Financial education will change your life.
Lol, what? Yes, I’m serious. Financial education will change your life because suddenly everything will start to make sense. Earning money is not about greed. It’s not about accumulating as much as you can. It’s not about earning to spend. Money is a tool. A tool to get exactly where you want in life. When you understand this, suddenly the entire world opens up to you.
But there’s a bit of an issue; financial education is completely lacking in schools. No one tells us how to invest in the stock market, how to buy a house or how to build a business. The exact things that will help us get where we want to be, aren’t taught in schools. It’s tragic, yes. And that’s why I’ve created this blog, to help people educate themselves financially, right from the youngest age possible.
What is Financial Education?
Put simply, financial education consist of understanding the basics of how money works and how to use it to your own advantage. It does not mean get rich, it means use money well to get where you want to be. Don’t be obsessed with it, don’t be scared of it, just use it (well).
In your early twenties, I encourage taking a year of self-education. A year between high school and university (if you decide to go) to teach yourself about the essential skills in life, and to help you decide whether you really need to go to university. Use this year to educate yourself on the things that no one else does: finance, the world, yourself. You can travel, you can work, whatever you want. But teach yourself about money and you’ll never have to worry about it in the future.
On Financially Mint’s home page I cover the basics to get started with financial education:
- Budgeting: have a rough idea of where your money goes (10 min to set up)
- Saving: take 15% of your income every month
- Making Money: build skills and make enough to be able to save 15%
- Investing: use compound interest to retire a millionaire
These are the basic 4 to learn how to use your money effectively. Once you grasp these concepts well, you can expand to other topics such as:
- Flag theory: optimising on taxes by planting flags in different countries
- Skill-building: find the right jobs + ways so you build technical skills earlier on in your career
- Self-development: learn how to focus on the essential and read the right books
So there you go, financial education is something we should have covered in high school, but schools seem to have skipped that part.
Here are a few other reasons financial education will change your life ⬇
1. To retire with money
Hate to break it to you, but in most countries the government won’t be giving you much money once you retire at 65. Now, if you want a decent pension, you’re the one responsible for it.
Governments are giving more and more responsibility to the citizen for their own decisions. That’s great – but most of us have no idea how to do that! 😰 We keep changing jobs, we live longer, housing prices are skyrocketing. How on Earth can I even think of a pension at the age of 23, if I need the money now? Because your 60 year old self will be very grateful.
Financial education will teach you how to invest for your retirement. The good news is that it’s pretty simple and it doesn’t take much money or effort to get started. It just takes consistence.
If you’re in early stages my advice is to save 15% of your income, and once you’ve built your cash cushion, invest this money into the stock market. By just investing £100 per month, you will have over £200,000 at the of 60, thanks to the magic of compound interest. Make investing a priority.
2. To not get robbed
Why do you think banks charge you 10€ to make an international transfer? Or why financial institutions sell stuff like annuities? Or insurance companies sell you life products you don’t need?
To take your money.
Ignorance is bliss? Sure, until you realise what they’re really doing is stealing your money.
Thanks to my financial education, I know that I should use an investment broker that charges me 0.22% in fees, that I should stay away from bank products and that I want to be protecting my money from tax. I’ve probably saved thousands of euros, pounds and dollars doing this.
If you know, it’s much harder for people to steal your money.
3. To never rely on a job
One of the huge benefits of being financially literate is that you know the importance of having a cash cushion. A cash cushion is 3-6 months of expenses saved up in case of emergencies, job loss or large payment.
This cash cushion means you are not in the ‘rat-race’. Why? if you’re suddenly let go from your job, cash cushion is there to keep you going for several months.
Being financially educated means you know the importance of keeping this stash somewhere safe and only touching it in times of need. No more anxiety of losing your job, or not being able to afford a new phone. Cash cushion will take care of you. 🔥
4. To start your career right
With financial education under your belt at an early age, you can be much more clever about choosing the career or path you want to take.
Second of all, you’ll realise that what’s important in your early stage is not making money, it’s building skills. Why? Because those skills that you get really good at will be the ones that make you money in the future.
Third of all, you’ll understand the importance of exploration. Before going straight to a job that you may dislike or that won’t build you skills, you’re better off trying and testing around. This can be done through student internships, online courses, books, podcasts, you name it! Just remember that some things are so important that finding them in the first place repays the effort ten times more. So never forget to explore.
5. To know you’ll always be able to make money
There’s nothing like knowing that you’re financially safe. That you won’t ever be on the streets. That you’ll never really be broke.
If you learn the basics of money management, you’ll always know how to dig yourself out of a hole, how to learn from your mistakes and be clever about what you do.
By knowing that you need to start investing now in order to have a comfortable retirement, you’ll be confident you won’t be broke in your 60s. By building these essential money making skills, you know you can make money online and work independently. By understanding the importance of having a cash cushion, you’ll never end up on the streets and never rely on a paycheck to reach the end of the month.
As you can guess, this considerably lowers your anxiety, and that can only be good. 👍
Having your money under control will give you the mental space to concentrate on what truly matters: LIFE
No more wasting time doing things that don’t bring you joy and that don’t add value. Once the money side is out of sight, you can really get to the good stuff. So why wouldn’t you want to get there?
How to get started?
Yep, now you’ve understood how important financial education is. But you’re now probably asking yourself – how on Earth do I get started?
These step by step posts are meant to help you understand the basics and get started with the topics of budgeting, saving, making money and investing.
Once you’ve completed these, you need to take action. Depending on which country you’re in that could be downloading Revolut, or setting yourself up with a broker such as Vanguard. And then it’s about continuous education. Read the right books, listen to the right podcasts and talk to the right people.
Check out my Resources page for some ideas. 😉
Once you fix your finances, suddenly the rest of your life starts to make a lot of sense. Welcome to the party 🔥💸