Students: Consider Your Financial Future
March 10, 2021
A little knowledge about finances can go a long way in preventing student debt.
It is no secret to any student that money matters. By the end of an education many students have accrued large debts paying for tuition, textbooks, and housing. Especially in this job market, many recent graduates enter the world with apprehension about their financial situation.
However, a recent presentation by R.J Weiss of GenYwealth suggests that with just a little knowledge about money and the financial system students can be much more prepared to handle their debts, which will lead to a successful financial future. Weiss suggests that students must try to begin saving early, taking advantage of compound interest (which Einstein called "the most powerful force in the universe").
For example, a graduate who invests $5000/year from 22-35 earning 9% interest will have about $2.5 million by the age of 70 whereas someone who begins investing $5000/year at 35 until 70 (again earning 9%) will only accumulate about $1.1 million. Weiss also proposes a guide to getting out of debt that focuses on creating specific goals. By paying off the debts from the highest to lowest interest rate, the real value of money that a student (or anyone in debt) has to pay over time is severely diminished. Combining this method with a plan to lower expenses in particular categories by specific amounts will free up capital you need.
Interested in more information to make you feel more well-versed in financial matters? Weiss suggests the books The Richest Man in Babylon and I Will Teach You to Be Rich as great places to start.