How do you make money.

[Greyblades]

I have recently come into money, not an inheritance but a monthly £500 from my parents to help out with college, so that I dont end up spending too much of my student loan on my daily commute. I've worked out that currently, taking away an average expenses, I have a profit of around £220, £300-350 if I eat packed lunches and dont buy food.
While I really do appreciate my parents sacrifices I have no illusions that it is a concrete income, the current economic climate and issues with the NHS's on call system going out the window means they will face a 1/4th-1/3rd pay cut and I really dont feel right leaching off them even more that I have through my childhood.
I know about working, getting a job for a salary etc, but I dont know anything about the alternatives people use to make money. I know the words business, stocks, bonds, capital, futures, gold standard, wall street, and I might even have some partial notion as to what they technically mean, but really I have no clue what they mean to me. I've read rich dad poor dad and I know that becoming wealthy or even breaking even isnt easy outside of salaries, that that rich people make more money by making thier money work for them.
I've spent the last 3 months having no cluehow to manage money and I dont really want to spend the next 3 years doing that. I've got an income, I've met several people on this board that seem to know alot about economics, and I have no clue, so I would really appreciate some help telling me what I can do with money.

[Visor]

I have recently come into money, not an inheritance but a monthly £500 from my parents to help out with college, so that I dont end up spending too much of my student loan on my daily commute. I've worked out that currently, taking away an average expenses, I have a profit of around £220, £300-350 if I eat packed lunches and dont buy food.
While I really do appreciate my parents sacrifices I have no illusions that it is a concrete income, the current economic climate and issues with the NHS's on call system going out the window means they will face a 1/4th-1/3rd pay cut and I really dont feel right leaching off them even more that I have through my childhood.
I know about working, getting a job for a salary etc, but I dont know anything about the alternatives people use to make money. I know the words business, stocks, bonds, capital, futures, gold standard, wall street, and I might even have some partial notion as to what they technically mean, but really I have no clue what they mean to me. I've read rich dad poor dad and I know that becoming wealthy or even breaking even isnt easy outside of salaries, that that rich people make more money by making thier money work for them.
I've spent the last 3 months having no cluehow to manage money and I dont really want to spend the next 3 years doing that. I've got an income, I've met several people on this board that seem to know alot about economics, and I have no clue, so I would really appreciate some help telling me what I can do with money.

Not entirely sure what you're asking so I'll say a few things first.

Be aware of what you're buying. Is it on special? Is it necessary? Can you afford to buy it?
Check with your centrelink type agency to see if you can get any payouts (youth allowance, rent assistance, etc).
Do your tax return, it's not that hard.
Make sure your hobbies aren't chewing through your cash.

etc.

They're some ways to make sure you don't waste your money. (also try to work out a budget/schedule, it may make it easier for you).

To do something with your money, there is always investing (wouldn't have a clue on it), finding a bank with the best rate (really worth checking out for, look out for withdrawal or monthly fees though, etc). Of course to make money, you generally have to work, or at least that's what it seems to be.

Work long, work hard, and you'll get a reward at the end.

[Centurion1]

Message me. I invest (trade really) on a personal level and also for work (as an intern obviously but I crunch alot of numbers and have a solid grasp on what goes on) at a decent investment firm. I can at least give you some starting tips. To be quite honest you likely are not going to like what you hear.

I probably understand your current situation a bit better than most since im a bit of a poor university student myself.

What alot of people don't really understand is that the market is terrible for older folks looking to retire. For those without any investments like young people it's actually a great time to get into it and proceed obtaining wealth for your future!

What everyone is telling you is absolutely correct and for the short term what you need to do is live within your means and not over extend yourself. And for gods sake stay away from accruing debt. But there is nothing wrong with create a little portfolio to teach you about wealth management (a skill many people sadly lack) and maybe even help you out when your a bit older.

[Crazed Rabbit]

Regarding investing: Unless you are already rich your immediate and mid term source of wealth will be whatever salary you earn. So you can invest some part of that for your retirement. I would recommend the book The Coffeehouse Investor (http://www.coffeehouseinvestor.com/the-coffeehouse-investor-book/). This book talks about investing in the (US) stock market in a way that is most likely to get you a good return based on the stock market average. Basically you invest in index funds that contain a very wide range of stocks such that the index funds approximate the investment return of the entire stock market. And since this, on average, has steadily increased for decades and decades your investment will grow. I'd imagine the British stock exchange has a similar record. Set this up with a mix of index funds and bonds per your risk tolerance and check on it annually, reevaluating and making small changes to keep your investments in line with your goals. Your risk tolerance will depend on your age, income, etc. Basically, when your young and invest the majority of your future wealth will still come from your salary, not investments. But as you get closer to retirement more of your wealth will be coming from your investments, so you'll want to invest in less risky things to reduce the chance of a recession eating 25%+ of your investment. Also work to minimize taxes and especially fees from the companies managing index funds - 1% in fees over decades and tens of thousands of dollars invested can add up to a LOT of money.

Regarding managing money: do not buy what you don't need unless you can afford it (see below). Keep track of your income, taxes, and expenses. Make sure you are saving money every month, and do this by budgeting how much your income is, what you need to pay for essentials (and try to lower this cost) like food and rent, some portion you put into savings (the higher the better), and some portion for buying things that make you happy. Do not buy things that make you happy with a credit card if you can't pay that card off in full every month. In fact, don't carry credit card debt over month to month. Remember; just because you can take a loan or sign some contract to pay some amount per month and 'buy' something doesn't actually mean you can afford it. Have savings for a rainy day in case you lose your job and cant find work for several months.

CR

[Fragony]

You can't get by with 500 pounds? That is more than enough to be able to eat well and have fun as well.

[Fragony]

Depends. 500 pounds is about... 1200$? That's not a living wage in most of united states. I'm sure the cost of living is higher in the UK

More than I have usually. But I was thankfully smart enough to just pay for my house instead of harvesting interests over added value. Live for free now except for some local taxes.

[Papewaio]

Live within your means
Payoff any credit cards you may have.

Start saving for a house deposit OR decide to rent. In general the sooner you can get even a cheap place the better. If you rent then after awhile it can become more cost effective to continue renting.

Save 10% (at least) and first have money that is easy to access. Then a second pool of higher interest paying funds. In the short term do not invest more then 20% of your savings in stock.

Look at supplementing your stipend with work. First thing make sure it doesn't interfere with your studies. Second either get a job that is a substitution for the gym or one that enhances your job experience in line with your studies.

[HopAlongBunny]

Not much to add really.

Save, Budget: if you invest it has to be money you can afford to lose; sure things rarely are. Pay attention and the market will offer you opportunities; BP was priced like they were going out of business after the Gulf spill, if you can, take advantage of opportunities like that.

The bulk of your wealth usually comes from saving; boring but true :)

[HopAlongBunny]

dbl post

[Nigel]

....a profit of around £220, £300-350 if I eat packed lunches and dont buy food.


I am by no means an expert on money, but this one statement popped an attention sign in my mind.
Don't try to save money by buying cheap food - which could compromise your health if you do it for too long.

Don't get me wrong, I am not telling you to go to expensive restaurants of eat fancy stuff. But just don't go cheap on your health; you may come to regret it in older years. There is a lot of good quality food that you can buy for a reasonable price, fresh vegetables, fruit. Buy meat less often, but get it in good quality from the butcher's. It is really not that much more expensive, but buying good quality food should come before making a profit.

Other than that I can only echo what others have said:
Don't spend more than you earn, stay away from building up debt.
And later, most of your wealth is likely going to come from your work - not from your investments. So focusing on your studies to get good grades and a good job afterwards is really the best investment you can make.

[Greyblades]

Guys you have my utmost thanks, all these pieces of advice are really helpful, the problem I think is that I wasn't clear, I was hoping for a explanations of alternate ways of making money than working for someone else. I don't see myself getting anywhere with a 9-5 job, even if I could do it without clashing with my university schedule, I don't want to lose my income nor do I want to keep leaching off my parents, yet I don't have much job prospects besides work experience, so what is there in life? I've heard of people who make a living from Stocks, Bonds, business investment, people starting businesses etc, but I don't even know what most of those are or where to start.

[Greyblades]

I am by no means an expert on money, but this one statement popped an attention sign in my mind.
Don't try to save money by buying cheap food - which could compromise your health if you do it for too long.

Don't get me wrong, I am not telling you to go to expensive restaurants of eat fancy stuff. But just don't go cheap on your health; you may come to regret it in older years. There is a lot of good quality food that you can buy for a reasonable price, fresh vegetables, fruit. Buy meat less often, but get it in good quality from the butcher's. It is really not that much more expensive, but buying good quality food should come before making a profit.
Um, Actually I didn't mean that I buy cheap food, I meant that I can bring in packed lunches from home, I kinda still live with my parents and a ham sandwich and bottle of water from home is readily available instead of buying from the uni cafeteria.

[HopAlongBunny]

Outside of the lottery there really aren't any shortcut.

Quick example: say you invest $200/month in a company where stocks are $20/share; 10 share/month paying a generous dividend of $0.20/share/quarter. First quarter you have 30 shares and get a dividend of $6; after a year you have 120 shares dividend is up to $24. Continue for 3 years and it just gets better; slowly :) All this ignores swings in share price boosting or destroying your capital; the point is it takes time, the more time the better.

[Greyblades]

I'm aware there is no quick and easy way to get rich, that you dont make money outside of salaries without being smart and/or lucky and that it is very risky, but that seems rather sedate. So whats the stock market about?

[drone]

The stock market is about taking your extra money and trying to turn it into more money.
Well, lately the stock market has been about taking your extra money. If you don't really know what you are doing, and can't spend the time to manage your portfolio and keep up to date on your investments, you are going to get robbed. CR gave some good advice, if you want into the market the index funds are not a bad place to start.

[HopAlongBunny]

Well, lately the stock market has been about taking your extra money.

Unfortunately true. The expansion of "hot money" (a subject raised by a prof of mine 20yrs ago) can transform markets into casinos. Essentially unlimited capital moving between stocks at light speed can make a mockery of any investment strategy.

[Gregoshi]

As is often the case, Mary Poppins provides the answer:



https://www.youtube.com/watch?v=XxyB29bDbBA


However if Mary Poppins was made today, it would probably be mutual indexing funds. A better return than banks and less risk than stocks.

Greyblades, I'm not sure I understand your reluctance to work. I know a uni schedule can be crazy but many uni students manage to work around their schedules. Part time jobs at stores, restaurants or even within the uni itself should provide the needed flexibility. These kinds of jobs as give you some experience and provide references (at least as far as your work ethic goes) for your first "real" job once you graduate. A job would also provide even more exta cash to play with investing if that is something you really want to pursue.

However, to gain a measure of financial independence, I think having a drive, focus and discipline to learn what you need to learn and then do what you need to do to achieve that goal is key. A casual "oh, what do I do with this extra $200 I have lying around?" type thinking won't do it. Look at where you can save money (like your packing lunches) and look at what you can do to (legally) get more. Formulate a plan and have the discipline to stick to it. When you see articles about people who have done amazing things with money, like paying off their house or student loans really fast, they have a focus and become obsessed with achieving their goal. Determination is as important an ingredient as the whats and hows.

[Greyblades]

Greyblades, I'm not sure I understand your reluctance to work. I know a uni schedule can be crazy but many uni students manage to work around their schedules. Part time jobs at stores, restaurants or even within the uni itself should provide the needed flexibility. These kinds of jobs as give you some experience and provide references (at least as far as your work ethic goes) for your first "real" job once you graduate. A job would also provide even more exta cash to play with investing if that is something you really want to pursue.

However, to gain a measure of financial independence, I think having a drive, focus and discipline to learn what you need to learn and then do what you need to do to achieve that goal is key. A casual "oh, what do I do with this extra $200 I have lying around?" type thinking won't do it. Look at where you can save money (like your packing lunches) and look at what you can do to (legally) get more. Formulate a plan and have the discipline to stick to it. When you see articles about people who have done amazing things with money, like paying off their house or student loans really fast, they have a focus and become obsessed with achieving their goal. Determination is as important an ingredient as the whats and hows.

I dont have a reluctance to work (well, yes I do due to being a lazy little sod but that's besides the point) I have a reluctance to talk about work because I already know all I want or need to about jobs due to being brought up in an education system aimed at sticking me in a career, I had my life almost derailed through them devoting 3 weeks sticking me into work experience.
I'm young! I think careers will be soul destroying and I still have delusions of getting rich, and noone makes a billion dollars on a career. I want to know about the alternatives I didn't even think existed 3 years ago.

[Philippus Flavius Homovallumus]

I dont have a reluctance to work (well, yes I do due to being a lazy little sod but that's besides the point) I have a reluctance to talk about work because I already know all I want or need to about jobs due to being brought up in an education system aimed at sticking me in a career, I had my life almost derailed through them devoting 3 weeks sticking me into work experience.
I'm young! I think careers will be soul destroying and I still have delusions of getting rich, and noone makes a billion dollars on a career. I want to know about the alternatives I didn't even think existed 3 years ago.

You said it - delusions.

Get a job, use that to get a better job, then a better one.

By the time you leave Uni you may be able to move to .3 on a pay scale, with that degree and actual work experience you'll then be able to move to .5 and then .7 in rapid succession, or go into an intership that lands you at .10 after twelve months.

The way to get ahead is to get the work experience of an ACTUAL job while at Uni, when you can manage to just work 4-8 hours a week because once you leave Uni EVERY employer will want to know why you haven't had a jb, and your degree will by irrelevant.

Or, like all young men before you you could ignore me and fail to benefit from my mistake.

[TinCow]

I'm young! I think careers will be soul destroying and I still have delusions of getting rich, and noone makes a billion dollars on a career. I want to know about the alternatives I didn't even think existed 3 years ago.

Inheret

[Greyblades]

You said it - delusions.
Or, like all young men before you you could ignore me and fail to benefit from my mistake.
Did you get sick of people telling you the same thing, over and over again, too? I didn't ask for advice on work experience, I get enough of that everywhere else, and I dont want to be told how to get employed either not only do I get enough of that but that is what I'm trying to find suppliments/alternatives to.
When I said that diatribe about being young and wanting to be rich I wasnt entirely serious, but to be quite frank whether or not I end up in a 9-5 job for a salary and seeing buying a house and sending kids to college as the highlight of my humdrum existence, as my youth had been catastrophicaly bad at moulding me towards, I want to know right now if there is anything I can do with the money I have that isn't either spending it on useless rubbish or letting it gather dust in a bank.

If I desperately needed money I would get a job, or at least try to in this economic climate, I dont so now's the time to experiment with what I have, so what is there to do with it?

[TinCow]

Did you get sick of people telling you the same thing, over and over again, too? I didn't ask for advice on work experience, I get enough of that everywhere else, and I dont want to be told how to get employed either not only do I get enough of that but that is what I'm trying to find suppliments/alternatives to.
When I said that diatribe about being young and wanting to be rich I wasnt entirely serious, but to be quite frank whether or not I end up in a 9-5 job for a salary and seeing buying a house and sending kids to college as the highlight of my humdrum existence, as my youth had been catastrophicaly bad at moulding me towards, I want to know what else there is in this life before I decide what I want to dedicate the next 45 years to.

Crime and/or poverty

[Greyblades]

I'm going to ignore that and redirect you to the edited post, the version not hijacked by my underlying issues over my existence getting more and more joylless and meaningless in a sadsack world that is filled with people so dang pessimistic that the position I am faced with is considered lucky and filed with mere "1st world" problems.
Incidentally I've been upping my duloxetine as far as I'm allowed, if the little faries holding up the profile pics are interested.

[Papewaio]

Own your own business.

ie Buy something in bulk and sell it as individual items at markup at a market.
Or create your own cleaning business
Or get into real estate

Some if not all require seed capital of varying amounts and if you make it you will need a harsh boss. Which since you will be self employed means having to motivate yourself.

[TinCow]

I'm going to ignore that and redirect you to the edited post, the version not hijacked by my underlying issues over my existence getting more and more joylless and meaningless in a sadsack world that is filled with people so dang pessimistic that the position I am faced with is considered lucky and filed with mere "1st world" problems.
Incidentally I've been upping my duloxetine as far as I'm allowed, if the little faries holding up the profile pics are interested.

There is nothing to do with the amount of money you have right now. That is, quite honestly, not very much to live off of. If I am misunderstanding you and that money is over and above your living expenses, then I recommend that you save it for now. Over time that money could amount to something more significant. At the moment, I would recommend investment in bonds and other low-risk areas. The markets are not very stable at the moment and sustained growth is not something that can be counted on. Bonds will make you a safe and steady return and allow you to accumulate a nest-egg for later use in something more interesting.

As far as employment goes, if you're not interested in a 9-5 salaried job there are many options. If you don't want 9-5 OR a salary, you're generally limited to service, temp, or seasonal work. Of these, seasonal work is probably the most interesting. It's generally restricted to agriculture, fishing, mining, forestry, etc. but if you like manual labor and working outside, you might find that to be the place for you. Generally you're going to be traveling around to different places during different seasons to help out with the extra labor needed during the seasons relevant to the various industries. Depending on how it works out, you can then live frugally off the income until the following year, or move on to a different area the next season to continue your income.

If it's just the 9-5 bit that bothers you and not the salary, there are a lot more options. Far more than I could ever list, but you could consider things like truck driver, seaman, pilot, police officer, fireman, etc. Far more options open up if you have a useful degree of some kind, particularly medical or engineering. With those you could work for various organizations around the world in unusual places. Full-time volunteering with charitable organizations or non-profits is also an option. In the US I would recommend looking into the Peace Corps, but I don't know if they'll take Brits or whether there is a UK equivalent. Regardless of your nation, the military is also an option.

[Greyblades]

Thanks, I have enough info about jobs, what I wanted with this thread is what else there is. I heard alot about stocks, bonds, PACs, interest, saving accounts, but I had little to no idea on what they were and what they do. I'm told to be smart with my money but how can I do that if all I know about economics is what to do for a pay check, I have little to no idea what the market is, what it entails or what is considered smart finances.

[TinCow]

Thanks, I have enough info about jobs, what I wanted with this thread is what else there is. I heard alot about stocks, bonds, PACs, interest, saving accounts, but I had little to no idea on what they were and what they do. I'm told to be smart with my money but how can I do that if all I know about economics is what to do for a pay check, I have little to no idea what the market is, what it entails or what is considered smart finances.

In order to make a living off of investments (stocks, bonds, etc.) you have to have a LOT of money to start out with. For example, a good rate of return on an investment will be in the 5 to 10% range, with 'safe' investments (those with low or no risk of loss) being on the lower end of that scale. Thus, your 'income' would be that 5 to 10%. In order for that to be enough to live off of, the principal must be sufficiently large so that that fraction of it can support your lifestyle. If you have a 5% rate of return (a reasonable expectation these days), a principal of $100,000 would earn you $5,000 per year. If you are withdrawing that money and living off of it, your principal will never increase and thus the amount you earn will not change very much. $5,000 is not enough to live off of in most places, so clearly $100,000 is not enough of a principal to sustain yourself. To gain enough of a yearly return to live off of, say $50,000 per year, (assuming a 5% rate of return) you would need a principal of $1,000,000. None of this is counting taxes on your income either, which will reduce what you get every year.

In short, it takes money to make money. You cannot invest 500 GBP per month and live off of the profits; you need much larger sums. This is why most people only start to live off their investments when they are much older and have accumulated far more in savings. Even then, most people draw down their principal. It requires a truly large sum to live off the interest/dividends alone, a sum that most people are not likely to ever see in their lifetimes.

[Lemur]

Lemur's patented, copyrighted, and trademarked financial system:

Deposit big checks, write small checks.

There. You are welcome.

[Greyblades]

Well yeah I'm not saying I have to live off 500 a month, what I would like is to use what I get to learn, I basically am at a practice stage, living off my parents dime in my parents house with a generous allowance with which to pay for transport to university and the leftovers with which to experiment, I don't need to to live off the profits right now but I would like to use said leftovers productively and learning to use money to earn more money seems pretty productive and even appealing.

Sometimes I wish I had better communication skills so the misunderstandings wouldn't take several posts to explain.

[Franconicus]

Well, I am no expert, but had to learn a couple of things:

1) Before even thinking of investing money, pay back all your debts!
2) Do not trust any banker or finance adviser. They all live from your money. You have to care about your money!!
3) Investing money is like playing poker with professionals. You play against people which studied finances and spend their whole days just investigating opportunities.
4) Houses are not as good as everybody seems to thing. However, they force you to save money regularily.
5) If you still want to invest money, a mixture of stocks and gold may be good. A good alternative of stocks (if you do not have the time or interest) may be exchange traded funds. You buy for the Nikkei, Dax or Nasdaq or what ever you like. They have the same performance as the index itself, not better not worse. There is not much management needed, so the fees are lower than for other stock funds. Usually the bank does only the management, and if the bank is bancrupt, you do not loose the money. But there may be different kinds, you have to ask this, if you buy some.
6) Should you buy gold, look where you buy from. You get it much cheaper online than at the bank!

[TinCow]

Well yeah I'm not saying I have to live off 500 a month, what I would like is to use what I get to learn, I basically am at a practice stage, living off my parents dime in my parents house with a generous allowance with which to pay for transport to university and the leftovers with which to experiment, I don't need to to live off the profits right now but I would like to use said leftovers productively and learning to use money to earn more money seems pretty productive and even appealing.

Sometimes I wish I had better communication skills so the misunderstandings wouldn't take several posts to explain.

Well, the first and most important step is to learn how to budget. You need to categorize your income into three separate areas. First, determine how much money you need to pay for essentials, such as food, housing, transportation, etc. Do not include any luxuries in here, only the bare minimum necessary. Second, set yourself a specific level of savings to put away for the future. More on this later, but a good rule of thumb is 10% of your income. So, with an income of 500 GBP per month, this would be 50 GBP. Third, everything else left over is your disposable income. If you do not already have them, open two bank accounts, a checking account and a savings account. Every month, deposit 450 GBP into the checking account and 50 GBP into the savings account. Ignore the savings account for now; pretend it doesn't exist. Pay your bills exclusively from checking. Your disposable income will remain in checking and will slowly accumulate. You can do multiple things with your disposable income. First, you can spend it on luxuries, like entertainment, a good meal, or some nice item or piece of clothing which is not covered by your essentials. Second, you can save it for bigger luxuries. For example, you might want to buy a new computer which costs 1000 GBP. Obviously one month's of disposable income is not enough to pay for this. So, don't spend your disposable income for several months and instead save it up. When you've got enough got the computer, then you buy it. Third, make larger than normal deposits into savings.

Do not run up debt. Credit cards are good things, and I recommend using them. They are easier than carrying around cash, will build a credit record for you (which is important in future years), and you can even save money with them if you've got a card that gives you some kind of cash-back or reward system. The important thing, though, is to NEVER run a balance on the card. Always pay the balance of the card in full every month. If you do this, the credit card costs you nothing (avoid annual fee cards like AMEX, you don't need them). If you cannot afford something based on the amount of money in your checking account, you just don't buy it.

Continue this way until your savings account has enough money in it to allow you to live off of that account with no other source of income for six months. That money is now your emergency fund, and you will never touch it. It exists to bail you out of bad situations, such as unemployment or unexpected medical expenses. It is a safety net for your financial life, and you should always keep it safe in a savings account and never invest it or put it someplace where you cannot access it immediately and in full. From this point on, your monthly savings can instead be diverted into investments. These are the stocks and bonds that you hear so much about. There is a lot to learn about this stuff, but you're still at the beginning of the process so you don't need to worry about it yet. When you get there, find someone who's knowledgeable about it and pick their brains. As your income level increases, your lifestyle will increase as well and you should regularly rebalance the 'essentials' and the savings to ensure that they keep up with your means and your needs. Also make sure that your six-month emergency fund remains a six-month fund. If your lifestyle has changed such that your emergency fund will now only cover four months of living, you need to spend some time topping it up again. You also want to immediately top it up if you ever have to take money out of it.

Above all, do not go into debt for unnecessary things. You will probably need a loan to buy a house or a car, but those are special cases and worthy of their own discussion. Other than that, if you cannot pay for the item in full, do not buy it.

[caravel]

Just blow it all on booze and women...

Or save it all up 'til you get married and your wife will blow it all on shoes and slimming...

[Greyblades]

Ah, but 'tis my curse to be adverse to that sweet liquor you sup,
Booze, that elder sap that some do tap to fill thier wanting cup...

Drat. I try to write drunkenly and I end up getting poetic.
I dont like the taste of alcohol and the brothels in the area are bloody well hidden, why else would I be taking economic advice?

[Papewaio]

What Uni course are you studying? (Helps to understand your mathematical ability)

Use your local library and indeed your Uni library. Just like a physical fitness program use your libraries to build up knowledge in what are stocks, bonds and other investment vehicles.

Use the Internet. I've seen self learning modules produced by stock exchanges ie: http://www.asx.com.au/resources/shares-courses.htm

Once you understand the vehicle then understand the company and what it produces or services. Easiest way is to invest in things that you use on a day to day basis that you like. If you buy it in a supermarket and you don't like it then don't buy it. Essentially buy shares that would make up your personal preferred CPI. This does require you to do the shopping, also you can look at getting up early and going to farmers markets and buying fresh bulk produce. Just make sure you don't waste it.

Read up about great investors and entrepreneurs particle focus on how they got started.

Start with Warren Buffet for instance.

[Greyblades]

Well I was told to do what I like doing and not what I think others think is good for me, so I'm on a creative writing course (irony in 3..2..1..), not sure what I was thinking there but it could have been worse, before that I was doing a mathematics A-level.

[Gregoshi]

...and the brothels in the area are bloody well hidden, why else would I be taking economic advice?
I gather because you want to be screwed any way you can get it. ~D ~:pat:

[Papewaio]

Well turn your passion into an income stream before you leave Uni.

Start writing and aim for magazines to publish in. Just be prepared to be rejected.

[Philippus Flavius Homovallumus]

Did you get sick of people telling you the same thing, over and over again, too?

Yep - and now I live in a room that's about 12 x 12 feet and doesn't have double glazing, and between the PhD I need for my career and work I have no free time.

I was, however, smart enough to save the money my parents gave me - and walk to Uni.

It went in an ISA, after 3 years £3,000 was £4,000

[Strike For The South]

I worked 50 hours a week during and school and managed to come out nearly debt free

That's really all I got

I drank allot and cut up allot of cows, piggies, and chickens

I also had some very regertable sex

[Greyblades]

Yep - and now I live in a room that's about 12 x 12 feet and doesn't have double glazing, and between the PhD I need for my career and work I have no free time.

I was, however, smart enough to save the money my parents gave me - and walk to Uni.

It went in an ISA, after 3 years £3,000 was £4,000

Um... I've got it better than you now, and I couldn't walk to university from my home if I wanted to, add that to the impression I'm getting that you are set on a career and have no alternatives I doubt that I have much to take from your posts besides restating the info I've been given for the last 12 years.

[Strike For The South]

Brosideon, are you having another midlife crisis?

You posted earlier musing about how a wife and kids would be a lackluster pinnacle to your exsistance. You should take a step back and be reminded of your position in the world, of course this is not to say "think of all the starving brown people" that's a lazy, tired cliche and I bloody well hate it. It is however a reminder that life is not some sort of hollywood adventure and even Churchill had his share of boring family dinners and drab days under the hellscape otherwise known as English weather

Money is not an escape from this. Of course being financially secure is very,very important. I don't mean not to stress that but I do mean to tell you that thinking you'll play some stocks, make money hand over fist and spend your 20s living some sort of playboy lifestyle is a pipe dream.

Now speaking as a simple man with simple tastes I can say money is not overly important to me. I want enough to provide for my family and not worry about lifes little curveballs. I don't care for flash. Granted I realize not everyone is like this and I certainly don't consider it a fault if you want the oppisite kind of lifestyle. I only mean to say that should not be the fulcrum on which your life tunrs wether you end up poor or rich. Your passions should be that fulcrum. Money is an abberation and fleeting, granted it is a powerful abberation but a lot of money is just that a lot of money. It's not happiness or comfort, success or intellegince, it's just money.

Feeling insecure at this time in your life is normal. I know you posted about money but the underlying thought in all your posts is fear and insecurity, completly normal things for a young man. I see someone who respects his parents and at least has an eye towards the future and his place in the world. I say you're not doing half bad.

You have your whole life to make a fortune and lose a fortune, I suggest you start pouring your efforts into things that matter. Money is an unfortunate prerequisite for life, not the other way around

[Greyblades]

I dont have midlife crisises, I have one big life long crisis where I have basically all I want right now, food, water, shelter, company, the internet etc, and there's a time limit to how long it lasts, either the bread winner kicks me out or dies and I go from the lower middle class life of mild comfort and the freedom to persue my interests freely, to having to make something out of myself in the real world... and I've had enough bad experiences during my life that the only thing I am certain I either want or dont want; is that wherever I end up I dont want to be where my compulsory education seemed to want me to be.

[caravel]

I dont like the taste of alcohol and the brothels in the area are bloody well hidden, why else would I be taking economic advice?
Then you have no money problems......?

(and btw I wasn't suggesting brothels)

[Philippus Flavius Homovallumus]

Um... I've got it better than you now, and I couldn't walk to university from my home if I wanted to, add that to the impression I'm getting that you are set on a career and have no alternatives I doubt that I have much to take from your posts besides restating the info I've been given for the last 12 years.

When I was your age I was buying tailored suits from Hong Kong - I wasted the money I had, just not as much as most people, that's what you should be taking from me. I also wasted the opportunity to get ahead. If you want to be a writer, fair enough, but you won't money at it for a long time and that degree won't get you a lot of other places other than journalism.

[Fragony]

Brosideon, are you having another midlife crisis?

You posted earlier musing about how a wife and kids would be a lackluster pinnacle to your exsistance. You should take a step back and be reminded of your position in the world, of course this is not to say "think of all the starving brown people" that's a lazy, tired cliche and I bloody well hate it. It is however a reminder that life is not some sort of hollywood adventure and even Churchill had his share of boring family dinners and drab days under the hellscape otherwise known as English weather

Money is not an escape from this. Of course being financially secure is very,very important. I don't mean not to stress that but I do mean to tell you that thinking you'll play some stocks, make money hand over fist and spend your 20s living some sort of playboy lifestyle is a pipe dream.

Now speaking as a simple man with simple tastes I can say money is not overly important to me. I want enough to provide for my family and not worry about lifes little curveballs. I don't care for flash. Granted I realize not everyone is like this and I certainly don't consider it a fault if you want the oppisite kind of lifestyle. I only mean to say that should not be the fulcrum on which your life tunrs wether you end up poor or rich. Your passions should be that fulcrum. Money is an abberation and fleeting, granted it is a powerful abberation but a lot of money is just that a lot of money. It's not happiness or comfort, success or intellegince, it's just money.

Feeling insecure at this time in your life is normal. I know you posted about money but the underlying thought in all your posts is fear and insecurity, completly normal things for a young man. I see someone who respects his parents and at least has an eye towards the future and his place in the world. I say you're not doing half bad.

You have your whole life to make a fortune and lose a fortune, I suggest you start pouring your efforts into things that matter. Money is an unfortunate prerequisite for life, not the other way around

If you make a point about not having a midlife-crisis you probably have one. Just relax, have fun. Question everything and destroy anything. Path to mercifull oblivion.

[Greyblades]

When I was your age I was buying tailored suits from Hong Kong - I wasted the money I had, just not as much as most people, that's what you should be taking from me. I also wasted the opportunity to get ahead. If you want to be a writer, fair enough, but you won't money at it for a long time and that degree won't get you a lot of other places other than journalism.
You are restating the advice I've been given for the last 12 years, advice I've already taken partially to heart otherwise I wouldn't be asking for advice and explanations on how to make the most of my money.

Then you have no money problems......?

(and btw I wasn't suggesting brothels)
No I don't, but I have a sword hanging over my head that tells me that the good times will not last and I find myself less than all knowing on what I can do before it falls.
(I was joking.)

[TinCow]

No I don't, but I have a sword hanging over my head that tells me that the good times will not last and I find myself less than all knowing on what I can do before it falls.

Pfft, that's ridiculous. Being an adult is far better than being a child, juvenile, or even a young adult.

[Greyblades]

Pfft, that's ridiculous. Being an adult is far better than being a child, juvenile, or even a young adult.

Depends on your point of view. I certainly would like to carry on in my life not having to worry about my future and what I'm going to do with myself, but life sucks and time is impatient.

[TinCow]

Depends on your point of view. I certainly would like to carry on in my life not having to worry about my future and what I'm going to do with myself, but life sucks and time is impatient.

But that's not even true now because you're already worrying about your future. You can't avoid it because right now your future is not under your own control. You live off of the generosity of others and are not self-sufficient. That is unpleasant. Once you become self-sufficient, you'll find yourself empowered and free in a way that you never were as a dependent.

Life does not suck, it is superb; you just need to enjoy it while you've got it. There's never enough time to do everything you want, but there's time to do enough to make your satisfied.

[HopAlongBunny]

All you can do really is follow the sound advice: Budget/Save; you will be amazed at how much flexibility those tiny measures will give you in life.

That flexibility may pay-off big someday (that's everyone's hope) or it might just allow you to cruise through some storms, which can feel like winning the lottery all on its own :)

[Papewaio]

Ride the waves.

Enjoy the little things, that way you won't be spending on the (empty) big things to fill an emotional void.

Write down the bad things, use those as grit for writing stories. Afterall a happy story isn't a dramatic one.

Budget, not only money which comes and goes but budget your time. Don't be a miser with your time, students tend to be money poor and time rich. As a writer you will get ideas from experiences. You don't need to travel the world and do extreme sports, shoot wild animals or fish for marlin to either. You do need to observe and even sometimes interact.

You want to be a creative writer so write. Write about your money worries, I'm sure there is a huge amount of equally worried people in the UK who could be your potential audience. Write about the hurdles of getting published, the downfalls of pithy rejection letters. If you have gonads of steel make a blog about your trials and tribulations.

[Major Robert Dump]

If I told you how I make money the Secret Service and the FBI would come crashing in. But let's just say that it involves dye, paper, Chinese refugees and Chris Tucker always chasing me around saying funny black guy stuff

[Andres]

Well, the first and most important step is to learn how to budget. You need to categorize your income into three separate areas. First, determine how much money you need to pay for essentials, such as food, housing, transportation, etc. Do not include any luxuries in here, only the bare minimum necessary. Second, set yourself a specific level of savings to put away for the future. More on this later, but a good rule of thumb is 10% of your income. So, with an income of 500 GBP per month, this would be 50 GBP. Third, everything else left over is your disposable income. If you do not already have them, open two bank accounts, a checking account and a savings account. Every month, deposit 450 GBP into the checking account and 50 GBP into the savings account. Ignore the savings account for now; pretend it doesn't exist. Pay your bills exclusively from checking. Your disposable income will remain in checking and will slowly accumulate. You can do multiple things with your disposable income. First, you can spend it on luxuries, like entertainment, a good meal, or some nice item or piece of clothing which is not covered by your essentials. Second, you can save it for bigger luxuries. For example, you might want to buy a new computer which costs 1000 GBP. Obviously one month's of disposable income is not enough to pay for this. So, don't spend your disposable income for several months and instead save it up. When you've got enough got the computer, then you buy it. Third, make larger than normal deposits into savings.

Do not run up debt. Credit cards are good things, and I recommend using them. They are easier than carrying around cash, will build a credit record for you (which is important in future years), and you can even save money with them if you've got a card that gives you some kind of cash-back or reward system. The important thing, though, is to NEVER run a balance on the card. Always pay the balance of the card in full every month. If you do this, the credit card costs you nothing (avoid annual fee cards like AMEX, you don't need them). If you cannot afford something based on the amount of money in your checking account, you just don't buy it.

Continue this way until your savings account has enough money in it to allow you to live off of that account with no other source of income for six months. That money is now your emergency fund, and you will never touch it. It exists to bail you out of bad situations, such as unemployment or unexpected medical expenses. It is a safety net for your financial life, and you should always keep it safe in a savings account and never invest it or put it someplace where you cannot access it immediately and in full. From this point on, your monthly savings can instead be diverted into investments. These are the stocks and bonds that you hear so much about. There is a lot to learn about this stuff, but you're still at the beginning of the process so you don't need to worry about it yet. When you get there, find someone who's knowledgeable about it and pick their brains. As your income level increases, your lifestyle will increase as well and you should regularly rebalance the 'essentials' and the savings to ensure that they keep up with your means and your needs. Also make sure that your six-month emergency fund remains a six-month fund. If your lifestyle has changed such that your emergency fund will now only cover four months of living, you need to spend some time topping it up again. You also want to immediately top it up if you ever have to take money out of it.

Above all, do not go into debt for unnecessary things. You will probably need a loan to buy a house or a car, but those are special cases and worthy of their own discussion. Other than that, if you cannot pay for the item in full, do not buy it.

This exactly the advice I wanted to give, but I was too lazy to type it. Excellent post :bow:

The six month rule is golden and very important to keep in mind for the rest of your life. Living as if you don't have a savings account is another golden rule.

Next to stocks and bonds, you may also want to look if your country gives fiscal stimuli for certain types of investments. In Belgium, for instance, you get an important fiscal stimulus if you put money into a pension fund/life insurance. There's a stimulus for acquiring a house and from time to time, there are stimuli for certain investments to improve your home. You also always have to look out for taxes; the profits you make on some products are taxed, others are not. Once you're going to get into it, it'll feel like a whole new world opening for you.

I wouldn't put too much trust in professionals though, certainly not when they are busy trying to sell you products or when they themselves are working for a financial organisation. Listen to them, pick up a few things but educate yourself on the subject as well; never decide on the spot, but go back home first, look a few things up and then decide if you're going to follow the advice they gave you.

For instance: some banks will try to talk you into funds organised by themselves. They promise you an expected return of investment of 5 to 6 % which is good nowadays, certainly if you don't have to do anything yourself but transferring money. However, what they sometimes don't tell you, is that there's an annual fee to pay when you step into the fund and you return goes down with a percentage. Then there's also a cost to step into the fund; again 1,5 % gone. Etc. Read everything before you sign into something.

[Vladimir]

Power Ball is up to $550 million: http://www.powerball.com/pb_home.asp

[Vladimir]

I would literally poop myself if I won that kind of money. :bounce:

I won the PowerBall! Literally! I only got the PowerBall number, none of the rest match. :shame:

[Papewaio]

I won the PowerBall! Literally! I only got the PowerBall number, none of the rest match. :shame:

That's what Hitler said. :smoking:

[The Stranger]

invest it in gambling.

[Greyblades]

Well... I've been thinking over the last 2 days, there was this chinese buffet that had recently closed near me, maybe I should get a loan; buy it, open a restraunt. It's a really good area: it's part of the bus station across the road from the rail station, 15 minutes from the mainstreet and there's a mini tesco right next to it. high traffic and easy access to food if we run out some nights, I could see it paying itself off in a year or two.
Worth thinking about, I guess, though it will probably require loads of night classes on management.

[Ibrahim]

well, I do anything really: jobs, commissions, writing blogs, being a youtube partner (yes, I am one), etc. Not that anything ever pays off is this age.

of course, I never get to enjoy what little money I make, since all of it goes to fill the "crater"--my now closed bank account. closed on account of me bailing out my mom, who cannot plan her flights (or anything really) properly, so makes me pay for her final leg of the journey home--with money I was supposed to save to move to a place where I can find some sort of decent work. brilliant. And to cover her rear, she blames me for it all, because I accidentally opened the courtesy payment option on my old account, even though had I not done so, she wouldn't have returned home in the first place. And she seems to be just fine leaving me to rot with no ability to open a new account (the banks are jerks that way). She cites her financial problems, though really, half her problems would be over if she just payed the darn thing off for me.

And of course, having little experience, I can't get a job as a geologist/mud-logger/anything (even though a BSc would have been enough just a year ago), and with no bank account, I can't even receive money for any other line of work, making matters even worse (since my bank account is closed, and no one wants to hire a person with that issue--I suspect).

so my total income is nowadays about 1,500-3,000 dollars a year. Not exactly enough to go by with. or pay for graduate school (which is a must if I'm to be guaranteed work), or even to begin paying off the 30,000 dollars of debt incurred wasting my time in University for a worthless sheet of paper telling people I can do Geology...

unsurprisingly, I feel like I want to wrap my lips round a glock. Not that I do, as some part of me tells me not to give up: even though every logical part of my brain says I'm screwed.

so, basically, don't live in the US, and if you do, don't waste your time on college, kill off anyone close to you before they start sucking the money off of you, and start your own business if you can. Oh, and don't go into debt. ever. And don't vote for any clown from either party.

So now you know why I haven't been posting much lately at the EB forums, or here.

EDIT@ greyblades: my advice for you, since things are working out better for you, is just be careful with what you spend, don't use gas when you can walk (bicycles are fine, but walking is best for short distances), and see if you can find work as an intern or something (what is your major by the way?). I'd throw out your TV, any but the smallest fridges, and make do with no heating/AC (I hope your place has curtains and not blinds?). Internet should be basic, and your phone plan minimal, and with the cheapest company. don't listen to those get rich quick adverts, especially online, and avoid having to use credit cards.

and work hard in school, that way more scholarships come* (in theory), and you won't have to take out as big a loan. Finally, make sure that you gradually phase out having to get paid from your parents--even if you are still in college. It'll come back to haunt you, if my experience is a clue (I did for one year, then the last two years didn't have parental support, but that one year meant my mom is now on my head to pay her off). Also invest in things that won't lose value (better yet, something whose value will go up)--and it had best be physical, and not stocks. with the currency situation in Europe and the Americas, it's a good idea in the long run.

finally, keep looking for more and better work. I'm sure you'll find something (hey, everyone I know ends up doing well: I'm the only one left. maybe I'm a good luck charm-thingy to people around me?)

*to make that possible while having good work, set yourself at a slow pace: in the US, it's by credit-hour, so over here, I'd recommend 12-15 hours maximum (lowermost full-time: you're more likely to get scholarships). I don't know how it works in the UK, but do the equivalent.

[The Lurker Below]

I dont have a reluctance to work (well, yes I do due to being a lazy little sod but that's besides the point) I have a reluctance to talk about work because I already know all I want or need to about jobs due to being brought up in an education system aimed at sticking me in a career, I had my life almost derailed through them devoting 3 weeks sticking me into work experience.
I'm young! I think careers will be soul destroying and I still have delusions of getting rich, and noone makes a billion dollars on a career. I want to know about the alternatives I didn't even think existed 3 years ago.

don't kid yourself, you will be working if you want to be eating.

first, don't think about the money. think about the work. what is it you would enjoy doing. do that. then do it for the most money you can and learn to live within your means.

[Yoyoma1910]

If you invest in Vodka, you always get a 40% return.








:creep:

[spankythehippo]

Well... I've been thinking over the last 2 days, there was this chinese buffet that had recently closed near me, maybe I should get a loan; buy it, open a restraunt. It's a really good area: it's part of the bus station across the road from the rail station, 15 minutes from the mainstreet and there's a mini tesco right next to it. high traffic and easy access to food if we run out some nights, I could see it paying itself off in a year or two.
Worth thinking about, I guess, though it will probably require loads of night classes on management.

I wouldn't recommend opening a restaurant. Opening a restaurant is a hit or miss. And a miss has quite large complications.

I will give you advice no one has given here before.

Buy really good Yu-Gi-Oh cards to make a deck, and play in tournaments. I've earned about 6000 AUD from selling cards to Yu-Gi-Oh crackheads.

[The Stranger]

bet on sports. easy money.

and ye restaurant not a smart idea, will take awhile before it will become profitable and if its ur only establishment it is very hard work. generally the food business is not a very smart choice if u want to make a quick but big buck.

poker online is also a good idea if u are good at maths.

[a completely inoffensive name]

Go on a reality tv show.
Don't worry, it's The Onion guys.

https://www.youtube.com/watch?v=0App7QizQCU

[TinCow]

Well... I've been thinking over the last 2 days, there was this chinese buffet that had recently closed near me, maybe I should get a loan; buy it, open a restraunt. It's a really good area: it's part of the bus station across the road from the rail station, 15 minutes from the mainstreet and there's a mini tesco right next to it. high traffic and easy access to food if we run out some nights, I could see it paying itself off in a year or two.
Worth thinking about, I guess, though it will probably require loads of night classes on management.

Restaurants are one of the worst businesses to invest in. 90% fail within their first year.

In any case, you probably couldn't even get a loan to begin with. In order to get a loan, you need to have collateral or an income to offset it, preferably both. Banks aren't going to just give you money because you've got an idea.

[Beskar]

Plus the fact the buffet recently closed shows you how successful the area actually is and they probably invested far more time and money than you probably would be able to do so yourself, perhaps even with far greater experience.

You could always do the 'tasks' from the Apprentice. They usually get assigned like £200 and they compete to earn as much as they can from it or run your own start-up business. Many universities do have schemes where they could help you set up a business and one at my old university which was successful was home-made soup which was sold during the University rush times.

[The Stranger]

Go on a reality tv show.
Don't worry, it's The Onion guys.

https://www.youtube.com/watch?v=0App7QizQCU
lol XD

[ajaxfetish]

Well, the first and most important step is to learn how to budget. You need to categorize your income into three separate areas. First, determine how much money you need to pay for essentials, such as food, housing, transportation, etc. Do not include any luxuries in here, only the bare minimum necessary. Second, set yourself a specific level of savings to put away for the future. More on this later, but a good rule of thumb is 10% of your income. So, with an income of 500 GBP per month, this would be 50 GBP. Third, everything else left over is your disposable income. If you do not already have them, open two bank accounts, a checking account and a savings account. Every month, deposit 450 GBP into the checking account and 50 GBP into the savings account. Ignore the savings account for now; pretend it doesn't exist. Pay your bills exclusively from checking. Your disposable income will remain in checking and will slowly accumulate. You can do multiple things with your disposable income. First, you can spend it on luxuries, like entertainment, a good meal, or some nice item or piece of clothing which is not covered by your essentials. Second, you can save it for bigger luxuries. For example, you might want to buy a new computer which costs 1000 GBP. Obviously one month's of disposable income is not enough to pay for this. So, don't spend your disposable income for several months and instead save it up. When you've got enough got the computer, then you buy it. Third, make larger than normal deposits into savings.

Do not run up debt. Credit cards are good things, and I recommend using them. They are easier than carrying around cash, will build a credit record for you (which is important in future years), and you can even save money with them if you've got a card that gives you some kind of cash-back or reward system. The important thing, though, is to NEVER run a balance on the card. Always pay the balance of the card in full every month. If you do this, the credit card costs you nothing (avoid annual fee cards like AMEX, you don't need them). If you cannot afford something based on the amount of money in your checking account, you just don't buy it.

Continue this way until your savings account has enough money in it to allow you to live off of that account with no other source of income for six months. That money is now your emergency fund, and you will never touch it. It exists to bail you out of bad situations, such as unemployment or unexpected medical expenses. It is a safety net for your financial life, and you should always keep it safe in a savings account and never invest it or put it someplace where you cannot access it immediately and in full. From this point on, your monthly savings can instead be diverted into investments. These are the stocks and bonds that you hear so much about. There is a lot to learn about this stuff, but you're still at the beginning of the process so you don't need to worry about it yet. When you get there, find someone who's knowledgeable about it and pick their brains. As your income level increases, your lifestyle will increase as well and you should regularly rebalance the 'essentials' and the savings to ensure that they keep up with your means and your needs. Also make sure that your six-month emergency fund remains a six-month fund. If your lifestyle has changed such that your emergency fund will now only cover four months of living, you need to spend some time topping it up again. You also want to immediately top it up if you ever have to take money out of it.

Above all, do not go into debt for unnecessary things. You will probably need a loan to buy a house or a car, but those are special cases and worthy of their own discussion. Other than that, if you cannot pay for the item in full, do not buy it.

I'll just second Andres in saying that this is some of the best starting financial advice I've ever heard expressed. Very well and succinctly said.

Ajax

[TinCow]

I was doing some financial work today and in the process noticed this article: 13 Steps to Investing (http://www.fool.com/how-to-invest/thirteen-steps/index.aspx). It's a very good primer on investments and money management and is worth the read if you're interested in doing something with your money. Note that this is what you do with your extra money AFTER you've taken care of the things I discussed earlier.

[a completely inoffensive name]

I don't trust anyone giving me advise on how to make money, because anyone who actually knows how to do it has no reason to give away his/her secrets.

[The Stranger]

giving advice on how to make money (or happiness), is one of the best ways to make money :)

[luigi_I]

ptc :)

[naut]

Mate. Relax. If you're focused on how nothing makes sense you'll eat yourself up inside.


I want to know about the alternatives I didn't even think existed 3 years ago.
Affiliate marketing? (http://en.wikipedia.org/wiki/Affiliate_marketing) (You'd need HTML and CSS skills, plus a domain name, and a niche with resalable ebooks or similar. Quite some effort for unreliable results.)

Exploiting currency differentials? (I.e. work in a Western nation with a strong currency for 4 months a year, live the rest of the year in a country with a weak currency.)

In any case save whatever you can now and keep an eye open for opportunities, maybe you can invest a bigger sum in a year's time? Maybe you can go into business with that capital? Maybe you'll decide the UK is not the place for you and use the cash on a ticket somewhere else? Just keep calm. Your decision(s) will be better if you're calm.