06 July 2012

Young Money

Spending like they do will not lead you to getting young money--or old.
Young Money
Young people today have an unprecedented opportunity available to them. Modern society is of course the most advanced society. Here in America, even those who come from less-than-rosy backgrounds have the option of bettering themselves in several ways as long as they're willing to do what it takes to work towards that end. Along with, or arguably even more important than getting an education, starting to save money and generally getting your financial house in order from an early age is critical to a life of success and advancement. Much money is squandered who do not know and understand their relationship with money.

Why accumulate Money Young?
As a young person, being told to save money has several things not going for it. You're generally at the lower end of the pay scale in your organization. You have quite a few new expenses that may seem overwhelming. Of course, you can't miss the hanging out with your friends and lovers, activities which usually consume copious amounts of money as well. Yet at the same time, saving young--even when it seems as if the amounts are insignificant--will often be some of the most worthwhile saving ever done. Oh sure, later in life, you will almost assuredly find a higher-paying job and believe that it will allow you to save more then so saving now isn't necessary. But that is a foolhardy path and almost certainly a recipe for disaster. Saving those seemingly small amounts early on can often grow to sums that dwarf the results of waiting a couple years and throwing much heftier amounts in. This money will come in handy throughout life in a myriad of situations. In case of job loss, it could provide a decent supplement to unemployment. In case of illness, it could cover time off work. The money can be used to buy a house, a car, or as an emergency fund. It can be used to cover expenses to allow for starting a business. Of course, it can also be used for retirement. Most importantly, "a penny saved is a penny earned". Save enough and you will begin to see the ever-increasing benefits of having money work for you.

Ways to accumulate Young Money
As mentioned before, the financial constraints on the young seem to be much tighter than on older individuals. It might truly seem impossible to save. However, that is the wrong mentality to have. Without a true determination to save, saving will not happen. Therefore, the first and most important part of accumulating young money is determining to do it, no matter what it takes. This may initially lead to what seems to be hardship, but hardship now for prosperity later sounds far better (and less embarrassing!) than apparent prosperity now only to fall back on hardship later. After the determination, you need to create a savings goal & plan. Start by earmarking slightly more than you think you can afford to save for saving, then plan to increase it every year. This will ingrain saving as an integral part of your life, eventually making it as natural as breathing. An important aspect of saving is also spending. The less you spend, the more you can save. Therefore, cutting your expenses can have a bigger effect on your budget and savings goals than the saving itself.

Where to accumulate Young Money
Now that you've decided to prod yourself into saving, the all important question pops up of where to hide the money. First, one thing must be understood. Your money is never 100% safe from all risk. It's up to you to decide what risks you're willing to take. You could take it and put it under your mattress, but that has its own set of problems. Most people keep their money in the bank, so that's a grand place to start. Banks offer savings accounts and some checking accounts that allow your money to earn interest, but most don't pay phenomenal rates. There are also various forms of financial instruments sold through banks and the government that simply cannot fit in this current discussion. There's also the stock market, real estate market, bond market, and a plethora of other opportunities to store money that allow it to grow as well. Some are better than others, but all have risks. Putting your money in a bank is great for awhile, but you may find it worth your time to start looking at other options as your accumulation grows.

Bringing it all together
Starting down the trail of money management and personal finance is an important milestone no matter what age you are, but is especially critical for young people today. Being in control of your money young will keep you moving forward in life and also allow you to leave the type of legacy you want to remembered for, both by your children/spouses/relatives/etc. and by everyone else you were able to come in contact with. By learning your relationship in money, it can allow you to control it, not the other way around. You have many tools and opportunities in present society to play the money game far more competently than has been possible before, so use them to their fullest extent and to your advantage. Bon voyage!

Young Money around the Web
How I Failed My Daughter and a Simple Path to Wealth - JLCollinsNH

Can I Retire Young? - Early Retirement Extreme

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