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Things every young person needs to know about money - Chapter 8 – Establish a system

“A Penny Saved is a Penny Earned” Benjamin Franklin “While money can't buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx This series has focused on the need for young people to think strategically about money. I discussed the importance of saving money, managing money and how compounding can work for or against you. Now you need a system! System’s beat “goals” every time. I might have a “goal” to retire rich, but unless I put in place a sys

Things every young person needs to know about money - Chapter 7 – When do I borrow?

“My wealth has come from a combination of living in America, some lucky genes, and compound interest.” Warren Buffett “I think people don't understand compound interest because typically no one ever explains it to them and the level of financial literacy in the US is very low.” James Surowiecki In an earlier post I mentioned Occam’s razor as a great tool to put in place “rules of the road” for decision making. Wikipedia includes this description of Occam’s: “simpler theorie

Things every young person needs to know about money - Chapter 5 – Compounding can be your friend!

“Enjoy the magic of compounding returns. Even modest investments made in one's early 20s are likely to grow to staggering amounts over the course of an investment lifetime.” John C. Bogle “The time to save for the future is now. Thanks to compounding interest, the earlier you start putting money away for the future, the more you will save.” Alexa Von Tobel The definition of “compound”: calculate (interest) on previously accumulated interest. The impact of compounding will be

Things every young person needs to know about money - Chapter 4 – The Time Value of Money

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” Albert Einstein “If you understand compound interest, you basically understand the universe.” Robert Breault A dollar today is worth more than a dollar tomorrow. Those simple words are a core principle of finance, and without it your possessions would be limited to what you could pay cash for at any given moment. What is your home worth? Did you have that

What young people need to know about money - Chapter 1 – Introduction

“A Penny Saved is a Penny Earned” Benjamin Franklin “Too many people spend money they haven't earned, to buy things they don't want, to impress people that they don't like.” Will Rogers I was shaped by the values of my parents. My father grew up on a farm in Iowa and survived both the Great Depression and the Dust Bowl. Life was so hard on the farm that he ran away at the age of 16 and joined the US Army to fight WW II. He fought in North Africa in WW II, then stayed in the m