Now that we are in 2022, we have experienced a few years of huge upheaval which has come with financial uncertainty and less clarity about what the future holds. Now, more than ever in history, it is so important for young people to learn about money and how to make it work for them to carve out a future that they desire.
When you are young, things like where you want to travel, who you want to date or hang out with, what sport you play, what car you drive and what your school or college grades are usually what you are thinking about. Money is important to you in regards to what you can spend it on to make your life better at that exact moment, but little importance is placed on actually learning about money, learning money skills or developing financial literacy. This lack of education is setting you up for a much harder life down the track, and is the reason why so many people struggle with money in adult life!
While you are young, learning money skills and learning about money is one of the most important things you can do and will set you up on the right track for a life of freedom and living a life of freedom and choice! Learning this while you are young gives you the biggest advantage of wealth building and that is TIME!
Money is at the centre of everything that we do: what job we choose, how long we work for, what we buy, where we eat, where we can go, where we live, what quality of life we have and even how we choose to spend our free time.
We hear about money through our family, friends, the news and our peers. It is basically everywhere we go! But how are we meant to understand what we should do with our money and how are we meant to make good money decisions to help us in the future? It’s not taught to us in schools or colleges and only in a few homes. Generally it’s up to us to try and work it out for ourselves by trial and error. There are so many financial traps to navigate while you are young and unfortunately for a lot of young people , by the time they learn about this, it’s too late and can be a very costly lesson that is hard to reverse.
Chances are, if you clicked on this blog, you are interested in learning about money and securing your financial future. Luckily, learning about money has never been as easy and accessible as it is today with the internet. We have books, podcasts, TV shows, YouTube videos, financial experts and even courses like ours to help you along the journey! But equally, there are just as many ways to lose money and make poor financial decisions which can set you back in life. That is why we think it is so important to manage your money wisely!
Here are a few reasons why you need to start learning about money while you are young:
It is a basic life skill
Just like brushing your teeth, reading, writing, driving or learning to ride a bike, money management is a basic life skill that you carry throughout your life. Understanding how money works and developing your financial literacy equips you with the knowledge and skills to manage your pay-checks and avoid financial scams. These basic skills include things like making and sticking to a budget, understanding debt, savings, financial freedom, cash flow, starting side hustles, taxes, investing, compound interest, and so much more! Our Fundamentals of Wealth course explains all of these skills and so much more to set you on the right track! When you understand and master these skills from a young age, you can be confident throughout life that you are ready for whatever life throws at you!
It becomes a habit
We all know that it takes about 14 days to build a habit and so much longer to break one! By educating yourself early on finance and putting good savings goals, systems and practices in place, you start your financial journey off on the right foot, thereby not making mistakes and saving yourself confusion and stress in the long term! With so much financial education out there, you can be sure to learn from the best and, as they say, ‘step on the shoulders of giants’! As young people are normally starting off by earning a small amount of money and just starting their savings journey, it is the best time to start building good habits to establish a solid financial future.
It gives you independence
As a young person, you want as much independence as you can get. Learning about money gives you the freedom to CHOOSE what you want to do, where you want to live and how you want to spend your money. How good does that sound? By starting to build financial independence, you also become more responsible and practical in all facets of life, thus making you more confident to go out in the real world and tackle big life experiences. Once you start to develop financial literacy, you become amazed at how much power you start to gain over every aspect of your life, making you happier, more mature, independent and excited for everything that life has to offer. Life has so many wonderful things to offer, so many places to travel too, experiences to try and things to enjoy and you need money to really get the best of them.
It gives you choices in life
Starting a savings goal and learning about money doesn’t mean sacrificing your lifestyle! If anything, educating yourself around money gives you more choice about what, how and where you want to live your life. As you develop your financial literacy, you can set short, medium and long term money goals that allow you to create your dream life and reward yourself at every stage of your financial journey. When you budget properly, you don’t feel guilty about buying that expensive car, going out on fancy dinners or going on that amazing holiday, because it is all in your control! Then when you learn more and more about money and apply it, you can gain the ultimate freedom! That’s called financial freedom, where you can choose to do what you want, when you want, whenever you want because you can afford to. Sounds great doesn’t it? If you want to learn more about that then jump on blog on financial freedom here
It gives you peace of mind
Developing a savings and financial strategy allows you to set aside a certain amount of money that you can use as an emergency fund. By creating an emergency fund, you have peace of mind knowing that whatever life throws at you, you have prepared a financial ‘safety net’ that ensures you can live comfortably. A general rule is to have around three months of income saved. The COVID19 pandemic has illuminated the unpredictability of modern living, showing that you have to expect the unexpected! By learning about money and understanding the importance of an emergency fund, you can sleep at night knowing that you can support yourself, even through the toughest of times.
Your greatest asset when you are young is TIME, and you can use it to become wealthy if you know how.
As a young person you should be using compounding to make your money work for you! You have the huge resource of time and this allows you to let money and compound returns work for you. There is this very special resource called compounding and it can work magic for you if you use it while you are
young. No one less than Albert Einstein called it the “Eighth wonder of the world !” and when you know how it works, it really is. If you utilise this principle while you are young it can set you up for life of freedom, free from money worries, but you need to know how to use it properly. One of the key ingredients of this formula is time and as a young person , that’s what you have got and should be utilizing! If you are interested more in the magic of compounding then click here to read our blog on that.
It allows you to understand and manage your debt
Although many people think that no debt is good debt, a major component of financial literacy is understanding when to borrow money to build wealth (aka. good debt) and when to avoid financial traps (aka. bad debt). Knowing the difference while you are young can literally put you onto the path of riches or it dig you into a financial hole so big you will spend the rest of your life digging yourself out of. These days there are more and more financial traps for young people with every product and service under the sun being marketed to them via their phones, laptops and Tvs. Unfortunately most of these things are for depreciating assets, such as cars, clothing, consumables etc are the types of items to avoid going into debt for, as they lose value over time. They make you feel great at the time but that financial hole just gets bigger and bigger. Items that help generate wealth, such as education, business ventures and real estate, are all positive types of debt that can improve your life in significant ways but most young people don’t know how to identify what these are let alone how to use it properly.. By learning more about money and the types of financial decisions to make and avoid, you can make better spending decisions on big ticket items that will help put you in a better financial position in the long run!
You can save and plan for your retirement
As a young person, you tend to not worry too much about what your retirement will look like after all it’s so many years down the track and you can always work it out later right? Unfortunately that is a huge trap that most young people fall into and most people waste their most valuable resource when they are young and that is time! A study by the US Federal Reserve System found that one-fourth of Americans have no retirement savings, and over 60% of those with retirement savings have low levels of confidence in making retirement decisions. That’s a lot of people, and I bet you don’t want to be one of them! Therefore, the sooner you start caring about your retirement, the greater advantage you have to create the retirement you want for yourself and your loved ones. By educating yourself about retirement and saving young, you take the pressure off your future self and reap the rewards sooner. The older you will be so thankful that you learned all that you did when you were young!
The financial landscape is constantly changing
With the introduction of the internet, electronic trading, new markets and new income streams, there are so many forces that continue to transform the financial system. The ever changing world of money also means that there are more financial scams and tricks out there to be aware of. It is therefore now more important than ever to understand how money works and how to keep on top of what is happening. By increasing your financial literacy, you can understand what money decisions work best for your lifestyle and what to avoid so you don’t fall into the trap of making poor financial decisions & scams!
As you can see, learning about money is crucial to help you make the best financial decisions for yourself in the short, medium and long term. By starting young and making good financial decisions early, you can avoid financial mistakes, traps and poor money decisions that will set you back in life. This will allow you to earn more money and invest from an early age.
Although school may not teach you these essential life skills, there are still so many resources to help you start your financial journey on the right foot and get ahead in life as soon as possible! Getting yourself skilled up in money while you are young is so vital and important and luckily now there are some fantastic resources that show you how.
Our JWA E-Learning courses cover everything a young person needs to know about money and investing
Click the link below to learn more about our three courses. It is now more important than ever to learn about money and secure your future!
If you enjoyed this blog and want to learn about money skills and the wealth mindset then check out our series of great courses on this link!