Most of my friends in their early 20’s are not interested in finance. By not learning how to manage their money by balancing their spending and investing in assets at this age, they are only making it harder for themselves to gain financial independence in the future.
I’m very lucky that I became interested in finance at age 18 and began what will be a lifelong pursuit to learn as much as I can. After just 5 years, I can already see the benefits, and how these benefits will compound over time.
Here are the things I wish I could tell my friends about finance:
You do not need money to become financially savvy.
Most of my friends assume they will learn more about finance when they are just a little bit older. Just a few more years at a job, or when they get their next bonus, or when they switch to a higher paying job.
The idea that you will learn more about money when you have extra money is a TERRIBLE idea. You will never have “extra money”.
By the time you get the higher paying job, or a big bonus, you will likely already have ideas for 50 different things you will already want to spend the money on. When money does come in, the last thing you feel inclined to do is invest it. You may think to yourself, “I earned this, I’ll invest later.”
Although having money is great, and time in the markets is super important for building wealth, by increasing your financial IQ you will be ready to use your money to create more wealth when your cash flow does increase. When you understand how to get your money working for you instead of against you, it will be easier to turn down purchases on luxury goods and liabilities.
Learning about finance does not mean selling your soul to Jeff Bezos.
Most of my friends are political leftists, identifying as socialists or sometimes even as communists. To them, Jeff Bezos is the epitome of all things wrong with the US’s financial system.
Although I am politically libertarian, and as such am in favor of a free market system, I do see where this fear is coming from. I too wish the super rich paid higher taxes. I wish there were less government loopholes that the rich could utilize. I am in favor of decreasing the tax burden on the poor.
Learning about finance does not mean investing all of your money with the Jeff Bezos’s and Donald Trump’s of the world. You can invest in eco-friendly startups. You can invest in companies that are striving to end homelessness. Many businesses are looking to make positive changes.
A lot of finance and budgeting IS anti-consumerism. One of the best ways to become financially stable is simply to BUY LESS STUFF.
Thank you for listening to my mini rant.
If you are interested in learning more about money, or getting your friends interested in how to increase their financial IQ I would strongly recommend “The Psychology of Money” by Morgan Housel. Click here to read my review of “The Psychology of Money”.