6 Things a 19-Year-Old Has Learned About Finances

Ever since I was 15 I’ve been coming up with ways to make money. For some reason, I’ve always had the internal belief that I’m going to be very successful when it comes to finances. At 19, having a lot of money isn’t as important to me now as it was to my old egotistical self, but I still want to be comfortable.

There are definitely areas of personal finance that I could improve upon, but I think some of the fundamentals I’ve stuck to have kept me in a relatively good position compared to others my age. Hopefully, despite my youth, I’ll be able to share something here that you can apply to your own situation.

6 Things I’ve Learned

Before we start, I want to say the obligatory: I am by no means a financial advisor so my words shouldn’t be taken as fact. However, hopefully you’ll see these, often common sense, ideas as beneficial to your own wealth generation and apply them where relevant.

1) Keep Doing What You’ve Done, Keep Getting the Same Results

It amazes me how many people can moan about the likes of living from paycheck to paycheck and make absolutely no change to their spending habits month after month. As the saying goes, if you keep doing what you’ve always done, you’ll keep getting the same results you’ve always gotten.

This applies to many areas of life but especially to finances. If you’re in debt then the simple solution is this: earn more money than you spend, or, spend less money then you earn. If you want to start saving money and you haven’t been doing so previously, you’ll obviously need to cut back your spending habits.

2) The Most Expensive Items are Rarely Necessary

Although you may be thinking “but I don’t go for the expensive items anyway”, I’m speaking as someone who isn’t yet twenty years old. I’m sure you can all relate to your youth (or you may be there now) where everyone wants the best MP3 player, the coolest phone and the most impressive car.

For me, it was turntables. I got into DJ’ing over 2 years ago and instantly knew I had to buy Technics 1210′s, they are the best in the industry and retail at around $1200 brand new. Even though I was 16 and playing only to my friends in my bedroom, I thought they were a must. I ended up saving my money for almost a year to afford them, but I eventually got my hands on a pair.

These days, I’m much wiser as to where my money goes, I don’t need the latest iPhone and my laptop is 4 years old. If it isn’t broke (and still fairly optimal), don’t fix it.

3) Showing Off is the Highest Form of Ego and Lowest Form of ‘Cool’

If you can afford to show off with your cash then great, but it doesn’t mean you have to. Teenagers especially like to show people how much money they have, and this was further pushed into my reality when watching ‘My Sweet 16th’ — the TV show where millionaires spend hundreds of thousands of dollars just to throw their daughters a birthday party.

Often though, the sad case is that people who really don’t have the cash spend what they have in order to look better in the eyes of others. Sometimes it is to fit in and appear cool, other times it’s just about the ego. If you’re spending money just to look good to others then that is a low form of fulfilment and the relationships you gain aren’t going to be of much substance.

An old friend of mine from high school used to be very popular until he started talking about how expensive his watch was, how much money he earned and which car he was going to buy. People started seeing him for what he really was. People aren’t interested in your false self, there’s nothing for them to connect with.

4) Rash Spending Will Catch Up to You

I registered my own limited company when I was 17 so that I could legally start offering internet marketing services. When I decided I wanted to start a company I just quickly Googled “Register a company online” and went with the first service I found. The price was only $50 to set-up a company which I didn’t think was bad at the time.

My haste led me to missing the $300 charge after a year which was explained in the terms of service (I guess you should read them sometimes). Needless to say, since that incident I’m much more careful about what I sign up for and where I’m spending my money. If something is worth buying, it’s worth the time to make sure you are getting the best deal for your money and that there won’t be any nasty extras like I found myself with.

5) Actually Spend Time to Look at Your Income / Outgoings

This is probably one of the most common bits of advice you’ll see on finance related articles, but let’s be honest – who actually does this? I know personally this is something I had never really wanted to do, mostly due to the time and effort it would take.

However, I’ve started taking a more responsible attitude to my dealings, especially regarding outgoings. In fact, now that I work from home full-time this is even more important to me as I need to make sure that my income is matching my targets. Even if it’s just for one month, or if you find that too challenging, just one week, actually take the time to record where your money is going and where it is coming from.

The most important thing you should look for are any unnecessary expenditures you are making; you might surprise yourself and see a few things you can cut back on.

6) If You Must Take Risks, Take Affordable Ones

This might be a rare occurrence, but it’s likely that there will be times when you need to take risks in order to reap some potential rewards. This might be in the form of an investment, an idea you would like to take into production or even just some fun gambling.

As the point states, if you have to take a risk, make sure it’s an affordable one. By that I mean consider the worst possible scenario. Ideally, the worst possible scenario is going to leave you in a situation that isn’t financially abundant, but one that is at least financially stable. As any sensible gambler will tell you, “Don’t bet more than you’re willing to lose”.

Posted in: Money and Finance