If you’re a typical student, there’s a lot you still have to learn about investing. Actually, if you’re a typical high school or college student, there’s a lot you still have to learn about most things in life, but investing is a big one. There’s very little formal education you will receive about investing (or any other money management skills, for that matter), and many things that need to be learned.
I’m not saying all this to discourage you, but rather to point out the task you face. If you’ve stumbled across The Amateur Financier, chances are that you’ve at least begun to seek out personal finance information on your own, which is an excellent start. To help you get a good start to your financial future, here are some tips straight from Roger:
1) Start Investing Now – Being a young whippersnapper does have its advantages every now and then. If you’re young, there’s lots of time for your investments to grow. I touched on this last week; the longer you invest, the more your money will grow, and less you need to invest in order to reach your goal. Start while you are in college (or even better, during high school, although you might need to use a custodial account under your parent’s name to do so) and even small amounts can turn into a decent retirement fund.
2) Get Good Grades – Particularly for you high school students, getting good grades should be task #1. Good grades open the doors to more impressive colleges, and make it easier to get scholarships or other aid packages once you get into school. Even if you don’t want to go onto college (if you want to join the armed services or start your own business, for example), making sure you get everything you can out of your education will help you to get a leg up in life, if only by expanding your personal level of knowledge.
3) Expand Your Experiences – It’s easy to get locked into a particular way of thinking or doing things, particularly if it’s a way that’s always worked for you. But when you’re young and have relatively few obligations to fulfill (such as a family or a job), that’s the perfect time to do things that you’ll be unable to do in the future. Take some classes outside your major, try a few part-time jobs to learn what you like to do, even try starting a small business in your free time (blogging is pretty fun, for one); it’s an excellent time for you to explore your options. Speaking of which…
4) Take Some Big, Foolish Risks… -Speaking of experiences, youth is the perfect time to do stupid things. Not just things like drinking until you pass out at a college party, but also things like trading stocks, making highly speculative investments, or generally doing everything that most investment financial guides tell you to avoid. As mentioned before, when you’re young, time is on your side; even if you end up penniless at thirty because of some bad investment decisions, you’ll still have decades to recover before you need to rely on your savings for your living expenses, plenty of time to recover. (Actually, if you find yourself with a net worth of exactly $0 at age thirty, you’ll be doing better than many people who are loaded up with debt at that age; that’s an accomplishment itself.)
5) …But Don’t Be Too Stupid – There’s a difference between taking on risk, even incredibly high risk, and being stupid with your money. Day-trading stocks is highly risky and potentially hazardous to your wealth, but giving your name and identifying information to someone offering you Nigerian prince money is just plain stupid. Even while you are taking risks, including potentially big risks, be careful with your financial information and don’t do anything that could seriously impair your wealth in the future.
6) Always Read The Amateur Financier – Alright, alright, this one is a little tongue in cheek. But continuing to read and build your knowledge about money management throughout your life is an important step to controlling your finances. Thanks to the Internet, it’s as easy as turning on your computer and looking through all the resources you have available online. Some worthwhile first stops include Morningstar, Investopedia, and Vanguard, all of which have excellent resources for investors who are just learning the ropes.
There you go, hypothetical high school or college student to whom I’m directing this post, several things you can do to get your finances off to a good start. Enjoy the head start on financial wellness!
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