OK, the teen who won $1,000 isn't really from your neck of the woods, unless you live near Plano, Texas. And she's no longer a teen, either, having recently turned 20. But while she was still a teenager, Jessica Miller did what any teen you know can do -- she entered our Teen Contest. And she won!
Our teen contest
First, a few words on our contest. In our 2002 book The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of, we announced an ongoing contest, saying:
"We've decided to launch a $1,000 annual grant for the next five years for the most eloquent and effective advice on personal finance, investing, or business offered by a teen submitted to our teen discussion board. It could come from you, could it not? If you'd like to compete and learn from others, then contribute (as many times as you like) your best financial thoughts on the Teens board and take a chance at winning $1,000 for being a talented communicator of financial advice. (Remember, we offer a 30-day free trial to check out our boards. So don't delay. This could be the first $1,000 you invest for your future.)"
A winning entry
Below is much of Jessica's winning entry. Share her smarts with teens you care about. Many of us ex-teens could learn a few things from her, too.
To any teens out there who are looking to make some money, here are some tips I've picked up along the way (I'll be 19 in March).
1.) Get a job. Okay, so it isn't any fun to work on Friday nights when your friends want to party, and it can be tricky when you're in school five days a week. But believe me, it's worth it and it will continue to be worth it for the rest of your life. You'll really be glad you were making money while everyone else was slacking off when you have the money to have some freedom, unlike your friends who will have to ask their parents every time they want to go out or buy something.
2.) Spend less than you earn. Just a warning, this seems much easier than it really is. And this is the reason most Americans have such problems with debt. (This is so true. Learn how to dig out of debt and/or maximize your credit in our Credit Center.) You don't have to make a lot of money, just save everything you can. This is another one of those things where it seems like it's just not worth it until later, like when you see all of your friends living from paycheck to paycheck and you aren't.
3.) Open a savings account. If you don't have one, get one! You will have a safe place to keep your money and even earn a little interest while it's sitting there. (Learn how to maximize your short-term savings in our Savings Center, which features some special rates for Fools.)
4.) If you really want something, plan for it. Yes, it's always more fun to buy something right away, but this is not the best way to spend your money. If you plan for it you can budget ahead of time, save up the money, shop around and get the best deal. Plus, you'll have the added bonus of the anticipation, which always makes actually getting whatever you want that much better.
5.) Budget. Plan how you are going to spend those hard-earned dollars.... A budget doesn't have to be anything fancy, just an outline of your month, week or whatever. Figure out what you spend on gas, clothes, food, entertainment, etc. and then you can see if you're spending too much or if you think you can spend a little more. This will be a wonderful skill and attribute in the future.
6.) If you don't need it, don't buy it. Again, seems like a no-brainer, but again a reason so many people have debt problems. If you are struggling to make a car payment or insurance payment, don't get a new cell phone or go on a shopping spree at the mall. These are things you can do without for right now (this is where that whole budgeting thing comes into play). And right now when money isn't so tight it may seem like it's not a big deal, but it will be one day when you decide to purchase DirecTV and you're struggling to make your rent payment (I've seen this happen!). Just remember, it's hard to watch TV when the electricity has been shut off.
7.) Bigger isn't always better (at least at first). So you want to own a car and you've been saving your money. Good job. Now, are you just dying to have a brand new car? Me too, and you know what, I'm still waiting. I've been waiting for four years now, since I bought my other car, my used car. But remember you're only 16 and this is your first car. This is the car that you will probably wreck, or screw up or whatever. You don't need a brand new sports car. And I guarantee you don't need or want the car payments and insurance to go along with it. You can save lots and lots of money by paying a couple thousand in cash for your first car. No interest, no monthly payments... it doesn't get any better. One day when you're making the big bucks you can get that fancy car you've always dreamed of, but I'd recommend holding off.
8.) Time for college? Get scholarships or go to a community college. It will be so very worth it.... (Get tips on how to pay for college in our College Savings Center.)
9.) Save, save, save. Now this is kind of a reiteration of everything thus far, but it is the most important. If you can do this one simple step, you will still be leaps and bounds above most people. Learn to settle for less and save your dollars. Go ahead and buy your lunch off the 99-cent menu instead of ordering a fancy meal and dessert. It all adds up in the end, and if you don't believe me, save some of your receipts for a month and see how much you spend on fast food and drinks or coffee. You'll be surprised at how it adds up (and at how much better your jeans fit).
I'm not saying I'm any sort of expert on this stuff, but I can tell you that right now I'm 18, paying my way through a four-year university, have paid for two European vacations, own my car, am nearly independent from my parents, and am actually looking to buy a house this summer. And do I ever regret those weekends I spent working or not buying that shirt that time I went shopping? No. In fact, I never even think about it and I won't when I go toEuropeagain this summer, either.
Calling all parents, teachers, and friends
If you know any teenagers, I invite you to forward this article to them, or at least tell them about our contest. If a teen had won $1,000 and invested it in PepsiCo (NYSE: PEP ) stock 20 years ago, it would be worth more than $50,000 today. Sure, invested in Microsoft (Nasdaq: MSFT ) (for a little less than 20 years), it would have grown to top $250,000 -- but hindsight is 20/20, right? Even invested in Boeing (NYSE: BA ) , it would top $15,000 today. The point is, teens have a lot to gain by investing as much as they can as soon as they can -- and our contest can help.
How to enter
Entering is simple. You can email your entry to us at this address. Or better still, post it on our Teens and Their Money discussion board, so that others can read it and react to it. You can also see what other teens are saying about how they manage their money.
The financial advice or ideas you submit might be about:
- Saving money
- Earning money
- Starting a business
- Investing in the stock market
- Avoiding financial mistakes
- Or something else -- perhaps something we haven't even thought of!
More resources for teens
You can also help teens get a financial head start in life by pointing them to some other helpful resources. Here are a few:
- Our book, The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of
- Our online nook for teens, Teens and Their Money. It's chock full of information and advice on saving, earning, spending, and investing money, from both Fool staffers and fellow teenagers.
- Our Teens and Their Money discussion board (we're offering a free 30-day trial of our entire board community right now, so take advantage of it!)
- This article, which offers some eye-opening excerpts from our book.
The best gift that the teens you know may receive might be a nudge toward financial independence. If they don't thank you now, they'll surely do so some years down the road.
Go ahead -- help make someone a millionaire!
Selena Maranjian is no longer a teenager and regrets that she didn't start investing until her 30s. At least she'll never have to take another gym class, though. She owns shares of Microsoft and PepsiCo.For more about Selena, view her bio and her profile. You might also be interested inThe Motley Fool Money Guide, a book she wrote. The Motley Fool is Fools writing for Fools.