School – most of us have been there. We are raised with the presupposition that it is an irreplaceable, obligatory part of life. Very few people dare question that. While there is no doubt that you get a ton of knowledge at school, the usefulness of this knowledge is highly questionable. How many of you ever truly needed advanced mathematics? Did chemistry ever help you become financially stable? Or history? What is the point of learning it when we keep on repeating the same mistakes through generations?
Of course, some of that knowledge may have shaped certain career paths. But such cases would be a limited few. Many students graduate to enter the job market from the lowest bottom. I can certainly understand how education is a touchy, debatable topic for humankind. One thing that cannot be disputed, however, is that school does not teach us anything at all about the world of money and how to manage it. With hopes that I can help you (especially if you are in your 20s), here are 10 things I wish school would have taught me about money that I learned strictly through experience.
1. Jobs have ceilings
Jobs are a product of systemic lock-ins. They exist to help you survive. It sure is happy news when you get that first job or a promotion at your current company. That’s because we fear dying out and we get the relief that won’t happen by getting survival jobs. Then, when we have that job, due to our human nature of insufficiency, we start having thoughts of ‘something more.’ Like “Hey I got a job and some stability. Now I want to earn more, and eventually, maybe even get rich.”
The non-obvious truth is that nobody ever got wealthy just by having a job. No matter how many raises or promotions you get, you are still an employee – a cog in the mechanism of the company. Your salary has a ceiling. It will never rise past a certain maximum. Wealth, on the other hand, can only be acquired by being the company owner. That guy does not have an employee type of ceiling tailored for a level of survival. That guy’s ceiling is purely dependent on the company’s profit margins. So, if you are ambitious for a wealthy future, it will not be tied to a job. The good news is that when you have that level of stability, your mind can focus on how to use the money you earn to start making money.
2. Set aside 30% of your salary
Spending can become a nasty habit. You can end up not setting any of your salary aside. In effect, that will land you in ‘survival mode.’ If you get to that point, you will entrap yourself and complain that you do not have enough to prosper blaming it on your job. But the truth is that at that point it becomes all about strategy and discipline. Not controlling how you spend flattens your chances of further prosperity.
The key here is to prioritize setting aside an amount of your salary that you will not touch. You can call that amount your ‘wealth fund.’ It will be the money you use to begin side hustles or invest. Set this money aside before you start spending any money from the salary that you have just received. Make this your absolute, sacred requirement. No excuses. There will always be something popping up that you will require to pay for in our consumerist world. When you set aside 30%, pretend that you do not even have that amount and work with the remaining salary.
3. Purchasing consciously makes a difference
Prices for the same goods and services vary dramatically, frequently without a proportional variance in quality. For example, you could be getting your bottle of water for $5 at the airport, while the same one costs a mere $0.50 at a supermarket. That’s a 90% discount right there! You may think these additional costs do not matter that much, but they snowball. An unwatchful purchase here, another one there, and you end up overspending on your grocery bill, which makes you feel you have little money overall.
The economy is a tricky game. Companies play on our feelings, psychology, and habits. Just paying attention to how you spend your money could save you multiple expenses to the point where you no longer think you are not earning enough. Find outlets with decent prices, think about the long run, and avoid impulsive buys. For example, let’s do your usual supermarket run. Ask yourself: “Am I getting the best prices for the same goods here?” Most likely, there is a cheaper store that you could be visiting. When buying, think about purchasing more of the same item for a lower per-unit price. Buy 12 toilet paper rolls instead of 2, as those 2 will cost more per roll (no way you will not use them right?). And when at the cashier, avoid that Mars bar that is starting at you. It was placed there for a reason.
4. Don’t you dare feel bad asking for a raise
Ever heard of something called inflation? I am sure that it was difficult not to hear about it, especially recently. Well, it grows yearly, if not monthly. And a lot of businesses adjust to inflation to make more money so that they can cover the higher costs. What does this mean for you? If your salary does not grow, year after year, you are actually earning less and less. Let’s see this in numbers. Imagine you are earning $3,000. In 1 year, let’s say inflation grows by 10%. You now pay more for the same goods and services out of the same salary. Hence, when you think your salary did not change, it got devaluated!
To maintain your purchasing power, you should aim for a salary increase every year. Not only that, but you should also try to at least get a salary increase that is proportional to the rise in inflation. Otherwise, you will be a victim of the economy. Naturally, going to your HR department and saying “I need more money because of inflation” is not the best idea. If you want to learn how to ask for a raise, let me know in the comments (I had multiple raises and consulted several people who got raises too). And remember, by getting the salary increase you are not even improving your quality of life! Just maintaining it.
5. Saving is a big mistake
For the same reason that working without a yearly raise is making you poorer, saving money is also a bad idea. Your money simply loses value over time. Sure, some savings accounts pay you a percentage of interest every year. That amount of interest, however, is nothing compared to the percentage of inflation. Savings accounts may pay you from nothing to 5% yearly. Inflation nowadays may reach as high as 15% per annum!
If you are going to be setting money aside, you should use that money to invest. There are multiple channels for investment available, ranging from stocks, crypto, and investment into your own business to property. Depending on your investment decisions, you can well beat the yearly inflation if not match it. Of course, there is always a risk. That is why you should never invest without doing your own due diligence. But investment is definitely the way to make your money work for you.
6. Cash beats credit
Living outside of your means is financial imprisonment. We all want a nice car, a home, as well as clothes and accessories. Can we all afford them? Not always. Yet banks nowadays allow us the freedom of acquiring things we could not otherwise afford. Sounds like a good thing but not without a catch. Credit, loans, and mortgages will naturally cost you money due to the interest you will have to pay back. Hence, whatever you are purchasing ends up costing you even more and putting you into a harsher reality. It is not like you could afford that new car anyway, and now you are driving around a super-depreciating asset with a heavy burden of debt dragging behind you.
The deceitfully short route of debt is rather tempting to take when all we see trending in the media is the addictive lifestyle of the affluent. It does not cross our minds that those same people do not normally take a loan for their flashy belongings (some do, but rather few). Plus, think about this a little differently. Many billionaires do not drive around in the most expensive cars or flash luxurious jewelry. They do not need that attention. So in effect, you are simply lured by the luxury market to spend your money. It makes you feel bolder in a life that felt so minuscule before. You should not be scaredly mortgaging a home that you could buy without doubts had you had the money for it.
7. Hold multiple currencies
There is no single stable currency. They all fluctuate according to politics and the market. Just like it is a bad idea to keep your eggs in one basket with investment, it is not wise to keep your money in one currency. What if the political situation makes that currency devalue out of control? Nobody can guarantee that will not happen.
Should you keep your money in every currency of the world then? No, that is not the case. But it is definitely easy and safer to keep your money in a few relevant currencies. For example, if you live in Europe, you may want to consider keeping your money in Euros, Dollars, and/or British Pounds. During times of turmoil, a currency can really appreciate in relation to another and you may even make some money on currency exchange if you play your cards right.
8. You do not lose invested money until you decide to sell
If you have invested in company stock, for example, and the value of your shares starts falling, you may not make a loss in monetary value until you actually accept the new price (the loss) and sell your stocks. That is exactly how all unprepared investors lose their money. Why? Because they seek to gain a quick buck. So they sit there speculating from one day to the next, biting their fingernails and making impulsive decisions. Of course, the price of a stock will rise and fall. You can clearly see that from the company’s stock price history.
Smart investors invest for the long term. When they do, they also live through moments when selling their stocks would equal a loss of monetary value. Yet they do not move a muscle on that roller coaster, especially if they did their due diligence and understand that the trend line is looking rather positive. How do they do that? They emotionally disconnect from the money they are investing. They do not invest that money unless they know they could live without it (in case it comes to the worst). And that patience frequently pays off, a few years after many stocks grow significantly. Today, I own stocks that suffered a dramatic blow, as well as stocks that have grown over 40% in their value over time. Am I planning to sell? Not yet. I am not in a rush and not desperate for money to be accepting losses.
9. Everything is money
Money is not just paper with dead presidents or historic architecture printed. When you look around yourself, count how many things you see that have monetary value. Or rather, challenge yourself to find something that does not. So, how many thousands of Euros or Dollars in monetary value are you surrounded by at this moment?
Everything has a price. Everything can be sold. It is a mistake to focus strictly on paper money in your transactions. Be open to accepting payment in other types of valuable ‘currency’ that you can exchange for paper money later. If someone ‘pays’ you by giving you their car, for example, that car can be sold for paper money.
10. Money does not buy happiness
It buys temporary satisfaction and expiring pleasures. Happiness is the state of your soul. There are people laughing while driving an old Honda and crying inside a Lamborghini. I personally know affluent people who are still on their path to finding that happiness. Yet I also know simple-minded people employed from 9 to 5 that know how to enjoy life to its full extent. Never rely on money for happiness because you will end up extremely disappointed. Find a way to enjoy the now.
If school taught us at least these 10 basic things about money, we would have a society of much more capable individuals. I spent my 20s learning these facts through experience. If you are in your 20s, knowing these and taking them seriously is bound to give you a big advantage in life. Do you think there is something else that school should teach us that it doesn’t? Comment below!
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