Building Your Financial Awareness Lesson #3 Personal Finance for Students

Hey, what's up everyone and welcome to the School of Personal Finance. In this video, we're going to talk about building your financial senses, your financial awareness about what is going on around you. So now this is the third video in the Personal Finance for Students video series that I've been putting together. And now again, if you are a young adult, even an older adult, I'm sure you will find some value in this as well. All right, let's get to it. All right, so let me give you some examples of what I mean by building your financial senses or your financial awareness. So for example, my son is 15 years old and I started doing this with him years ago, where whenever we would go into a store to purchase something, I would always point out the price. So I would make him look at the price and start comparing things. So even if we were in the clothing store, comparing different name brands, how much one would cost compared to the other, or going to get gas, how much does a gallon of gas cost? Going to McDonald's, how much does a Big Mac meal cost? All of those things, I would always point those things out to him so that he could start to see the decisions that I would have to make around where to spend my money. Another thing I started recently doing with him was making him price things out in hours of work. So he got a job at an apple farm in my neighborhood where he made $15 an hour during apple picking season, which is pretty nice for a 15 year old kid. So $15 an hour. So anytime we would go to buy something, I would always say to him, listen, how many hours of work do you need to complete in order to be able to purchase that? And it would make him think of things a little bit differently. So like, is this pair of sneakers, is it worth my seven hours of working at that job? And start to shift his mind a little bit and give him some financial awareness of his surroundings and the cost of things and opportunity cost. It's like opportunity cost is another thing we talk about all the time, where if you spend your money on this, then you do not have the money to go ahead and use for these other things. So which one is more important to you? And then we start throwing investments into the mix. So if you're going to spend your $300 on this, what if you instead took that money and you bought stocks with it? And what would that have done over the last 10 years? Maybe that $300, it could have actually grown into $600 over the last 10 years or whatever the number may be. And then start looking at that out into far into the future. And if you ever want to be able to purchase a house, how much do homes cost? So that's another thing is we'll drive around and we'll look at different homes in the neighborhood and go on Zillow and say, wow, that house costs this much, this house costs this much. Or with colleges, comparing the prices of colleges. So it's good to do this at a young age to just start building that financial awareness. But you do that in all aspects of your life, right? Any store that you go into, just start taking notice of how much they cost, how much they charge for certain things, what the costs are, compare it to going on Amazon, what that costs, and start to just build that financial sense, that awareness of what is going on around you so that you can start making smarter decisions with your money. And then another great exercise is start looking at the income projections for the career that you're interested in pursuing, or just for all careers, just so you get an idea of what the potential is, how much money you think you could make if you did go ahead and pursue that type of work. And also it's a great idea to start getting an understanding of how much it would cost you to live for whatever lifestyle it is that you want to have. So if you want to live in a big house in an expensive neighborhood, what kind of job would you have to have in order to be able to do that? Or if you want to go move across the country or live in the Midwest or whatever the case may be, what would that look like? What could you expect? And how could you start planning around that and thinking about it? There's never too young of an age to start thinking about these things and putting it into perspective so that you don't get to the point where it's like you have these very high expectations of what your life could be, but then you want to take a job where maybe your income is nowhere near what is needed to be able to have that lifestyle. And maybe it could help point you in the right direction. It just at least is growing your awareness. Another good example is to start learning about the stock market and the economy. A very simple way to do this is to just take the stock app on your phone and start following stocks. Start following the major indexes. So the Dow Jones Industrial Average or the S&P 500, the NASDAQ. Put in some stocks that you want to follow. Put in Tesla, Apple, Microsoft, the big tech companies, any companies that you're interested in and just check them once a day and see where's the stock market moving. Maybe even have a starting point of the day that you start following them and see is the stock higher or lower a month from now, six months from now, a year from now. It'll give you a very good understanding of how the market works, how it goes up and down over the long term. Hopefully these companies are growing in value, but it's just again building that awareness and that understanding. Because eventually one day the stock market is a very good way that most people build wealth throughout their lives and save for retirement. And it is a big part of everybody's lives. Even if we don't really want it to be, it ends up being a way for us to save. Especially now that many of the companies don't offer guaranteed pensions and income in retirement. People need to save on their own. So learning about the stock market at a very young age, it is a great thing for you. And you could just start slowly, check it once a day, and see how the markets are doing. All right, and then the last thing that I'll leave you with is to start reading more about personal finance, about growing your wealth, about investing. Start having an interest in it. Because the truth is, all of this stuff, it really could lead to a much better life in your future. You'll be happier if money is not a big struggle and stress point for you. So not to say that money is everything, but having more of it, it could make you happier. It could make your life easier if you invest well and you're good with your personal finances. It just takes the stress and the pressure off a little bit. And it could actually lead to you taking jobs that maybe you love over the money. So it could lead to a better life. But some books that have helped me, especially early on, like one book that did actually change my view on things, and it did change my life, as corny as that sounds, was Rich Dad, Poor Dad by Robert Kiyosaki. That one, it just changed my mind frame a little bit. And it did get me started investing in real estate also. And then another great book is The Simple Path to Wealth by J.L. Collins. And that just talks about investing in the stock market and using low cost index funds and the strategy around that. And also it's great to keep up on current events and look at online, read articles from the Wall Street Journal or CNBC and just have your finger on the pulse with all of this stuff. Because the younger you start doing that, you start to build those senses. You start to build a mind around business and finance and money. And it's just going to help you as you get older in So that is it for this one. Hopefully you found this video helpful. I'll see you again in the next one. Thanks.