3 Things School Doesn’t Teach About Money

Young people are confined in classrooms every other day listening to well-meaning elderly men go on for 3 hours straight about formulas and methods, but forget to tell them how to apply those formulas in real life scenarios.

If you studied or study in the U.K  or the USA then you are more likely to have benefited from a system that is more engaging and practical, but if like me you ended up in Italy, then all or most of the things you had to do were theory based. Here are 3 things your professors probably didn’t tell you in high school or college/university.

On Investments

Young people are so up-to-date these days. We are familiar with apps like Vine, Tidal, SquareInstaPic… some people even have the most obscure apps like that one that nobody ever uses and they just sit there in the bottom right in the ‘Apps’ menu. So it’s a wonder so many people have never heard of Acorn, Betterment, or Nutmeg. These are the top Robo-advisors today. You no longer need to monitor which stocks are crashing and which are rising, you don’t need to know opening times and you don’t have to stay awake at night wondering if 2008 is going to happen again any time soon. You have an app doing that for you.

Acorn for example is an American investment app that works almost like Paypal. Here’s how: You put all your debit and credit cards into one checking account and whenever you buy something, Acorn rounds the amount paid to the nearest dollar and invests the difference in low ETF. Scratch that. What I’m saying is; you go out to lunch with your friends and you have a burger and a milkshake for 5 dollars and 52 cents. Rounding up to the nearest dollar would give you 6 dollars, so Acorn takes out 48 cents and invests that in a basket of assets. Now you’re probably thinking ‘how significant can 48 cents be to any portfolio?’ but research found that people invest between 30 to 180 dollars a month using Acorn. Only issue here is that the service is available for US residents. But not to worry, dear Europeans and Australians, there is an Acorn equivalent for most countries. Nutmeg is the ‘British Acorn’ and in Italy, where I live, it’s MoneyFarm.

On Savings

Yeh, yeh, yeh, we’ve heard about this so many times we’re sick of it. Every famous entrepreneur encourages us to start saving for retirement while we’re still young.

We tend to be a bit myopic in vision and we take it for granted that in the next ten to fifteen years we’ll be living in a big house, married with two wonderful kids. We are told it is important to save but we’re not taught the discipline to look away from your savings and say ‘I’m blind, I don’t see any savings’. A friend of mine would always try to save for trips to Asia but she could never quite save more than 100 euros. She would manage to pinch out ‘a little’ every now and then for petty expenses. How would you expect her to save for retirement. A lot of people start saving when they’re 35 and miss out on so many years of accumulated savings but you can start bright and early, using apps like Nutmeg to help plan out your retirement and other shorter term goals. I recently started saving to buy property and while I’m nowhere near the required amount, it’s a start! So don’t sit around waiting for a sheikh on an oil well…

On Giving

This is the most underrated thing of all time but the concept of Karma and ‘You reap what you sow’ is the realest thing about money. Reach out to someone with a financial need even if you feel like you don’t have much for yourself. There’s always a cause to donate to and somebody who needs your help. We all participate in modern day grief, the hashtag movement and 140 character long eulogies to commemorate the victims of terror attacks but very rarely do we actually reach out to help. Donate what little you may have or actively join a good cause. Deeds like that have a way of coming back to you!

 

 

 

IMG_20160812_164717instagram: Mode Barbara

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