Five Tips for Teens to Avoid Debt

Back in the day, most people learned how to manage their money through the school of hard knocks. That’s still true. But today’s young people face much larger, higher-stakes financial decisions at a younger age than their elders.

For example, in 2018, the average college graduate faced $29,200 in student loan debt — the highest it’s ever been — according to a new report by the Institute for College Access & Success. And recent data from TransUnion shows that more than half of people ages 18 to 24 who have a credit card are carrying a balance on it.

It’s clear teens need help making sound money decisions. One financial literacy program pairs teens with volunteer mentors to create hands-on financial learning. Money Matters: Make It Count was created in collaboration between Boys & Girls Clubs of America and Charles Schwab Foundation and is celebrating its 15th anniversary. Young people have gone through the program a million times since it started.

Tamara Johnson served as a former Money Matters ambassador in Santa Fe. Johnson, who earned college scholarships and now practices family law, credits the program for giving her the foundation she needed to take on the responsibilities of adulthood. As a result, she’s debt free!

“While I was an ambassador, so many adults told me how they wished they had started as early as I did in getting the money thing right,” said Johnson. “I would tell any teenager if they have the opportunity to take part in Money Matters or any other financial literacy program, take it. You’ll learn simple steps for saving, and your future self will thank you!”

To help and inspire other teens to take steps to master financial literacy, Johnson offers her top five tips.

1. Respect the power of credit: You know how teachers, parents and other adults are always saying a bad decision can haunt you for years? That’s definitely true with credit. Bad money habits, like maxing out your credit card or making late payments, will show on your credit report almost right away. Then, it takes seven years before that disappears from your credit history. That can mean paying higher interest rates, being turned down for a loan, or not getting hired for a job you want. The good news is, being smart with money helps you avoid the credit trap. These remaining tips will show you how.

2. Be a saver — it’s never too early to start: What’s the best way to avoid using credit cards? Build a savings cushion, so that when unexpected costs come up, there will be no need for a credit card. Starting now, any time money comes in — your paycheck, babysitting money, birthday cash from grandma — the very first thing you should do is pay yourself. Tuck some of it away, and watch those dollars add up. Someday, that money will be there for you when it’s time to buy a car, go to college or rent an apartment. The pride you’ll feel from watching your savings grow is priceless!

3. Never start the month without a plan: There’s no substitute for planning. At the start of the month, sit down and list everything you will need to pay for in the coming weeks. Think about how much you have, and what your paycheck will be, and then, do the math to make sure you have enough to cover it. This doesn’t have to be complicated, just a simple list you keep on your phone so it’s always with you. Then, check in with your monthly plan once every week or so, and make sure everything’s on track.

4. Sort out needs vs. wants: Here’s the tough part. Your favorite band is coming to town, and all your friends want to catch the show. But your phone needs a new battery, your car has a flat tire and insurance is due. It’s so tempting to cave and raid your savings account so you can do it all. These choices are never fun, and this won’t be the last time it happens. But remember, your spending plan will be meaningless if you don’t stick to it. So yes, there will be times when you’ll need the conviction to say no. That said, make room in your budget for the fun things, so you can feel great about times like these when you want to say yes.

5. Stretch your dollars: You work hard for your money. Let it work hard for you! Before you buy, shop around. Compare prices online, wait for a sale or download a digital coupon. Or if you’re grabbing lunch, skip the beverage and ask for ice water; then put that money into savings. Smart money moves like these can leave you with a little extra and make it easier to keep it all in balance: your needs, wants, and savings. When you stay in control of your spending, it’s that much easier to avoid debt.

Creating good financial habits early in life can help you achieve your goals. Follow these tips, and you’ll be well on your way. Parents or teens who’d like to learn more about the program should check with their local Boys & Girls Club, or visit the Money Matters page on and take advantage of this resource.

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