We live in a world where the youth is becoming increasingly financially illiterate, and ever more convinced that the world owes them something. It owes everyone a job. It owes them a home. It owes them food and clothes. We are failing to live up to our potential as a result of having lost the frontiersman mentality of taking responsibility for ourselves, going out there and getting shit done.
As a result of this, I have seen a large subset of my friends that I met throughout highschool and university fail, and blame the system. Some are working a minimum wage job, and making no effort to get themselves on a career path. Others have moved back home for no other reason than the fact it enables them to live rent-free. They have no intention of saving for anything, like a house - they just don't want to have to pay anyone for the roof over their heads. The vast majority have some drug or alcohol problem, and have reduced themselves to complaining how hard it is to stay on the dole.
The problem is a distinct lack of knowledge on not only how to survive the modern economy as an individual, but also how to be at least moderately successful in it. In an effort to dispense some financial literacy that is sorely missed in the school curriculum of many first-world countries, I would like to introduce you all to the wisdom of Warren Buffett (net worth USD 77.1 billion). He famously remarked on the stock market that when investing his 'favorite holding period is forever'. Yes, he is a business man, but he is a decent human being, and as a bonus publicly opposes Trump despite the latter's policies helping the business and banking sectors get even richer.
Here are Warren's 6 fragments of wisdom that the youth of today is missing:
- Earning: Never depend on single income. Make investment to create a second source.
A single income is a dangerous approach to the 21st century. We no longer have the job loyalty - and security - that our grandparents were used to. People switch jobs often, currently averaging 7 times in a lifetime. We need to be prepared in case we are laid off, or if a spouse falls ill, or if an unexpected injury befalls you. Have a backup.
- Spending: If you buy things you do not need, soon you will have to sell things you need.
Have you ever gone to a local shopping center or mall with your partner, or friends, and watched them impulsively buying item after item? There is only a small subset of these people that do not live paycheck-to-paycheck. Everything in moderation.
- Saving: Do not save what is left after spending, but spend what is left after saving.
In New Zealand, there are many government budgeting advice services to help citizens and permanent residents save for retirement. As a country, we are incredibly bad at preparing for this eventuality, and unlike many western European countries, corporate pensions are entirely unheard of. The number one piece of advice these services begin with is 'save 50% of your paycheck'. That number may be higher or lower depending on your goals and financial needs, but it is paramount to make a conscious effort to spend on saving.
- Taking Risk: Never test the depth of the river with both feet.
I have a flatmate who has been trying to save up to move to Germany for the past 3 and a half years. Despite working a full time job that pays NZD$65,000 per year, he has not managed to save the NZD$10,000 he needs. The reason being that every time that he has some money, he dumps all of it into the 'next big thing'. At one point is was stocks in oil exploration, now it is BTC. Going all in on a risky investment is no different to gambling.
- Investing: Do not put all eggs in one basket.
Systems collapse. Do not bank on the system that holds your nest egg surviving above all others. The commonly mentioned trifecta for investment is stocks, precious metals, and an alternative such as crypto. This way you are protecting yourself against most - if not all - forms of collapse society is likely to see short of the total collapse of the financial system. Even then, at the end of all things it is likely that precious metals will remain a medium of exchange.
Similarly, focussing on crypto investment, do not throw all your investment behind one or two big coins. Spread between a split of coins meant as currency (such as BTC), coins designed as a platform (such as ETH), and coins that you believe have potential. The latter are especially interesting investments as the buy-in per coin tends to be lower than established coins, which minimises room for loss while maximising room for growth if you pick the coins carefully.
- Expectations: Honesty is a very expensive gift. Do not expect it from cheap people.
This one speaks for itself. On the internet, it can be very difficult to discern the true motivations of people. Be careful, trust your gut, and cross-reference everything. Surrounding yourself with good, honest people and working towards common goals will make succeeding in finance (and other areas of life) a lot more straightforward. Do not put up with anything less.
We cannot deny the financial world is harder on us than it was on our parents. It is not longer feasible in most first world countries for a family to live comfortably on a single income. It is certainly no longer possible to buy an apartment for half a year's salary like my father did in his early twenties. However, with some education, a can-do attitude and a bit of research there are still ample opportunities for us to succeed in the modern economic climate.
I will leave the final word to Warren:
Image Credit, in order of appearance:
Warren Buffett, Euroresidentes
Warren Buffett Wisdom, AZ Quotes