Financial advice for 16 year olds (and the rest of us)

1 March 2018

I enjoy Ruth Henderson’s blog, The Happy Saver. In fact, I’m jealous of the plain-speaking, accessible tone of her site and emails.

Ruth recently wrote an article about how a teenager can create a strong financial future. She was kind enough to involve me, and I was able to contribute one or two things to the article.

I forwarded the article to two of my nieces who told me they found it valuable.

Even if you’re not a teenager it’s probably worth checking out. It’s a great introduction to:

  • the magic of compound interest,
  • the importance of saving and being mindful of your spending, and
  • KiwiSaver.

It also provides some practical recommendations for how to start saving and investing.

The scope of my blog is a bit different from Ruth’s blog. My mode of writing and thinking is a bit “abstract”. So – less nuts and bolts, and more – ummmmm… – pie-in-the-sky?

So I’m going to provide some additional advice for a 16-year-old, and anyone who still feels young. Consider it a side dish to Ruth’s article.

  • First, read Ruth’s article. You’ll probably find it more engaging and practical than this one 🙂
  • Second, consider the following things, and remember them as you go through the rest of your teens and into your future:
  • The biggest investment you’ll make in the early years of your adulthood will be in yourself. Investing in your education can reap significant rewards, financial and otherwise. Later in life, you’ll find that a good income will make up for a lot of financial sins. Developing valuable skills also provides you with greater flexibility: for example, you can negotiate better terms such as working part-time. Knowing that you can find a good job fairly easily is also a good way of having financial security. You also manage one of the biggest financial risks that most people face – which is the risk of losing their job and not being able to find a comparable one. (This is actually the reason many people “retire” – not because they chose to but because they are effectively displaced from the workforce. Don’t let this happen to you!)None of this implies that you should know what you want to do “for the rest of your life”. It will take time. (As The Sunscreen Song says, “the most interesting people I know didn’t know at 22 what they wanted to do with their lives – some of the most interesting 30-year-olds I know still don’t”).

Early on, focus more on “exploring” opportunities than “exploiting” them. Focus on things that give you opportunities and options. The time for “exploiting” all of your hard work and the opportunities you’ve created will come later.

Some terrific resources include the career guide at 80,000 hours. I also recommend reading Paul Graham’s article What you’ll wish you’d known.

  • One of the best (or worst) financial decisions you’ll ever make doesn’t relate to money at all. It relates to who you settle down with. I know this is likely to be a long way out at your age, but it’s worth keeping in mind as you start becoming interested in relationships etc. A partner who is also a saver, earns a respectable income, and shares your values and priorities, can really help.

Never forget: there are two types of STD, and one of them relates to debt.

  • Saving over the course of your life is vital! There’s a huge difference between being wealthy and appearing wealthy. If someone has a fancy car or wears fancy clothes, all it tells you is that they spent a lot of money. It doesn’t tell you whether they are wealthy or whether they are drowning in debt and can’t sleep at night. The book The Millionaire Next Door is good for reinforcing this message.
  • Money is a means to an end. The question is, what do you want your life to be about? This is a big question and your answer at one point in your life will be different to your answer at another point in your life. Your response will evolve as you think about it more, you have more experiences, and you learn lessons (good and bad). It will also change as your circumstances and priorities change. For example, my values and priorities changed radically after having children.

Money is important as a means towards what you really care about. But never forget that “wealth” is not just about money.

Did I mention reading Ruth’s article? If you listen to podcasts, I also recommend checking out the first season of The Happy Saver podcast.

On a final note, if you’re 16 you may never have heard of The Sunscreen song! Check it out: it’s worth your time.


careers, relationships, saving, wealth

About the author 

Sonnie Bailey

In his spare time, Sonnie likes telling people that he’s a former Olympic power walker, a lion tamer, or that he is an orthodontist. He is none of those things. In reality, Sonnie is a financial planner based in Christchurch. Through his business, Fairhaven Wealth (www.fairhavenwealth.co.nz), he provides independent, advice-only, fixed-fee financial planning services. Sonnie is a “recovering lawyer”: he has specialised in trusts and personal client work. He has also worked as a financial services lawyer for many years.

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