I’m hoping you can instil in your kids good manners, honourable principles, and a healthy diet. But can you impart financial stability to them? Can you really advise them on money matters?
I recently got the chance to sit down and speak with Mike Zisa. In addition to teaching at Pennsbury High School in Bucks County, Pennsylvania, he is also a financial consultant.
Zisa wrote The Early Investor: How Teens and Young Adults Will Become Wealthy. We discussed the importance of high school financial education as well as its rarity as it relates to our neighborhood-based kids.
Lisa discussed the most crucial things that all secondary school students should keep in mind after they graduate.
Saving Money Is Not the Same as Spending Money
Saving essentially involves depositing funds into accounts like checks, deposits, or cash at a bank. Cash deposits, such as short-term CDs, are also permitted (Certificate of Deposits).
You may even increase the safety and accessibility of your money by investing. Investing is the process of using money to buy assets that are anticipated to increase in value over an extended period of time, such as stocks, shares, real estate, and other investments.
The finest performance of your career was investing your money.
Use Compound Interest
When you compound, more money is produced from your savings and/or dividend income. To put it another way, aggregation is where money is generated. Wealth may actually increase enormously thanks to compounding! The more time you have to collaborate, the younger you are.
Start early investment
The stage on which Zisa is the most insistent is this one. He had a burning desire to write his book. The sooner you start investing your money, the longer it will take for the long-term capital-generating effects of compounding to take effect. Think about it: if you start spending $3,000 a year at a 6% average growth rate at age 25, you’ll be close to $680,000 by age 65. You are worth $260,000 even if you are just 35 years old. The biggest factor affecting the creation of long-term wealth is time. Get started investing right now.
Don’t Buy Stuff That You Can’t Afford
Today’s world is one where goods are needed and desired. It’s terrible if you don’t spend your money, but there’s nothing wrong with wasting it. Your spending does not add to the amount of debt that will eventually cause a financial disaster.
Use Credit Cards Responsibly
Your financial life will be heavily reliant on credit cards. Credit cards might also be the cause of your financial woes. In order to avoid excessive debt, many individuals have used credit cards to purchase pointless and frivolous items. It’s crucial to remember that whenever you use a credit card, you are borrowing money that you must pay back. There are a few critical points to remember with a credit card:
- If you don’t pay the whole sum, you’ll be assessed very high interest rates.
Avoid using your credit card to make purchases unless you have the funds to cover them. - Initially, low interest rates and balanced bargains should be considered.
- Scan the credit card’s print to avoid reading the extremely tiny text.
- By the due date, pay the whole balance.
Purchase Properties Rather Than Obligations
Buy things that will bring you money, not things that will leave you in debt! For instance, you may earn money simply by investing in a stock that pays dividends (a percentage of the company’s income) every three months.
Interest payments are received on a mortgage every six months. Passive gains are what are meant by this. On the other hand, if you purchase a loan of any type, you already have debt that you must pay back with interest.
It goes without saying that such loans, like a mortgage, may be necessary to purchase a first house or even a vehicle by investing in a stock that pays dividends (a percentage of the company’s income) every three months.
Interest payments are received on a mortgage every six months. Passive gains are what are meant by this. On the other hand, if you purchase a loan of any type, you already have debt that you must pay back with interest.
It goes without saying that such loans, like a mortgage, may be necessary to purchase a first house or even a vehicle.
However, other loan types will increase your burden and limit your potential to accumulate money.
Set a Budget to Save a Rainy Day
A budget is simply an estimate of expected income and expenses for a certain period of time in the future, often done monthly.
Setting a timetable can help you keep track of the money you spend on various items and services.
Establishing a cash account, often known as an emergency fund, each month is a crucial component of the budget. You set aside money in an emergency fund to cover unexpected expenses in your life.
Have a fund set up for emergencies that can cover your expenses for three to six months.
The emergency fund should be kept in secure, easy-to-access assets like a deposit certificate (CD), a money market account, or merely a savings account.
Evidently, Zisa believes that the path to financial stability begins at a young age. In order to teach their children financial literacy, parents should serve as positive role models.
If you live above your means and pick up the habits necessary to lead a less demanding and more fulfilling life, you will save yourself and your own children.