Importance of Understanding Personal Finance

You’ve probably heard the saying “Money makes the world go round”. In a world that is controlled by money, it is important to develop valuable skills in managing money and personal finance. Those who reject the language of money and say things like “money is the root of all evil” are the ones who end up spending most of their life thinking and stressing about money. My goal is to help you not have to constantly stress about money by helping you develop valuable financial habits and knowledge.

So what can learning about money actually do for you?

Well, a lot actually…

• Achieve financial independence

• Manage debt

• Build wealth

• Build financial security

• Make wise decisions

• Break the cycle of poverty

• Strengthen relationships

The statistics show this as well with 87% of Americans saying that they are happier or would be happier by not relying on someone else for money and being able to afford unexpected expenses like a medical bill. 79% of Americans say that financial stability would make them healthier and reduce anxiety.

Money can also strengthen your relationships, studies show that for every 10 relationships that ended in a divorce 4 are because of financial instability. 60% of Americans in a relationship have said financial stress has led to arguments in their relationship.

If I haven’t sold you so far on the importance of financial responsibility just take a few moments to look at your own life and how money has contributed to your happiness and how lack of money has led to sadness or anxiety.

I hope this issue of the Student Economy has inspired you to put more effort into managing for finances. You can expect future issues detailing exactly how you can lower stress and increase happiness by managing your money.

Mini-lesson - How the stock market works

The stock market is much simpler than all the fancy finance terms you hear thrown around by traders on Wall Street. The basics of the stock market can be summarized pretty easily into just one small paragraph.

The stock market is essentially a market where individuals or companies can buy and sell portions of other large companies. These portions are also called stocks. The stock gives the owner a small portion of the company meaning if you are the owner you get a small portion of the company’s profits that can be paid out to you or reinvested into the company. This also means you bear the risks of that company if it were to lose money you would also lose money.

The most important thing to know about the stock market is that the large majority of people and investment firms that try to pick and choose individual stocks do not make as much money as the market as a whole does. This is good news for the average person because it means you don’t need to learn about all the complexities of the market to make money. All you need to do is invest in the market as a whole

To invest in the market as a whole you can buy an ETF (Exchange Traded Fund) which is basically a basket of stocks. This basket of stocks can track the market as a whole or be hand-picked by expert investors. All you need to do to invest in the whole market is buy an ETF called VOO. This ETF tracks the top 500 companies in the US and returns an average of over 8%! This means if you invest $100 you will get an additional $8 after just one year.

We will go into more depth on the risks and rewards of investing in ETFs and the market as a whole in future additions of Student Economy as well as how investing can make your life much more enjoyable. For now, just remember investing in the market as a whole is a better way to invest than trying to pick individual stocks yourself.

What I promise to teach you in my newsletter

• What you need to know about the stock market

• How to invest effectively

• How to financially plan for your future

• How to budget and plan expenses

• How to combat rising prices and inflation

• How to prepare for large unforeseen expenses

• How to buy a house in this economy

• Important financial terms

• How to become financially independent

• How to “buy” freedom

• Much much more

I hope this issue of the Student Economy has inspired you to put more effort into managing for finances. You can expect future issues detailing exactly how you can lower stress and increase happiness by managing your money as well as how to invest efficiently and easily.