Business Times of Edmond, Oklahoma August 2018 - Page 28

BUSINESS MATTERS NICK MASSEY ASTUTE INVESTOR Financial Lessons Are Missing In High School This year, as in every year, millions of American teenagers graduated from high school and entered the next stage of their lives. Many will go on to college and some will also take some time to figure out what they want to do with their lives. It’s an exciting time no matter what they decide to do. Unfortunately, few of these young people are prepared for what comes next, and I’m not talking about math or computer skills. I’m talking about basic financial literacy. A recent study showed that only five states required high school kids to take a personal finance course in order to graduate. Nationwide, only 16 percent of American high schoolers are required to do so. Do you remember learning how to balance a checkbook? That seems so old fashioned today in a world of instant mobile payments. But knowing the basics of investing and financial planning, how to save, the compounding effects of interest, and the dangers of debt, are as important as ever. Today’s kids are pretty much on their own. They’re extremely unlikely to have a pension at work, and their benefits (such as health insurance) will likely be less than those enjoyed by their parents. They’re also entering their adult lives at a time when housing is more expensive relative to incomes. A college education is shockingly expensive and debt is given away like candy, making it very easy to get into financial trouble. If you’re a parent, a grandparent, or even a concerned aunt or uncle, have a little chat with the kids. Of course, they probably won’t listen; but if you repeat yourself often enough at least some of your advice will sink in. I’m constantly amazed when my own children, now well into their 40s, occasionally quote something I said when they were growing up. I guess they were listening occasionally after all. Here are four financial life lessons you should really try to drive home: 1. Compound interest is important, and it’s a double-edged sword. The compounding of interest has a snowball effect.It starts small but rolls into something very large. Of course it has the same effect with debt as it does with earnings. It’s better to be on the earnings side. 2. Live within your means. Who knew that you can’t go very long spending more than you make? (Maybe someone should tell the government this.) 3. Pay yourself first. If you view savings as whatever is left over after your monthly expenses, you’ll never save. If you want to build wealth, your savings need to come first, before your monthly expenses. 4. Read, read, read! This should be obvious, but in a world of tweets and texts, few people really take the time to read books anymore. Don’t be one of those people. You’d be amazed at how much you can learn about anything that interests you by just reading. The joke in my household when the kids were growing up was “when Dad wants to do something new or different (which was all the time), he goes and reads a book about it.”Trust me, it works. So if you are a young person reading this, you just read your first piece of personal financial advice. Now, go have a great life. NICK MASSEY is President of Massey Financial Services in Edmond, OK. Nick can be reached at Investment advice offered through Householder Group Estate and Retirement Specialists, a registered investment advisor. 28 August 2018 | The Business Times