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What Is The Most Important Thing I Need To Know About Money In College?
Q: I’m heading off to college this month. What’s the most important thing I need to know about money?
I met a girl at my freshman orientation during the first week of school. She had a brand-new luxury car. It was beautiful.
When I told her how awesome her car was, she said, “Thanks! I got it for high school graduation and had to get a car loan. It’s my first loan, and I feel like an adult!”
I was pretty shocked. So I had to break it down for her. My response was something like this:
“You have a car loan? Did you know the average car payment in North America today is $482 a month? If you put that in a good growth stock mutual fund, averaging 12% from age 18 to 65, you could have $5.2 million dollars?”
Just kidding. I wasn’t quite that technical. But I do remember saying something about a mutual fund, to which she responded, “What’s a mutual fund?”
If you pay attention to your money in your teens and 20s, then you’ll be coasting by the time you are 30, rather than spending all your effort digging out of your student loan debt and credit card bills.
Instant gratification is so rampant in my generation, so I emphasize patience and contentment. Too many people my age look at what their parents have and want to have that right now. They don’t think about the fact that it took their parents 30 years to get where they are today.
Most of us aren’t like Mark Zuckerberg—millionaires when we are in our 20s. We’ll have to spend a lot of time building wealth, saving money, and investing. And that’s okay. Because when we do that, and when we follow these common-sense principles, we’re going to set ourselves up for incredible success later in life.
So, remember, you can’t shortcut your way to financial success. “Get rich quick” just doesn’t work.
Be patient. Learn contentment. More than anything, that’s the message I want my generation to hear.