Most Important Letter to a High School, College Student, & Young Adult

This post contains affiliate links.

Dear High School Student, College Student, & Young Adult,

I want to write this letter to you today because it can totally change your life.  You have one thing over all other adults in this world.  Time!  You are young.  You are at the perfect age to read this letter and if you take it seriously, you can avoid what most of your peers will soon face.

I write a lot about budgeting and personal finance on this blog and I get emails frequently from people asking for help.  I’ve seen it too often.  They’re in debt with credit cards, car loans, mortgages, student loans, and sometimes all of them together.  Wanting to know how to pay off debt and afford living again.  I so badly want to rewind their lives to a time before they started managing their own money, so they can start over because it’s so much easier to start off right than fix it later.

My husband and I made a decision to pay off our mortgage as fast as we could, but all the parts of our lives worked together to make that happen.  We did it young and opened up opportunities to do what we love without feeling like we can’t pay bills (him be a teacher and college basketball official and me stay at home with my kids, while pursuing a home business of my own), while still saving for a larger than life retirement.  Timing and decision making were key.

Well, you’re there.  You haven’t had to rack up debt (unless you’re just out of college with student loans), and you have the ability to make millions by investing so much less than your adult counterparts.  You might not care about personal finance right now, but you should!  Managing your money properly can make your life so much easier or on the contrary, it can make your life a living nightmare, always struggling to pay the bills and never saving enough for retirement.

If I could sit down with every high school student (and college student) and give them advice, this is what it would be:

{ONE} Read all of Dave Ramsey’s books.  Start with Financial Peace and The Total Money Makeover.  Read them and read them again until you understand them.  Take it even further and visit his website trying to soak up all the free information that is available.  He’s the leader in personal finance and if you follow his teachings you will be just fine.  Get familiar with The 7 Baby Steps.  *I’m not affiliated with Dave Ramsey, I just love his teachings that much.

{TWO} Do not sign up for a credit card.  This is really targeted to you college students.  You will be bribed with all sorts of fun and “free” gifts if you do as soon as you turn 18 years old.  Do Not!  Credit cards are usually what start the downward spiral of financial ruin.  Use a debit card if you need.  For the record, I’m actually a proponent of credit cards ONLY if you pay them off each month because you can actually earn tons of money (that’s how we vacation), but majority of people cannot do this, so be careful. 

{THREE} Budget your money and write down every expense you incur.  You need to know where every dollar goes.  Make a habit out of writing down your expenses.  Dave Ramsey has an app (Every Dollar) for all you techies, which is probably every one of you 🙂  We initially wrote down each expense in a spiral notebook when we were first married, but now we do it in Excel for safety and privacy reasons.

{FOUR} Avoid student loans.  Most parents can’t afford a 4 year college these days.  Thank your parents every day if they do pay for it and do well respectfully.  Otherwise,  high school students, your grades are much more important than you realize (or your athletic abilities).  They can translate into money.  With that said, earn scholarships if you can.  Find all the scholarships you can apply to and apply for them.  This is how I got my education and I’m grateful.  It set us up for early financial success.  If you have to have student loans, pay them off as quickly as possible to get rid of any debt you can. Another way to avoid student loans is to attend a community college for part or all of your college years.  They are significantly more affordable.

{FIVE} Invest NOW!  High school students and young adults, this is where you can really change your future.  Time outweighs dollar amount when it comes to investing.  Whatever you do, invest money now.  It doesn’t have to be a lot.  Dave gives an example of this in his book (I think Financial Peace) about how much more money grows for a 20 year old vs. a 40 year old.  Compound interest is a beautiful thing if done early!  We have a wealth adviser who tells us where and what to invest in.  Investing can be confusing so we ask professionals.  Ryan and I are almost 8 years apart and he started investing a couple of years before me.  I will still earn more money than him at retirement age because I started at a younger age.  Young adult, you have the power of youth!  Use it.

{SIX} Buy a house you can afford (and preferably on a 15 year note).  This is huge.  This is mostly geared towards young adults or newly married couples, but it’s a big one.  This will be your biggest expense in your budget and you do not want to be strapped by the house you live in.  A general rule of thumb is to not have a mortgage (loan you take out) that exceeds twice your household annual income.  For example, if all the income contributors in your house make a total of 55,000, you wouldn’t want your loan to be more than $110,000

{SEVEN} Pay off your house early (set up your finances for this).  I can feel eyes rolling when I say this because it’s often looked at as unrealistic or too far fetched.  It might be for those in debt or in a later stage of life (although I still believe it’s possible, maybe just a little harder), but you are young.  You most likely don’t have kids yet.  If you follow the above tips, there really isn’t an excuse why you couldn’t do this.  My husband and I were a young married couple working as teachers.  He worked a second job as a basketball official (and still does today, just at a higher level).  We made a goal to pay off our house in 7.5 years by doubling our house payment each month (he did this for a full year on his income alone before I got a job).  We didn’t want to pay so much interest.  Several months went by and we kept cutting that time down and 33 months after purchasing it, we paid it off.  We saved thousands of dollars in interest and also save a thousand dollars every month by not having a mortgage.  This is the most freeing debt ever paid off.  Just calculate how much interest you will pay on your house…it’s sickening.  Often times you will pay double what your house is worth.

In a nutshell, don’t go into debt, budget wisely, and invest now!  You can change your life with simple rules like that.  Like I said before, it’s so much easier to start on the right foot than go back and fix mistakes.

I am linking up with Momfessionals as we write letters to our old high school self.