Contrary to popular belief, when teenagers begin to think about their future careers they rarely think about how much money they will make. Some think about hiking to the Ozarks and living off the land, some want to be police officers, some teachers, some nurses, architects, etc. Students are really self-aware in that they understand their interests and passions. They also don't have any idea what barriers there are to living out their dreams including the fact that many of the careers they wish to pursue will not afford them the lifestyle they imagine.
Shouldn't it be this way for all of us? You think you will love doing something and you go do it. So what is stopping you? The first barrier sometimes mentioned is paying the bills. Sure, sure we all have bills but how many of those bills are just "keeping up with the Jones' " bills and how many are necessities.
Let's examine one of the biggest financial challenges we face as working people -- Preparing to retire. Some people want to retire early, some rich, some to maintain their lifestyle and some say the will work until the day they die. Consider a couple of easy ways to prepare for retiring.
1) Get out of college, find the first job you can that pays you $30,000, live on half of it for 3 years, and invest the other half. After taxes you might have $12,500 to invest each of those years. Then take any job you like because you never have to worry about investing heavily for retirement again because you will have over $2.7 million in retirement savings after 45 years with a 10% return.
2) The second way to take care of retirement is to invest a little bit every week for your entire working career. Say $250 per month for the same 45 years. In the end you get about $2.6 million for retirement.
What do both of these scenarios teach us? Start investing early and don't let financial barriers get in the way. All that is needed is a little sacrifice and discipline. In the first scenario we have to live on an austerity budget for 3 years to fund our retirement. Live like you were in college for 3 more measly years and you will have your retirement taken care of. Here is your monthly budget:
Food: $200 (my family of 4 eats on less than $400/ mth)
Rent: $350 (live with your parents but pay them rent, get a roomie, share utilities)
Clothes: $ 50 (you know you have enough clothes but the 50 bills is for work attire)
Auto: $200 (that beater you have will work fine, gas and insurance, get Geico)
College: $250 (time to pay the piper but maybe you were smart and went to state school)
Fun: $ 150 (this is purely a luxury and most will probably be needed to pay for misc. items)
Total $14,400 per year
In the second scenario your lifestyle is built around spending only what you have. The budget constraints are very minimal and hardly noticeable if you deduct the $250/mth right from your paycheck.
Discipline is the key here. Short term sacrifice. Long term perspective.
Next time: More on picking and/or changing careers. Some may be asking for investment tips but that comes after we find and follow our true vocational calling.
6 comments:
I Concur!!
I agree with all your ideals and principals, very nice Job!
(to play devils advocate)
I would raise the question of how much can be accomplished for others/the world if one/all only aspire to 30,000/yr. The largest sum of amassed money in this senario ends up in the Goverments hands, which unfortunately will be blindly thrown at problems in a vain attempt to look
helpful. There would need to be a general shift in everyones philanthropic efforts to allow a continued way of life that we have come to know and love(?) or a better commitment to general giving from a larger portion of the population.
We live in an era of big institution where the "Big Church" or "Big Organization" reigns supreme. These oversized establishments are not possible without either an unanimous goal or the extreme efforts of the minority few. When 90% of needed funds comes from 10% of the people we would either have to shift our goals or reevaluate our efforts.
That is not to say that the large institution are "correct" but if your posts about general happiness are correct which I believe they are, then we owe an enormous thank you and apology to the people who have forgone happiness so that many can enjoy the fruits of their labor.
I like the way you think. I agree with most of everything you say but lets say I am going to an out of state college and my parents don't want to go with. what should I do rent an apartment or live on campus.
You friend,
Shane Cassell
i agee with you. i think that if teenagers learned more about finace, making money and alo learn how to save money i think that teens now be better off in life and better off finacially in life. If we all learn more about the value of money then less people will be in debt and more people will be wealthy.
IF more teens are stble with their money then why do some teens feel that their parents will pay for eveything in life weather it be credit card debt ext.?
I agree. I really like your thoery of Short term sacrifice and long term perspective. Teens should definiatly start thinking about investing early on. But the question is how much?
Eric Vergien
I agree with you i think teens should learn about financials early on and discove how savings accounts and stocks were so they can start saving there money so that by the time they are ready to retire there interest will have actually acumulated some actual money.
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