget category and spend the money on something else? How can we do our best to plan and be as accurate as possible, so that we are better prepared for expenses that come up, like when I needed to buy a car? These are some of the questions we will discuss throughout the rest of this episode.
The short answer to whether its ok to spend from other budget categories is “it depends.” It is better to spend from a different category than to go into debt. However, we want to be wise about when we choose to dip into other categories.
When we create budgets, we are deciding what our boundaries and plans are when it comes to our money. Practicing staying within each category amount budgeted helps us develop discipline. So, occasionally dipping into other categories is ok, but if it happens consistently, then we need to re-evaluate our budgets.
Looking back, I had too many savings goals at once when I was a teenager. At the time I had five savings categories: emergency, wedding, car, Hawaii, and college. Before I go into details of what I could have done, I need to say that having an emergency fund is a required category in the budget of all wise stewards.
To solve the problem of having too many savings goals to aim for all at once, I could have started by saving up for a trip to Hawaii. After saving enough for Hawaii, I could have switched my focus to saving for college. After saving for college, I could have started saving for a car. Then, after saving for a car, I could have switched my focus to saving for my future wedding.
You may be wondering why I would have saved up for Hawaii first and not college. I think it is important to use our money for enjoyment, as well as practical things. Because college is such a big expense, waiting until after saving up for college before saving for Hawaii would have taken too long for me.
Plus, some teens get a graduation trip, why not a homeschooled teen?
The two biggest things that would have helped me follow this new plan would have been for me to apply for scholarships beginning my sophomore year of high school and then to earn more money when I was a teenager.
I unexpectedly graduated high school a year early and did not know much about scholarships. If I had begun applying for scholarships my sophomore year and treated it like a part-time job, I would have had a greater earning potential. Then, less of my college expenses would have been paid out of pocket.
As far as earning money, I babysat occasionally and did extra chores for my parents. I could have made more money by making and selling bread, babysitting more, or working a part-time job. I also could have worked a full-time job between high school and starting college.
(Resource #1) If your teen needs an income, but you’re not sure what they could do, sign up for my free 20 Best Jobs for Latter-day Saint Teens download through the link in the show notes.
Up until I graduated from college, I felt like there was a brick wall blocking my view of my life after college. I did not have a plan for finding a job, when I would need to buy a car, how I would pay for housing. Nothing.
Now, I know it may be difficult for your teen to look 5, 10, or 20 years down the road. That’s ok. Start small. Have them practice looking 1, 2, or 6 months down the road, then build from there.
(Resource #2) I found a great General Conference talk by Elder Richard J. Maynes where he speaks directly to teenagers to help them connect having the goal of eternal life in the Celestial kingdom with today and the choices they make. This talk is packed full of good things, and I can’t just summarize it or quote a few things he said, so I encourage you to read it. I included the link in the show notes.
I’m going to tell you another story. It’s the story of Joseph of Egypt, and you probably already know it. Joseph was the son of Jacob, who was later named Israel, and he had eleven brothers.
His brothers didn’t like him very much and they decided to sell him as a slave into Egypt. And while Joseph was the slave to Potiphar, Potiphar’s wife lied about Joseph’s behavior and Potiphar threw him into prison.
Later, Joseph interpreted Pharaoh’s dream and found favor in Pharaoh’s sight. That was a blessing from the Lord, from Joseph remaining faithful. And the dream was a foreshadowing of the seven years of plenty that they had and then the seven years of famine. In the seven years of plenty, they had lots of crops and in the seven years of famine, they couldn’t grow very much food.
Joseph helped save the lives of those in Egypt and his own country because he recommended to Pharaoh that they store away as much of the food as they could for those first seven years of plenty. Then they had enough food for the seven years of famine, and they didn’t starve.
I really love Joseph’s story as it illustrates the importance of saving and preparing for the future.
Proverbs 29:18 says, “Where there is no vision, the people perish.” As we have been talking about, it is really important to have a vision and a plan for the future.
Helping your teen learn their life mission is a great first step to helping him or her gain a vision for their lives. Now, when they learn their life mission is on the Lord’s timetable. I definitely think they can at least get a broad version and learn more about themselves in this process.
I recommend starting by having your teen pray and ask Heavenly Father what their life mission is, and if they have a patriarchal blessing, to study it. Patriarchal blessings are great resources for learning about ourselves and what Heavenly Father wants us to do.
We will talk in a later episode about more resources that can help in this learning process.
Now that we have talked about big picture plans. How do we reach them? We need smaller plans and goals that lead to the big ones. Financially speaking, budgets are the road map for reaching our goals and realizing our dreams.
When I was a student at BYU-Idaho, I had a chunk of money in my bank account dedicated to college expenses. I would use that money for rent and groceries, all the normal expenses of a college student.
I had boundaries for myself about what I would spend my money on, but I did not have a budget to keep my spending, at the grocery store for example, under a specific amount.
Looking back, I would have “paid” myself a specific budgeted amount each month to use for my expenses. Doing this could have helped me make my money last longer while I was at BYU-Idaho
I know, I know. You’re probably thinking, “teens don’t have budgets.” True, most teens don’t and that is a problem. If teens are spending money, they need a budget.
Practicing budgeting is one of the main things we can all do to become self-reliant and wise stewards of what the Lord blesses us with.
If you want to give your teen opportunities to learn and practice self-reliance and stewardship, start by signing up for my free “20 Best Jobs for Latter-day Saint Teens” download to help them begin earning money.
And then join me next time as we continue, over the next 7 episodes, to discuss mistakes teens make with money and how to help them avoid or overcome these mistakes.