And if you can learn them while still in high school, all the better! When I was in high school the last thing I was thinking about was money, and that’s not because I had a lot it. This leads me right into the first lesson, so I’ll just start listing them and commenting on each below.
(1) Money Doesn’t Buy You Happiness, But You’re Going To Need It For Absolutely Everything Else (aka Get Fr**** Serious With Your $$ Now!)
Which is just to say that if you are like I was, you need to start caring about money. This will become obvious to you as soon as you start looking at colleges and universities, but the sooner you can learn it the better. In other words, you don’t need to hold money in high regard in order to start getting really serious about it. You have no choice. Call money evil if you like, assume that “neoliberalism” did the world in if you want and maintain that we don’t need capital markets, but in the meantime you need to start treating your finances as seriously as your transcripts, relationships and other personal goals. And by serious I’m going beyond platitudes – I really mean that you have to start doing the following things if you want any hope of being in a financially good place 15 years down the road:
- Start doing your taxes now – it’s worth it – use a simple online program and learn about it
- Start reading books on personal finance: the classics: Napoleon Hill, Robert Kiyosaki
- Start building credit: get a simple credit card and pay it off each month
- Start keeping records of your money: income/expense statements and cashflow statements
The earlier you start doing these things, the more long-term value they will have for you.
(2) You Can Invest With Your Student Loans, It’s OK!
By “invest”, I’m including such vehicles as high-interest savings accounts and money market funds held in short-term securities. Once you’ve paid for tuition and your living expenses, it’s ok to try to make some money if you have money leftover. In fact you can open up a brokerage account as young as 18, I believe, in most places, so as soon as you get your student loan money or other scholarship money, I’d advise you to open a brokerage account and just start getting familiar with the process of investing in equities. The usual disclaimers apply, however: investing does involve risks, including the risk that you might lose your money if you haven’t done your research and don’t know what you’re doing. So I’m assuming you know you will need to be prudent about this. And (as the Weakonomist said I should remind you of: you will have to pay this money back). But there’s nothing wrong with trying to get ahead. In fact, the arguments are great for your student years being among the best times for learning by taking on risk that you will grow more and more averse to with age (and experience). I include this as a money lesson because it really would have been important for me to know at the time. Take it from SVB at the Digerati Life, too: it’s better to invest in the stock market as early as you can.
(3) Develop a Relationship With Your Bank
The longer you keep your money at the same bank, in the same bank account, and the more money you keep with your bank, the better the relationship you’ll develop with your bankers. What does this mean? Over time, it will start to mean things like better treatment, better deals and rates, better service, and all kinds of things. It’s like building credit, but in a more informal sense. Once you meet certain minimum savings account or checking account thresholds at some banks, the bank might waive the fees for you. If you don’t have a bank account yet, get one as soon as possible. If you’re not sure what bank you’ll stick with, open a few accounts with different national banks so that they can all benefit from having a long operating history.
(4) Milk Your Student Status For All It Is Worth
Student cards; student discounts; student specials – they’re everywhere. Make sure you pay attention and don’t forget about them. A few bucks here and there add up. Especially on transportation. You’ll only be able to get away with this for 4-5 years, and then it’s full price for everything until you’re a senior! Check with your bank, especially – there might even be deals for students on getting a first-time mortgage.
(5) Keep Receipts For Everything and Do A Budget!
I know it sounds very boring, but at the very least, in 20 years you’ll look back on your tuition and book fees and be able to say “Wow, was it really that cheap?“ You’ll also start putting into practice an essential way of keeping your money together. There are many different kinds of budgets – you can just keep track of your spending after the fact – and learn more about where your money is going – or you can try to prescribe in advance what percentage of your pay or loan should be going towards what bills and expenses. Either way, it’s good for making sure you meet your credit card payments on time and keep track of miscellaneous administrative costs (there are lots of those at college, it seems!).
So I know this list may not cover it all, but I think these are key. I’d love to hear what else you can add, though! For me the most important one was just getting started investing and knowing that there was no “minimum age limit” to get started. You can start in highschool! So what money lessons were most essential for you in college – what would you most want to tell new students about?
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{ 5 comments… read them below or add one }
I think the responsible thing here would be to advise your readers to take extremem caution when it comes to investing student loans. I do t disagree with the statement but I don’t think it’s a vital money lesson you should learn in college with borrowed money.
Instead advise the reader to save the money or return it. Get a job and invest those earnings.
Hi Weakonomist, thanks for the comment. Of course I would not advise students not to repay their loans. Many students in fact “invest” their loans by putting them into high-interest savings accounts and even money market funds to wait it out before they need to draw on it. As with any income, the responsibility is on the earner to use it properly. Student loans are money that students are going to have to pay back – I assume the basic (moral) responsibility that everyone holds – but perhaps I shouldn’t assume of readers that they wouldn’t already know this. But I do think all this caution was already in the text anyway.
Well I think in general, taking the risks the earlier you are the better because you can afford to.
Imagine starting to invest when you turn 30 and are about to buy a house, and boom the economy tanks on you and you lose half your holding that you were gonna use for the downpayment.
I think i agree wid tom, risk is inevitable in learning the rules, you’re gonna lose some..btr lose wen u can still recover, but educated risking.
To number 3 I’d add, build your relationship with a local bank. They’re more likely to care, and less likely to be involved in the stupid economic turmoil so many of the nation-wide banks have fallen into.