Thursday, February 6, 2020

Important Financial Lesson You Won't Learn in School

Today I am going to talk about some of the important financial lessons that many schools will not teach you so that you can learn to manage your finance much more effectively during and after graduation. I believe that no matter what field we are specialized in, we should at least know some basic financial management because many people who graduated college, have a great job but they couldn't get out of debt. Why is that? it is because when they were in school they were never taught how to manage money, how to save money, or how to invest money. That is why most people who graduated from college have large debts and they couldn't pay it off even when they got a great job.

It is not the college debt that destroys their financial future, but the interest that came with the debts that they have to pay back every month that is taking away most of their income. So today I am going to talk about some of the financial decisions you should think about whether you are still in school or have already graduated.

When you are in school most of you either have your parent to pay for your college expenses or you have some kind of financial aid, a loan or scholarship to help you with the tuition. If you are one of the lucky ones that have your parent or a full-ride scholarship that paid for most or all of your college expenses then good for you because you don't have to worry about paying back the debt when you get out of school. But for those of us who took out a loan to pay for college, you need to learn how to manage your money more effectively so that you do not have a big debt when you get out.

Below are some of the things I recommend you do no matter if you are still in college or not.

1. Find a job while you are in college, it does not matter how much that job pays. If you can find a high paying job while in college good for you, but if you cannot that is okay too just go ahead and accept the job offer because, in the end, a dollar you made is a dollar you can pay off that debts when you get out of school.

2. Learn to control your spending habits. Many people spend most or all of the money they have on things they don't need. Rather than spending money on the things you want, try to spend money on only the things you need. The most important step in being a financial success is to be able to differentiate between your needs and your want.

For example, if you are out shopping for a laptop because you need it for school do you really need to go and shop for a Mac book that costs thousands of dollars? or do you just need a decent laptop that you can get your schoolwork done? Unless your work or your class required you to have a Mac book there is really no reason to spend that kind of money on one. So think about the things you are going to buy before you buy them. You don't have to be super frugal to a point where you have to think about saving every single dime but try to limit those things wherever you can because you will thank yourself one day.

3. Do not put all of your money into a saving account, instead only put some of it in the saving or checking account where you can access it at any time you need because the money sitting in savings or checking accounts will not make more money for you. Instead, put the money into a short-term investment account so that it can make some money for you. The best thing about most short-term investments is that you can take out the money much faster than a long-term investment. One of the short-term investment I recommend is WorthyBond because [1] you do not have to wait several years to take out the money if you need it to pay for something and [2] the interest rate they pay is five percent which is a lot more than what you would earn on a saving account and [3] you can just sell your bonds at any time, withdraw the money and have it deposit to your bank account in as little as two weeks.

4. Long-term investment: If you have a good amount of money like over 2000 I recommend investing in REITs or Real Estate Investment Trust and leave it there while earning dividends. Since REITs is a long-term investment only use it if you are not planning to take out the fund for at least five years because it is similar to stocks so if you take it out early you might lose the money you invested. One of the REITs I recommend is Fundrise, which is a crowdfunding platform that allows the professionals to invest your money into the property they believe will have the most return on investment.

Note: That I am not a financial advisor and the above are completely my own opinion.


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