It’s Time to Talk About Money

Note: This article is aimed at teenagers and introduces ways to save money. It is not financial advice, but in the last paragraph, we present an option to open your own youth account with a 25€ starting credit.

You’ve probably heard in the news that our money is losing value and everything is getting more expensive. In economics, this is called inflation, and currently, it’s at nearly 7% due to the war in Ukraine and other factors. This means that everything is 7% more expensive compared to last year. So, with 100€, you can’t buy as much as you could last year.

So why bother saving money and not just spending everything you have?

For one, it’s good to have a reserve for emergencies and to plan for the future, but also to build wealth. Yes, this is still possible despite the inflation rate mentioned earlier. And since you’re probably still a student, we have good news for you: One of the most important factors influencing how much wealth you can accumulate is how early you start. Another factor is the so-called savings rate, meaning the amount of money you can set aside or invest every month. That brings us to the next point: It’s also important to choose the right investment classes, which you may know best as savings accounts or stocks. However, there are many more options like funds, commodities, bonds, or relatively newer forms like crowd-investing and cryptocurrencies, to name a few.

Learning to Manage Money

For example, if you had started investing 10€ per month in a typical stock index with an annual return of 9% ten years ago, you would now have over 1,800€. At 20 years, you’d have more than 6,000€ – even though you only invested 2,400€ yourself. This is called compound interest. If you can save more each month, you’ll benefit even more, and the best way to get there is by questioning your consumption habits and living more sustainably. Do you really need the latest phone? Does a cheaper mobile contract make more sense? Do I need new clothes every month? And if so, could I perhaps check out a secondhand store or a flea market?

Here are a few simple rules to help you hold on to your money. Try it out:

1. Set aside a fixed amount at the beginning of each month.
2. Buy less of things you don’t actually use.
3. Sell things you no longer need.
4. Regularly compare and cancel mobile phone contracts.
5. Avoid fast food, whether ordered or takeaway.
6. Cancel subscriptions you don’t use.
7. Quit smoking. Now. It’s too expensive AND unhealthy.
8. Use comparison portals before purchasing expensive items.
9. Take 30 days before buying an expensive item to decide if you really need it.
10. Maybe you can find this item secondhand somewhere?
11. Write down exactly what you’re spending your money on to keep track.

That’s a lot of input, and for some of you, maybe too much. What you should hopefully take away from this is to think about this topic and maybe talk to your parents about planning for the future. Perhaps even show them this article. ;)

It’s not just about securing your retirement: If you set the right course early, it can also significantly influence the lifestyle you’ll lead in your 30s or 40s.

We can’t give recommendations on the best savings rate or investment classes for you, but your bank’s customer service is a better point of contact for that. If you want to educate yourself further in this area independently, the videos and posts from Finanzfluss are also highly recommended.

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