Should my teen save or invest?

Should teens focus more on saving if they are going to pay for their own college or invest more? Wondering how they should spend their paycheck.

Thank you for the question @Jasmine_Nakasone!

Generally, I am an advocate of a nice balance between enjoying your hard earned money in the present and saving/investing it for your future self. The percentage breakdown can vary depending on the situation, but if possible, a 50/50 split might make sense for a teenager. Once a plan is in place, it makes it easier to spend the “spending portion” guilt free!

The balance between savings and investing depends on how long until the money will be needed. Generally, anything that will be needed in <5 years should be in a high yield savings account rather than invested in the stock market. This is because the stock market can be very volatile in the short run, but over longer periods it can be more predictable.

I hope this is helpful! Let us know if there are any other questions!

1 Like