Gabe Ruschman is a 16-year-old go-getter. An honor roll student from the Chicago suburb of Skokie, he plays safety on his high school football team, carves out time to play the trumpet, and has worked as a seasonal employee at Home Depot over the summer.
The teen is also passionate about cars, and his recent shopping experience spurred interest in learning how to manage his money better—from saving, goal setting, budgeting, investing in stocks, and more.
With an encouraging boost from his grandfather Robert Ruschman, Gabe emailed me a list of questions that covered a wide range of money management issues that he was curious about. The answers included so many interesting nuggets of information that I thought they should be shared with Kids & Money readers, especially teens.
For answers, I turned to several personal finance experts. Their thoughts on Gabe’s questions, edited for clarity:
Next, she said, allocate your savings to those goals in a priority order, say 50 percent to a car, 30 percent to college, and 20 percent to spending money “whatever is right for your priorities.”
Beacham generally urged teens to “think long and hard” about buying a car. “Do you want it or is it a need,” she asked. And what about all the costs associated with owning a car? Who will pay?
“Matching the market return (through an index fund) over the long haul is a great way to build wealth, especially if you’re young and invest consistently, ” said Rossman. “Buffett is an incredible investor but leave the stock-picking to the pros.”
A debit card, on the other hand, is tied to a checking account. You can only spend what you have in the account. A major advantage of a debit card is that you are not going into debt.”
But credit cards have advantages, such as superior rewards programs and better protection from fraud. Using a credit card responsibly will improve your credit score too.
“But always make sure to pay (the balance) in full every month and avoid interest,” said Rossman.
As for Gabe’s financial advice to his peers, he put it succinctly: Don’t be afraid to take risks, but be smart. Read what the experts have to say, monitor social media, and most of all keep your cool.
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