A lot of people have a different opinion on the fastest way to become broke. Your parents might say it’s the daily Starbucks, and while that can contribute, it’s not exactly the whole. It can be a lot of things, from accidents to just poor money management. This is why the Personal Finance class is mandatory, because learning how to manage your money will be a key factor in what direction your life takes.
Let’s start with what Robin Sommerville, a personal finance teacher, believes is the worst choice you can make. Here it is, the big reveal…….. Not saving. That’s right, it’s not gambling away money to sketchy people, giving your money to a foreign prince, or investing in your little cousins slime business. Don’t get me wrong; those are ALL bad ideas, but the most important thing, especially just starting out is not saving. Savings can be for a lot, and are something you’ll probably, or at least should, end up putting aside throughout the rest of your life. Savings are a must have people, and they are your safety net and your future. As a high schooler, we are expected right now to have a good $500 saved up, as an adult you’re supposed to have a good 3-6 months worth of expenses saved up, so when bad luck comes knocking it won’t knock you off your feet.
Now let’s talk about another issue…. The American lifestyle. I don’t know if anyone told you this yet, but the economy is not what it used to be in your grandparents’ and parents’ era. A minimum wage job will not pay for college, a house and a car; it just isn’t plausible anymore. So, it’s weird the expectation of having the so-called ‘American Dream’ with a white picket fence around your average 200,000 house with a new car that still sticks around. You want to know what is, in Somerville’s opinion, the second worst choice you can make? Buying stuff you can’t afford. Buying things like an expensive house, or getting a car you can barely make monthly payments on and fall into deep debt. So (hint, hint) that isn’t something you want to do, the average American has $90,460 in debt currently… no bueno.
Have you ever broken a bone? Well if you have, do you know how much that is gonna cost you without insurance? “If you have no health insurance, the diagnosis and treatment for a broken arm that does not require surgery generally runs up to $2,500 or more. If surgery is required, without health insurance a broken arm generally costs about $16,000 or more.” according to Abels & Annes, Personal Injury Lawyers. Insurance is a must, for your car, your health, your house….. Accidents happen, and it’s better to take the safe side here. Some people can spend a large chunk of their lives paying this type of stuff off- thanks to our questionable health care. Not that places like Canada have it better… they just pay that stuff back in taxes.
We’ve covered saving, buying stuff you can’t afford (debt) and accidents without insurance. But the key element to managing your money well is knowing what you have. I’m talking about the dreaded budget. You kind of have to keep track of stuff, especially if you need to pay taxes or bills. You need to figure out how much you need for bills like your car, gas, and food, and how much you can save or invest (please do so wisely and do research; otherwise, this is not good advice). If not you could end up short on something, and trust me banks will take full advantage if you overspend, and you’ll collect a hefty interest paying back the money you now owe them. And better yet, pay attention in that personal finance class and work to educate yourself so you will succeed in life. You have to control your money, or it controls you.