The World’s Shortest Course on Your Money

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School teaches many things but gives short shrift to money: making it, spending it, investing it.

Here are the most important things you need to know. The advice is aimed at young adults but may well be worth reading by people of any age. It's the advice I’d give a family member.

Making it

Unless you’re unusually talented or skilled—for example, artificial intelligence programmer or brilliant, dogged lawyer type—the most likely path to solid income is to develop excellent sales/fundraising skills and its higher-end analogue: business development. That refers to identifying opportunities for a business to license technology, do a joint venture, merge, acquire, or be acquired. Another reasonable route to financial security is simple self-employment. Avoid the competitive arenas, for example, biotech and high tech. Rather, go where the competition is modest, for example, a small chain of flower or gift carts near a busy bus or train station.

Spending it

Housing is the biggest expense. The biggest mistake people make is insisting on a “good” neighborhood. As long as you take reasonable precautions, the reduction in crime risk isn’t worth the very large cost difference.

Higher education is another mammoth expense. It’s usually smart to trade away the prestige of brand-name colleges in favor of starting at a community college. If you want more challenge, enroll in harder courses and the honors program, and get involved in challenging extracurriculars such as being a student representative on the faculty senate.

A particularly bad deal is the 2nd-tier large private colleges: USC, Syracuse, Tulane, NYU, Boston University, etc. The experience there is rarely very personal but the cost is enormous and unlike say an Ivy or Stanford, the diploma’s prestige over far less costly colleges is minimal.

A third major expense is a car. The typical person buys a brand new car every 8 to 10 years. Far wiser to buy Toyotas (the most reliable car) with 150,000 miles on it and keep it until it drops. That single decision will save you hundreds of thousands of dollars over your lifetime and the ride comfort and reliability difference is modest, certainly not worth hundreds of thousands of dollars.

Investing it. Without going into long explanations, investing even $50 a month like clockwork in a Vanguard mutual fund (or top-yielding CD found on bankrate.com if you’re very risk avoidant) is an investment that even many sophisticated investors would nod at. Vanguard’s fees are the lowest in the industry by far and it offers a wealth of choices to match your risk tolerance. To get started, just call their not-on-commission representatives at 877-662-7447.

Of course, I hope you find this article helpful. I do want to say while I have money invested in Vanguard mutual funds such as Vanguard Index Growth Fund, and I own a Toyota Prius, neither company is paying me to endorse their products.

I read this on YouTube.