Remember when you used to crawl? When you looked under flower pots and ate crayons and said “mamma” and “dadda,” and somewhat regrettably learned the word “no”?
Look at you now. You’re all grown up. You can’t crawl to work. You can’t look under flower pots for dollar bills, or eat crayons in the office. You can’t call your parents “momma” or “dadda” anymore. And you certainly can’t say “no” when you owe the bank money. You’re all grown up, and now you have the responsibility to manage the same things your parents have been managing since before you were born. You are now in charge of your own personal finance! However, since your brain is still shrugging off the remnants of adolescence and teenage awkwardness, you’ve probably long forgotten all the words of financial wisdom your parents have heaped upon your rebellious and ignorant mind. Therefore, here is a basic outline of the three major aspects of that scary thing called Personal Finance:
The first thing that must be done (that should have been done ever since you earned/stole your first dollar bill, at least), is to set up a savings account. If you’re under 18, simply have your parents set one up for you and deposit your earnings in there as they come along. The nice thing about a savings account is that it prohibits you from dashing store to store with a loose credit card in hand, spending all your money on a whim. A savings account is what it sounds like: you actually save your money rather than lose it. The opposite type of spending would be the “losings account,” or, more popularly, your credit card. Do yourself the credit, and please refrain from credit cards on all accounts (no pun intended).
If you really want the pleasure of spending money with a card, do yourself a favor and create a checking account. The checking account is an account that holds money that is easily spent with your debit card. (Yes get a debit card, not a credit card). The checking account is the second main aspect of personal finance. If you eat out, or buy groceries, or purchase items online, then you’ll be paying for this with money on your checking account. The money in your savings account is safe from your irrational gut decisions, but the number in your checking account is a testament to your own will. Gaze upon its dropping number frequently to remind yourself of your own financial mediocrity.
The third and most exciting aspect to your own personal finance is investment. You can put all your money in a stale savings account, and have the same amount you put there 10 years ago, but if you invest your money over a long period of time, the amount will grow exponentially on a small-scale, over the years. No, it’s not magic. It’s compound interest. The investment most similar to a savings account is the type where you invest your money for retirement; make sure you are depositing money every week or every month at a high-risk for long-term. High-risk and long-term is the best combination for retirement, because the market will rise and fall throughout the years, but by the time you’re 60, the original amount will have, in the end, risen quite a bit. If you’d like to keep your money, don’t jump on the stock markets unless you have plenty of resources and plenty of knowledge and skill. At this time in your life, you will very likely have neither of these, so understand your own cognition (or lack thereof), and avoid these get-rich-quick schemes.
There. You have just received some highly complex information that most students don’t learn until they’re thirty years old and trying to escape their parent’s basement. But it’s time to grow up! Stop relying on adults to do everything for you. Spit out those crayons and get on with life!
Food for Thought.