The common sense guide for graduates…
By Aaron Bare
If we were to define common sense, it would be found most places being common and it would make sense of the world around us. Yet, how uncommon is common sense. So much so, I wanted to put some common in the sense around 10 things that I wish I knew upon graduation. These 10 items will help ease the pain in a complex world.
We live in time where we will have 7 different careers by 38, not jobs, yet totally different livelihoods. 25% of jobs 10 years from now will not even exist. So throughout this book, we will examine ways to not only survive, yet thrive in a world of uncertainty. With change comes opportunity. As the world tells us, change is the only constant. So embrace change and learn to be flexible, adaptable and create certainty. Luck is created not dealt. So create your lucky situation and create your future. This book will examine a few ways to do so.
Credit is very important in a consumer society like the US. Our ability to pay bills on time is what our total financial existence is built on. Credit is simple, some people have it, some people do not based on what approach they take. Understanding this can only open doors and in reality save you millions. Yet, there are many ways to earn it, build it and leverage it. Although, only 25% of people in the US have credit scores over 700. These are the people who have lots of credit, many low balances and always pay their bills on time, most likely they are users of bill pay and have some savings and/or make enough money to pay their bills. Some things to stay away from to improve your financial life are Late Payments, Bankruptcy or Foreclosure.
Spending & Saving
How we spend our money says a lot about us. Like sifting through someone’s trash does, are we wasteful, environmental or minimalist? The bottom line for government, business and your household, you must make more than you spend. If you spend more than you make, it will not take long before your financial world falls apart. Learning how to budget is a skill that will be under-appreciated, yet will keep you in the game. There is also a time value of money that the earlier you understand the richer you will be. Put $10,000 dollars in at 18 and it equals $1 million at 65 at a long term return of 10%, do the same at 30 and it is only $120,000 and so on and so on. Finally, create an emergency fund, stop living paycheck to paycheck and create at least 6 months of funds in a reserve. At least, make sure you have the credit available to survive for 6 months. As in uncertain times, things always change unexpectedly. Later I will explain dollar cost averaging, which leads to a long-term plan for investing that works regardless of the uncertainty in the financial markets around us. So stick to a plan, spend less, save more and live within your means. Freeze your credit cards if you have too.
How you spend your day is how you spend your life. So I suggest defining your habits, routines against your goals to see if they are aligned. Lately, there has been a plethora of books, documentaries to explain one simple truth about success. The more energy we put into something the more likely it is going to come true. This is not myth, witchcraft or magic, it is common sense. There is a “secret” you can laugh at. So define some goals and find ways to accomplish them by bringing them into your habits and routines, be resilient, determined and relentless. Good things do not come to good people. Good people create good things. Much like this book, I spent time to create it. Now it is a reality, New York Times Bestseller and all.
One of the major goals for a consumer driven obese culture is to get fit, its why vitamins and health clubs are a multi-billion dollar industry and often never get used.Whether you are fit now or not, the likelihood of you keeping your 6-pack, is less than 1%. So learning that there are good carbs and bad carbs is one essential step in defining a healthy life. Stay away from diets, they may shock he system, yet in the end most people gain more weight. Health is a major issue for many, as you get older it becomes a major issue for more of you. Energy is the source of everything and if we get too much resources, we start to stock pile excessive carbs in fatty deposits. This ultimately leads to heart disease, diabetes or another disease that attacks cells. We should take in less carbs than we need, otherwise it goes to the fatty patty, ba dunka dunk and the arteries of cholesterol. Nutrition and exercise are still the preferred healthcare plan, every doctor is not going to tell you to forget about either of these. So an apple a day, keeps the doctor away. So does nutrition and exercise. Get off the couch and move those buns.
The more you have, the more you make. High School graduates make over $1 million less than college graduates. Those with Graduate degrees make more than just College Graduates. Professional Degrees make even more. So find a passion, go to school and keep learning. It never stops. We live in a changing world so expect to return to the classroom throughout your life, whether online or at the University.
Rent vs. Buy
If you can rent cheaper than why buy. Prior to the housing crisis, it made no sense to buy a house. Buy high, sell low is the strategy of the day for late home buyers.The smart play is always to buy low and sell high. So , look at rents and the only reason to buy is if you want to own a home for a duration of 7 years or longer.Flippers can flip this. Much like investing in the stock market, economic cycles happen and we need to be associated with the appropriate risk for your comfort. We need to buy assets for the appropriate time frames. Buying a home can be rewarding, fulfilling and defines the American Dream to a certain degree. Same with investing in Real Estate, yet if you can buy a home and rent it out for positive cash flow than you have a good deal. If not, questions the value there and whether in the long term you want to be attached to that house. As many our now realizing, what you own, owns you.
60% of Millennial’s consider themselves serial entrepreneurs. This was a surprising poll for me, yet the uncertainty of their futures demands this thinking. Sometimes things appear opposite to what they are, safety is actually risky and risk is actually safe. Yes, that’s right, the world has flipped upside down, inside out. Whether the world is flat, melting or rotating, the world has fundamentally changed. Corporate America in a lot of ways has more risk than Entrepreneurship. At least in Entrepreneurship, the outcome is on your results and not the companies. The ease of entry to many businesses created opportunities for this generation that is unprecedented. We live in a free agent nation and your ability to market yourself as a company or individual makes you an entrepreneur, whether you have a job, work for a company or rolling the dice with a startup.
Dollar Cost Averaging
Dollar Cost Averaging is the consistent method of putting money into a market, or mutual fund. So if you have an IRA, 401k or another investment plan, self-directed or not, Dollar Cost Averaging is the way to insure you buy at the lows and get the most gains for your money in the long run. Dollar cost averaging is buying shares every week or period at whatever price they are. This strategy is great for the long term, as you buy at the lows and highs, as you come to retirement moving money out of the market into investments that have the proper duration. Much like a time frame to own a home, stocks need to have the appropriate duration. Volatility while dollar cost averaging helps as long as you are not within 5 years of retirement or when you want to use the money. Dollar cost averaging creates more results with volatility as it is even better than the market going straight up.
The environment is changing and always will be, whether you think that you can make a difference or not, your efforts matter. Our reliance on oil makes us vulnerable and is to partially blame for the financial crisis, economics, national security and climate change. Reduce. Recycle. Reuse. Renovate. There are many forms of acting green, and the smallest of efforts move us towards a sustainable world. So engage in the green initiatives, lead us, and make a difference. As out world becomes more and more global, it also becomes more and more local. So make a difference.
Considering that healthcare could improve our lifespan by 100 or more years, retirement is not something you should shoot for. Social Security will not be there as we age. Healthcare in general is in a fragile state. So our traditional thoughts of retirement are changing. Even if you have not talked about it, Baby Boomers are already altering their retirement plans because of a lack of credit, savings and excessive spending. So tomorrow will always create another day. With a focus on today and the life we live, we may realize that our perception of tomorrow is only uncertain, so we should do what we want to accomplish today. Throughout life, we will have many opportunities to have mini-retirements, planned or unplanned time periods that we need savings to get through.
As much as life is about chasing dreams, make sure you live each day to the fullest.Laugh. Smile. Share. Engage with people. We are all in a rat race, some with a lot less pressure, some with everything at stake everyday. How we handle ourselves, is how we define our character. Some us will have relentless schedules. Others will have huge debts. Some will enjoy nature and others will be trapped behind the desk.Find your hap