April 7, 2021 / Source: The Bizz USA
By Arnav Jain and Pravar Jain (Co-hosts of Money Made Easy Podcast)
Teenagers and college students devote most of their time to school, whether it be for their courses, extracurriculars, or standardized tests. But when these same students become young adults into the real world, they are unprepared to handle this one almighty concept: personal finance. The fact that most people coming out of education do not even know the basics of investing, savings, and budgeting is concerning. Imagine coming right out of college and not knowing what to do with your first paycheck? This is the dilemma that nearly all young adults face every year.
This issue also stems to adults who have been void of financial literacy during their youth. Roughly 95% of people in their 40s hate their 9-5 job, constantly worry about taxes, debt, and loans, and don’t have time to spend with their family or to do other things they love. All of these factors are derived from the fact that personal finance was never taught to them at an early age.
Personal finance boils down to two main concepts: being able to know how to manage your money and leveraging that money to have it work for you. Many think that being knowledgeable about personal finances is simply a concept of hoarding money, but this fatal misconception has doomed people from their pursuit of building wealth.
Additionally, personal finance is much more than merely investing, it also takes into account credit, side hustles, taxes, savings, budgeting, and so much more. It is not at all similar to the “Top ten best stocks for this month!” claims. Personal Finance is aimed towards building a strong foundation to be able to create generational and sustainable wealth.
Personal finance may seem like a topic that very few people care about, but even the wealthiest of people in Elon Musk and Warren Buffett know about the fundamentals of financial literacy. You can be a millionaire and be the most famous person on this planet, but if you do not have your personal finances in order, you are doomed for failure. Take a look at Mike Tyson: he has made over $500 million in his illustrious boxing career. However, because of poor money management, his net worth remains at merely $3 million, which means he lost around 99% of his earnings.
The same applies to everyday people on a more crucial scale. Mike Tyson is still a millionaire, but if ordinary people do not properly manage their finances, they can be left in a dire financial situation. Whether you are a doctor, computer scientist, chef, or garbage worker, there is not one person who does not need to know how to work with their money. Ultimately, the game is not always about how much you make--it’s about how much money you keep.
Now, the question that many people ask is “Why do I need to learn it now?” Many assume that they can wait and learn about it once the time comes. However, when will that time come? Some say that education will teach them, but this idea that the school system will make students prepared for the real world is wrong. Even after college, many students have no clue how to manage their finances. They were never taught how to grow and make money work for you, how to budget and have savings goals, and the worst part about this is that high school and college simply ignore teaching personal finance. Take it from us, as we are both high schoolers and were never taught by public school how to manage our future finances. Personal finance was never even touched upon in our everyday discussions, showing its lack of importance among students. It’s a shame that the U.S. education system cannot even teach the most relevant and applicable concept that every individual will have to encounter in their lives. Ultimately, the education system will not teach it to you, which is why you must start as soon as possible and get ahead of the crowd by taking action.
The fact of the matter is that personal finance takes very little up-front work, and once you have the infrastructure in place, then you will be set for the rest of your life. The first step is to self-educate on personal finance. To achieve “financial literacy”, it is imperative to take advantage of books and online resources. By far the best books to read to become financially literate are “I Will Teach You To Be Rich” by Ramit Sethi, “Rich Dad Poor Dad” by Robert Kiyosaki, and “A Random Walk Down Wall Street” by Burton Malkiel. These books will lay out the core principles necessary to develop a fundamental understanding of how to manage your finances. Additionally, there are tons of Youtube channels, such as Stephan Graham, who offer great personal finance contact.
There are also great podcasts out there to learn about personal finance. Our podcast “Money Made Easy” is a great way to begin your personal finance journey, because we cover every topic that all the books and online resources cover into short, easy-to-understand podcast episodes. We believe the Money Made Easy podcast is one of the best resources for young adults and teenagers because we dive into the fundamentals of personal finance and discuss concepts such as student loans, credit, and side hustles. While it may seem daunting to self-educate at first, even just 10 minutes of your day watching a podcast episode or reading a book will be enough to put you ahead of 95% over everyone in personal finances.
As we have explained why personal finance is so important to learn now and how to actually master the concepts, it's vital to understand that time is your biggest asset. As teenagers and young adults, we are privileged with the amount of free time that we have on our hands, making it critical that you use this time to set yourself up for a better future. But what is the overall goal of mastering personal finances? Why does it even matter that much? Well, the simple answer to this question is that you get freedom. If your money is handled properly early on and you build a sound financial infrastructure, that means you can spend less time worrying about your money and spending more time on the things that you love. This means spending more time with family, going on vacations, and buying your favorite items without having to worry that you cannot afford it.
No matter how much money you have, there is always a way that you can work out your finances to do the things that you love. Moreover, once you get advanced with the system you create and things begin to flow more smoothly, then the ultimate goal shifts to being able to retire early. Yes, it is possible to retire before the age of 65. It is even possible to retire in your 50s, 40s, or even your 30s. It’s all about how you save, invest, and plan your finances in a way that you can make that retirement number as early as you want. Once you understand the game and crack the code of personal finance, all that's left is the mindset. It’s your choice to self-educate on personal finances at a younger age, or go procrastinate and think that college will teach this to you. By taking just 10 minutes a day today, you can spend the rest of your life with less stress, more freedom, and time to enjoy every moment to the fullest.