5 Smart Money Moves for Teens and College Students

The best money advice in the world won't help you if it doesn't have anything to do with your life. In seeking help with your finances, it's essential for you not just to look at generic words of wisdom but to focus on guidance that applies to you personally.

Today, we're wrapping up our week-long look at smart money moves for people of all ages. We started the week with advice geared toward those in retirement or getting close to quitting time, and then proceeded to address middle-aged investors and young adults. Today, let's finish the picture with the unique challenges that college students and teens face.

Trying to climb out of the nest
Parents and grandparents might scoff at the idea that their children and grandchildren need money advice, given that in most cases, teens and college students are largely dependent on others for their finances. But with financial institutions targeting the teen and college demographics as prime candidates for new fee-generating products like prepaid debit cards, young people today can't afford to be ignorant about protecting their money. Moreover, with the costs of college on the rise, more teens and students are looking for work to supplement their other money resources, even with extremely high unemployment rates among the young.

To get your feet firmly underneath you from the start, here are five things teens and students need to consider strongly.

Idea 1: Don't take debt lightly.
These days, it seems like just about every young person emerges from college with some form of debt. From student loans to credit cards, debt creates a big hurdle that can define the entire first part of your life, forcing you to make career decisions you might prefer not to make simply for the sake of digging yourself out of a financial hole.

If you can avoid debt -- either by getting a job or by choosing less costly options for schools and other expenses -- it can give you a lot more flexibility to do what you want with your life. So don't fall for the siren song of easy money, and instead, treat debt as a last-resort alternative that you should only use for the most important expenses.

Idea 2: Work? Start a Roth IRA.
When you've barely started working, the idea of retirement seems ridiculously far in the future. But if you have income -- whether it's from babysitting or a fast-food job or work-study -- then try to save a piece of it in a Roth IRA.

The minimal income that most young people have makes the tax breaks that regular IRAs offer worthless, since low-income youth likely don't owe taxes anyway. But 50 years or more of tax-free growth will have immense value later in life. Moreover, with generous rules for accessing contributed money prior to retirement, Roth IRAs give you flexibility and tax savings.

Idea 3: Track some stocks for fun or profit.
Teens learn best about investing by following companies whose products they know. But the best companies to follow are those that have both well-known products and growth potential. Disney (NYSE: DIS  ) is a good first stock for all ages, because its movies and theme parks are known the world around, yet it has plenty of growth ahead of it and a solid dividend. Similarly, Coca-Cola (NYSE: KO  ) has half a century of dividend increases and the world's No. 1 brand behind the deceptively simple business of satisfying thirst, while McDonald's (NYSE: MCD  ) feeds millions of kids like them across the globe. With a host of restaurant stocks, toy and game manufacturers, and entertainment companies to choose from, teens and college students can invest in what they use and believe in and get a financial education in the process. Using these and similar stocks as examples can make learning about finances more fun.

Idea 4: Put a true value on money.
The best way to understand the value of money is to see it in terms of the work you have to do to earn it. For instance, if you think of an iPhone as costing you 25 hours at an $8-an-hour job rather than $199 -- plus another eight to 12 hours of work to cover monthly subscription fees -- it gives you a different perspective on spending.

Idea 5: Invest in yourself.
The experiences you have when you're young will define who you become years and decades down the road. As important as money and savings are, don't skimp on the important parts of growing up. Often, the money you spend on the right things can pay off well into adulthood, both financially and in the quality of your life.

Get smart about your money
No matter what age you are, being money-smart is a skill that will pay off throughout your life. Thanks for staying tuned to this series, and be sure to keep coming to The Motley Fool for more advice to help you make the most of your money.

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