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. 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:





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!