It has been a tough year for the under-20 crowd. Lockdowns, fluid class schedules and cancelled extracurriculars are now the norm. And there are the masks – so many masks.

As a teen in 2021, you’ve likely got an overload of concerns, but here’s one way to feel more in control and positive about your future: Get educated about money. With knowledge comes power – and less stress. From bank accounts to bills, here are four strategies and tips that will set you up with healthy financial habits for life.

Be choosy about where you bank.

Guess what? Banks are after you. Not in a horror movie creep-fest way, but banks know that if you open an account, you’ll likely become a lifelong customer. They’ll do whatever it takes to entice you.

So, don’t be swayed by $25 starting bonuses or free electronics. Instead, do some research online and compare options such as bank fees, the number of free debit transactions per month, whether the account comes with a bank card you can use in person and online, and if you can deposit cheques using your phone.

Be especially careful about deals that promise no-fee banking for just a set amount of time, such as only the first year. You could end up paying way more in expensive bank fees in the long run.

Most accounts for children or students don’t charge monthly fees, but the interest big banks pay on deposits in the accounts (what the bank pays you to “borrow” your money) is often abysmal. For example, the interest rate on a children’s savings account at one big bank is currently 0.01 per cent, while alternative bank EQ Bank was recently paying as much as 1.5 per cent.

Check out online-only banks for better returns on your money.

Once you make your decision, grab your ID – a passport or birth certificate, social insurance number, etc. – and visit a bank with a parent or guardian, or call the internet bank with your parent or guardian. If your parent already banks with that financial institution, you may even be able to apply online.

Keep going: Don’t take the first deal your closest big bank offers you. Search “best youth accounts Canada” online and uncover scores of websites that compare accounts for you.

Save, save, save.

If there’s one habit you want to start now, it’s save your money. Not all of it! It’s totally okay to spend some of your cash. But learning how to save a percentage of your money now – say, 25 per cent – is a life skill you’ll need later when it’s time to buy a car, finance an exciting trip or purchase a house.

For example, in order to get a mortgage – a loan to buy a house – you’ll need to have a down payment saved up first, which usually runs tens of thousands of dollars or more. Sound impossible? It’s not. But it does take time and dedication to make dreams possible.

To create a saving habit, open a second bank account and pay yourself first. In other words, as soon as you get money, and before you spend any of it, automatically put a percentage of it in another account you don’t touch until you reach your financial goal. If you don’t see that money in your main account, you’re less likely to spend it on frivolous stuff.

Keep going: Play around on online savings calculators to see how money grows over time, or read classic beginner money books, such as Think and Grow Rich or The Wealthy Barber, to learn more about the power of “pay yourself first.”

Invest early

You’re luckier than you think. That’s because you have your whole life ahead of you to invest your money and watch it grow. And if there’s one thing investments like, it’s time.

Here’s why: Say you’re 15 and you save $1,000 this year. You ask your mom to invest it for you in an in-trust account on your behalf until you’re 18, the age of majority in your province. (Once you reach that magic age, you can do the investing yourself.)

For the next 50 years, that thousand bucks earns 5.5 per cent interest. Even if that’s all you ever invest, you’ll have $15,544 by the time you are 65 years old! Meanwhile, your dad who has only 20 years to invest, would end up with just $2,997. Time, plus compound interest, makes all the difference.

Keep going: What would it take to become a millionaire? There’s no shortage of beginner investing information to get you started. Try TeenVestor and Get Smarter About Money, including a compound interest calculator. There are also simulated investment portfolios and games at HowTheMarketWorks and Wall Street Survivor, plus books such as The Motley Fool Investment Guide for Teens. For cash prizes, register for the Young Investors Challenge, a free investment competition for high school students in Canada and the U.S.

Master your card

There are a lot of reasons to have a credit card. They’re convenient, for one. You need one to buy pretty much anything online. They can also help you build a good credit rating – what banks and other lenders look at to decide if they should give you a good deal on big loans.

But credit cards can lead to huge headaches, and even bankruptcy, if they’re not used wisely. So never – never – spend money you don’t have with a credit card. If you can’t pay the balance in full within a few weeks (the credit card’s grace period), save up for the item instead. Or dig into the savings you’ve already built. See? There’s a reason you want to pay yourself first!

Keep going: Get a credit card early and learn how to use it properly. Ask to be an authorized user on one of your parents’ cards. Or, with your parents’ help, sign up for a credit card with a low $500 or $1,000 limit. Pay off balances on time and you’ll be developing good bill-paying habits too.

The Globe and Mail, January 25, 2021