Wednesday, February 11, 2009

teenage dirtbag

If I just knew then what I know now! A reader recently emailed me inquiring:

If you could give high school students one piece of financial advice, what would it be?

The Responsible Canadian Response
High School is one of the most crucial times in your life money-wise. That is, this is the time period where you really start to establish your attitudes towards, and habits with money. Know that your post secondary education will be expensive and save a very large portion of your income (whatever is not spent on clothes, because really what else do you have to buy, you're lucky enough to have food and shelter provided), probably about 90% for University or College. You will be glad you did when you are about 24 or so.

Also, take control of your finances. If your mother is still managing your bank account, cut the cord. Take the time to understand how to manage all of your day to day banking needs. Did I mention you might need to get a job, I hope this goes without saying..

the moneygardener add in
I couldn't give my opinion without pointing out the elephant in the room. You are YOUNG! Being young's advantages are not limited to having wrinkle free skin, looking good in skinny jeans, and knowing what Twitter is. You have many potential years of investment growth ahead of you; more than this 30 year old could ever dream of. If you are at all inclined, socking some money away in a few dividend paying stocks or index funds would not be a bad idea.

What book would you recommend to a high school student on the subject of personal finance?

Duh...The Wealthy Barber by David Chilton. Put the Nintendo Wii down and read a book!

Now get back to studying for those midterms pimpleface!


Braiden The Traveler said...

Braiden Harvey says " Yes you are right. IF you get your financial life on the right path you will be a winner."

Braiden Harvey

zeromoney said...

I read a few books when I was in highschool one of them was the wealthy barber. I started an RRSP at 16 when I started working.

I don't think any books would have made a difference to what came next.. getting in debt for university.

I think I really needed to hit rock bottom, despite knowing about PF, before I started to practice it.

Grant Baldwin said...

Thanks for your thoughts!

I completely agree that the transition years of going from high school into college and the real world is critically important for someone's finances.

In my work with high school and college students, I continually stress this point. And as you said, I also remind them that they are young so they have a huge advantage over their parents. It's called "Compound Interest"!

Thanks for your input and your 2 cents.

Canadian Small Cap said...

It is nice to tell them about living within your means, saving, and investing but let's not forget about earning money.

If you want a certain lifestyle make sure you select a path that gives you a chance to achieve it.


MG (moneygardener) said...

Investing for retirement before the age of 20 has got to be unheard of...well done.

Thanks Grant.

Andrew said...

Not a big fan of the wealthy barber book or the retire early author.

The one thing that jolted me into starting an RRSP was a post on the subway some 20 years ago, illustrating putting away $25 a month at age 20 and then starting to put away a considerably higher amount a month at age 35. Was on the phone to buying a mutual fund that night.

Anonymous said...

The Wealthy Barber uses mutual funds as his key investment vehicle.

One issue of mutual funds is they charge high fees while guaranteeing you nothing. Now that ETFs exist, there's no real reason to use mutual funds anymore.

(unless you really, really trust the fund manager)

Second issue of mutual funds is that they must stay true to their prospectus. So even if they think the market is going to tank, they generally have to stay in long positinos because that's what the prospectus forces them to do.