“Wisdom is not a product of schooling but of the lifelong attempt to acquire it.” – Albert Einstein
If I had to define High School, I’d define it as a weird time where you’re discovering who you are on a personal level, what you want to do with the rest of your life, and oh yea and at the end of your tenure in the school system you’ll be making one of the biggest financial decisions of your life by choosing a college to go to… no pressure. It’s already been 12 years since I graduated high school and at the time there were zero personal finance classes; like seriously nothing that would remotely prepare you for a financial future #Iwastoobusysolvingforx. Thankfully some high schools are now teaching personal finance, yet, I certainly feel there should and can be much more emphasis on the topic of our schools to prepare our youth for not only responsible financial decisions, but a prosperous life. In today’s blog we’re going to be going back to highschool, so please find your assigned seats and get ready to review Three Things I Wish I Knew about Personal Finance in High School.
Gambling Is Not the Same as Investing – This one goes out to all my crypto maniacs out there. It seems obvious however there is a huge lack of education about what investing is; especially when it comes to the stock market. Many of us, myself included, started dabbling in stocks with frankly little to no clue with what we are doing. We take a few shares of Amazon, maybe some of Apple, and then always look for the home run company; you know, the company that is the next Facebook or is going to be the next big thing. For years I did this; and looking back I lost more money than I had to because I didn’t know the secret to investing. Investing requires a massive amount of education, patience, and discipline. Gambling on the other hand is essentially the exact opposite #anotherbitcoinplease. Investing requires a plan; now there’s nothing wrong with reading the prospectus of a company, and investing and believing in that company. However if you blindly choose individual stocks or speculate the next big thing; you might be a gambler. To date, many who have achieved FIRE suggest the best investment strategy is to invest heavily in a total stock market index such as VTSAX (Vanguard Total Stock Market index) or SWTSX (Schwab total stock market index, I personally use this one). Some of these market indexes track the S&P 500 and NASDAQ and have been proven to see better gains than picking individual stocks. If you aren’t already investing or are hesitant about investing, the total stock market indexes are really a great way to get into investing; as the historical data that backs up the indexes shows consistent gains over time.
Choose Your College Wisely – I don’t think I’ll ever agree with leaving the biggest financial decision of their life up to an 18 year old. When you’re 18 you want to fit in, you want to pursue an interesting and impressive career, and you also have an absolute zero understanding of debt or how to manage it. Education is an incredibly powerful tool; however college can also wreak havoc on your financial future for years to come. At the end of the day college is an investment. Although the experience of college life might set the illusion or mirage of being appealing; no one should base their decision of attending a college based solely on social or party aspects of an institution. I think all too often it’s easy to associate a “party school” with a wonderful “networking” opportunity. However, don’t let the temptation of partying overshadow the return you will receive on your investment. It’s important to choose wisely. If you don’t know for sure what you want to do; there is no shame in attending a community school while you figure it out. Still don’t know what you want to do with your life? Start interning (yes working for free) at local small businesses. There are so many businesses out there that need help and if you’re unsure of what you would like to pursue, it’s a wonderful idea to speak with people in your community and trying different jobs. You’ll find what you like, what you don’t like, what you’re good at etc… Give yourself the gift of developing your passion and finding your “why” in life before making a financial decision that can be with you easily for the next 10-20 years.
Additionally you want to educate yourself on debt and how to manage it. The way to eliminate debt is to get ahead of the interest rate so more of your payment goes towards the principle of the loan. Before heading to college run how much of a loan you will need, the interest rate on the loan, and what your monthly payment might look like. Furthermore factor in additional payments, and how you can budget to get ahead of the interest rate. If you keep chipping away at the principle of the loan by making additional payments you will pay it off incredibly faster than making just minimum payments.
You Have More Time Than You Think – I think there’s a weird stigma that once High School and even College is over people seem to think adulthood begins. Well I’m gunna shine a little wisdom. Whether you are 18 or 65 years old “adulthood” is kind of a mindset. Will you have responsibilities? Of course you will. However I also think it’s important to always keep learning and growing. The last item I wish I new about personal finance in High School would be to continue to invest in yourself. This could be in the form of education, educating others with your experience, or investing in your health. I think it’s important to realize that it’s ok to go off on different ventures through life; whether they be business related or personal journeys. Although you don’t need money to make things happen; as we grow older we learn that money buys time. The more money you have, the more time you have bought back. Setting financial goals are important; however rewarding yourself and staying creative and ambitious is also equally important.
Conclusion – High School taught me alot of things; however personal finance wasn’t one of them. Truthfully, Personal Finance doesn’t really require many crazy formulas or for you to bust out your TI-83 graphing calculator and map your way to success. It requires discipline, patience, and a willingness to be adaptable to market conditions. Most importantly it requires education. Always keep learning, educating yourself, and above all keep striving towards your goals. What are some things you wish you learned about personal finance in High School? We’d love to hear your thoughts; share in the comments below!