Personal Finance 101: What I Wish I Had Learned in High School and College

“Man, I can’t wait until I am done with school and I have a job and money!”

Sound familiar? We all have had that thought go through our heads countless times, whether it be during college or high school. We all couldn’t wait to be out in the real world with a paying job and all the freedom we could want. It all sounded great, until that day finally came.

Sure, at first being a real adult lived up to all the hype. You were free of all the homework, all the countless late nights finishing projects and cramming for exams, and all the worries of how you were going to pay for your next meal because you spent your last dime on that case of beer last weekend.

But then the euphoria wore off and reality set in. “I can’t wait to have a job!” slowly turns to “I can’t wait to not have to work!” It’s different for everyone, but for most people that job eventually gets old. You’ve done the 9-5 (or longer for many of us) life and you’re ready for something bigger and better. The one thing that’s holding you back is the belief that you have to always be working for your money. You can’t get rid of that job because you need it to pay the bills and survive.

We all spent so much time in school cramming our brains with as much knowledge as we could about advanced mathematics, chemical reactions, heat transfer, medicine, art, history, and which wine goes best with a juicy steak. But school failed to teach us about the one thing that, like it or not, will have one of the biggest impacts on our entire lives: Money.

Sure, those of you who majored in business or finance or something related learned all about the economy and corporate finance, but they didn’t teach you how to handle what’s in your own wallet.

Most of us simply emulate what our parents do or did, and statistically speaking, odds are that your parents have bad habits with money. Most people do. For those of you who were lucky enough to have financially intelligent parents, you may already know all of this, but for the rest of you, these simple truths can change your life if you buy into them and apply them:

Spend (much) less than you earn.

Do everything you can to reduce or cut expenses from your life. Eliminate excess. Do you really need that new car to go with your new job? Wouldn’t a used Civic for $2,000 off of Craigslist get you from A to B just as well and last just as long? Don’t go out to eat so much. Learning to cook at home will not only help with your health and love life, but it will save you a ton of money too. Live with roommates. Assuming you are still relatively young and don’t have any children, you don’t need your own place. Roommates will make your rent cheaper and also save costs by sharing other common items. If you want to make your money work for you, you have to spend far less than you earn and…

Invest the difference.

Instead of spending your money on things that lose value, invest your money in vehicles that earn you MORE MONEY. Buy stocks / bonds. Start a business on the side. Buy real estate. There are so many other options out there that you will discover and learn about once you start looking for them, but the most important thing is that you invest your money in something regardless of what it is.

Avoid debt.

There are exceptions to this rule in the form of “good debt” that will help you earn more money such as school loans, a business loan, or a mortgage. Most debt however, is consumer debt via credit cards or a car loan and it is a leach that should be avoided like a plague. Not only does consumer debt suck extra money out of your bank account, but it can also hurt your credit score and lower your chances of receiving credit for money making opportunities. Using credit cards is good to build your credit score, but you should pay them off in full every month and never carry a balance.

There is so much more that you can learn about how to make your money work for you, but just following these three simple principles will take you leaps and bounds towards achieving financial freedom.

If you are interested in reading and learning more about becoming financially independent, here are some personal finance blogs to get you started:

www.budgetsaresexy.com
www.mrmoneymustache.com
www.getrichslowly.org
www.financialsamurai.com

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