Top 10 Financial/Self-improvement Tips for College Students

This article was written mainly for students, but everyone can read it, you might find some good tips for yourself, too. Let us begin.

Starting studies is a crucial step in our lives. You finish high school, fill out application forms to colleges and universities, think of it as happy times, etc. All that drama and anticipation makes you forget how hard it will be and how uneasy the changes are. There will be no more tasty moms meals always ready and waiting for you to devour, no, there will be no more warm bed, clean house and delicious grandma's cookies sprinkled with poppy seeds. (Well unless she's so kind and sends you some, yummy!) College is time for you to become more self-dependant and that is not too easy. You won't have enough cash for anything and you'll spend every buck you lay your hands on. Don't worry i do not want to startle you, just follow these steps and it'll be much easier to become a richest kid in dorm!

• Avoid credit cards at any cost! Seriously, they are evil. As a student you get only enough money to pay for your studies, dorm and food. But you're young and you need to have fun, you need some more cash. But usually this happens in spending frenzy and the beginning of all financial problems. Sad but true. You're an adult already so you think it's about time to get that credit card. What can go wrong, you think.. Well, you get the feeling of power and can buy things you need now and can give money back later, especially with all those nice offers banks offer for students. Well this is one of the biggest mistakes you could ever do. You already become dependant. You get credit card debt and it's growing! Think about it. No job, no job experience, no recommendations, nothing. Now, let me stress that again, DO NOT GET A CREDIT CARD!!! (Or a little fluffy monster will bite you!)

• Avoid your parents! Sure that sounds like fun, but i do not mean avoid-avoid them, but avoid them as much as you can. A packet of goodies from mommy is not what you want. You have to separate yourself from them and start to get more self-dependant. You must learn to do your own laundry, ironing, making some food (at least simple recipes), etc. It will definitely help in your later life. You don't think of coming back home after finishing college or university, do you? Of course you don't. You want to live your own life and live it good. And frequent calls to and from your parents, frequent visiting, etc. does not help you do that. I mean do not separate from your family, by no means. Just see them less often, make that coming back home or a call a little precious. It'll be more important for both you and your parents.
  

• Avoid eating out and partying! Don't judge me already, i just started. I don't mean cut the partying and eating out, no of course not. Just don't do it too often. It kills your cash faster than you think. The night out with friends can cost you a fortune. You're self handed and can make your own food. If you're too lazy to do even that, at least in cafeteria or canteen. They got reasonable prices for a student and their nutrition isn't that bad. Take an advantage of that. Or else... Yeah, I'm sure you've heard about such students that only party hard, drink beer all day long and there is only fun and games for them. Sure, that sounds fun, but there is other side of that. I'm even more sure you heard how students spend their month's cash in 2 weeks and then eat carrots, cabbages and bread just to stay alive. Now, that's nutrition! For the love of God, don't be one of them. They only spend their cash to be poor and miserable. Don't be like that, be a cool rich kid. You'll like it.
  

• Find yourself a job connected with your studies! This really is a win-win situation. You learn in collage all that stuff, but you really have no idea how to use all that information. Getting a little of that practice is worth gold really. Many students go and work in local fast food restaurant or some other store, just to make a quick buck, but that is an awful mistake they do. Yes, you earn some cash, which can be used (see step below), but come on, you are just wasting your potential. Let's say you're studying programming, then why in the world would you go to work in some crap-hole? I say, you better look for a job as programmers assistant at least or the young programmer or something. That job experience you get is priceless. If you happen to find a job as student go ahead and stay there for at least a couple of years, because employers tend to look for people with at least 2 years of job experience. Stay at that work even if they pay you peanuts, that's extra cash and you need it! When you graduate you will already have a plus that will open more doors for you to find a perfect job. You'll be more attractive to employers than most of the students. You just can't lose.
  

• Start saving and investing your money! Oh, there could be anything better than that! You already started working, you earn a little cash, don't waste it! Better save it and use it properly! Open a savings account and transfer a desired amount of your wage there on a monthly or even weekly basis. Don't put all of it there, no, you're young, you just need to have a little fun. Let yourself have a drink after a week of hard work and studying. Do not make a habit of having a beer or something every evening after work, no. That is a huge mistake and it leads to alcoholism. Avoid that. Let me get back to the point. Save some portion of your income in a savings account and after a semester you'll be surprised how much money you've got there. Saving is good, but yet there is a better idea than that. Start investing that money! You're young, you got a job, you can go ahead and invest that money! It can be very rewarding and teaches you the discipline early! Let your money work for you! You have to set up your portfolio in order to do this. There are alternative investment methods of course. Read those articles up for more detail. If you are scared of losing money, you should at least invest in bonds as they are safe and helps you beat inflation. The earlier you begin investing your money, the faster you can get to financial freedom, which should be one of your main goals in life.
  

• Meet new people! Meeting new people is very beneficial. College is the place where there are so many young and beautiful minds. You should definitely take your time to find similar-minded people and make yourself some new friends. They may be your buddies to drink beer with in the weekends, but they might be your future business partners. You should build as many connection as you can, as they are very very important. Your friend can help you anytime. Two heads are always better than one, that's why you should make a good friend as soon as possible. You may share common interests, eat together, spend some free time, go to gym, etc. It'll really help you do all those new things you are not used to, like laundry or something.
  

• Avoid fake people! This part is crucial! Yes, meeting new people is great, but there always are so many fakers, that pretend to be your friend or just be friendly with you, they always smile, but they only want to drain you like a sponge and run away. Don't be fooled by those people. This often happens especially when you already got a job, start saving your cash and such. Talks go fast. The gossip is always there. Try to ignore all the gossip and possibly test your friends. Nothing too crazy, just some little test to see what kind of people they really are. This helps you choose people you communicate with wisely. You do not want to start your own business or some kind of project with the wrong person. You might be left on ice. Try to avoid impostors and only be friends with real and sincere people.
  

• Start doing some kind of sport! I can't stress this enough! You come to a new place. There are so many temptations to go out, eat unhealthy, drink alcohol, even do drugs. But you must learn to just say NO. It's easier to avoid such activities if you take up a sport of some kind. Really. Probably one of the best choices would be bodybuilding. I'm sure there is a gym in your college or at least somewhere around it. It's really good to go there, let off your steam, sweat a little, have a good shower, refresh and become more energetic and healthy than ever! Don't like bodybuilding, then go ahead and play basketball, football, tennis, whatever you like! Just do something active! It not only helps you look and feel better, it also helps your brain. It's always easier to think after a good workout. Sports leads to healthy eating, reducing bad habits such as smoking or drinking. What can be better? Your health is the most important thing there is. Do not mess with it inhaling some smoke or fumes. Help yourself to grow physically and therefor mentally. It's all connected.
  

• Start reading books! This is probably one of a few most important tips there could be. Reading is essential! If you don't already do that, it should be about time you did. People usually underestimate the power of reading. Reading helps you improve your brain activity tremendously! It improves your social skills, as you learn quite a lot of new things and get ideas from books, it improves your writing skills, as you see everything written correctly and memorise the words. Books always makes you think, thus widening your imagination, which is one useful tool! Imagination and creativity helps you everywhere. In your job, in your social life, in creating a business plan worth million! You should find time every evening to read for at least an hour. If you are an average reader and read one hour a day, you'll approximately read 1 book a month. That's 10 - 12 books a year. Not that bad. When was the last time you read? Have you read that many books in your whole life? In 10 years you would have read approximately 50 books. After that many books you would be more well-read than most of the population! Literacy is one thing you can't go wrong with.

• Keep studying! Well all these things may sound a little overwhelming. I tell you to get a job, do this and do that, but all this should be only done After Classes. Attend all the classes you've taken every day. Write everything you need to write, read everything you need to read, do anything you need to do for your classes and grades will come by themselves. Your key goal at right this moment is to get an education. And that you should follow! Getting a education is of key importance. Studies are for You, not for professors or employers. It is for your own personal growth and for you to find your path. Once you found that, don't stop there. After a few years after graduation go ahead and start studying again for a higher degree. It's beneficial. The educational system allows you to study your all life. Take advantage of that! The more your brain works, the smarter you become, the better you live, i might say! Extra degrees and diplomas from various courses and such help you increase your salary by quite a bit. Invest in your future. Don't be a fool, stay in school!

Well, there you have it. That is quite a read there. Hope these tips helped you at least a little. Thank you for reading and have a good day.

Money supply and control

Measuring money


What is money supply?
It's the stock of money and the supply of new money. The currency in circulation - coins and notes that people spend - makes up only a very small part of the money supply. The rest consists of bank deposits.

How do we measure it?
It depends on whether you include time deposits - bank deposits that can only be withdrawn after a certain period of time. The smallest measure is called narrow money. This only includes currency and sight deposits - bank deposits that customers can withdraw whenever they like. The other measures are of broad money. This includes savings, deposits and time deposits, as well as money market funds, certificates of deposit, commercial paper, repurchase agreements, etc.

What about spending?
To measure money you also have to know how often it is spent in a given period. This is money's velocity of circulation - how quickly it moves from one institution or bank account to another. In other words, the quantity of money spent is the money supply times its velocity of circulation.

Changing the money supply

The monetary authorities - sometimes the government, but usually the central bank - use monetary policy to try to control the amount of money in circulation, and it's growth. This is in order to prevent inflation - the continuous increase in prices, which reduces the amount of things that people can buy.
What can they do to control that?

• They can change the discount rate at which the central bank lends short-term funds to commercial banks. The lower interest rates are, the more money people and businesses borrow, which increases the money supply.

• They can change commercial banks' reserve-asset ratio. This sets the percentage of deposits a bank has to keep in the reserves (for depositors who wish to withdraw their money), which is generally around 10%. The more a bank has to keep, the less it can lend, thus decreasing the money supply.

• The central bank can also buy or sell treasury bills in open-market operations with commercial banks. If the banks buy these bonds, they have less money (and so can lend less), and if the central bank buys them back, the commercial banks have more money to lend.

Monetarism

Monetarist economists are those who argue that if you control the money supply, you can control inflation. They believe the average levels of prices and wages depend on the quantity of money in circulation. and its velocity of circulation. They think that inflation is caused by too much monetary growth: too much new money being added to the money stock. Other economists disagree. They say the money supply can grow because of increased economic activity: more goods being sold and more services being performed.

Well, now that you know the basics of money supply and its control, can you tell me, which kind of economist, are YOU?

Commercial and retail banking revealed

I find it very strange, when people do not know how do commercial and retail banks work. They seem to think, that banks just "make" money, literally. That's why i decided to explain the main concepts of banking and present them really simply.
When people have more money than they need to spend, they may choose to save it. They deposit it in a bank account, at a commercial or retail bank, and the bank generally pays interest to the depositors. The bank then uses the money that has been deposited to grant loans - lend money to borrowers who need more money than they have available. Banks make a profit by charging a higher rate of interest to borrowers than they pay to depositors. (Now that's business!)
Commercial banks can also move or transfer money from one customer's bank account to another one, at the same or another bank, when the customer asks them to. Well, this is basically how a bank works. It gets money from some people and then lends it to other people. Could not be any more simple, but the best thing about it - IT WORKS!

Banks also create credit - make money available for someone to borrow - because the money they lend, from their deposits, is usually spent and so transferred to another bank account. (They sure think ahead of it.)
The capital a bank has and the loans it has made are its assets. The customers' deposits are liabilities because the money is owed to someone else. Banks have to keep a certain percentage of their assets as reserves for borrowers who want to withdraw their money. This is known as the reserve requirement. For example, if the reserve requirement is 10%, a bank that receives a $100 deposit can lend $90 of it. If the borrower spends this money and writes a cheque to someone who deposits the $90, the bank receiving that deposit can lend another $81! As the process continues, the banking system can expand the first deposit of $100 into nearly $1000!!! In this way, it creates credit of almost $900! Wow!

Before lending money, a bank has to assess or calculate the risk involved. Generally, the greater the risk for the bank of not being repaid, the higher the interest rate they charge. Most retail banks have standardized products for personal customers, such as personal loans. This means that all customers who have been granted a loan have the same terms and conditions - they have the same rules for paying back the money. (We're all equal before God, aren't we?)
Banks have more complicated risk assessment methods for corporate customers - business clients - but large companies these days prefer to raise their own finance rather than borrow from banks.
Banks have to find a balance between liquidity - having cash available when depositors want it - and different maturities - dates when loans will be repaid. They also have to balance yield - how much money a loan pays - and risk.

Well, there you have it. I hope i pointed out the main points and have most of the questions answered.. If there is anything else you wanted to know, feel free to ask anything.

Royal Metal as a future guarantee

Gold, also known as the Royal Metal has been a huge influence to the world's economy for over 2500 years! Since 560 - 500 B.C. when gold began to be used as a currency for trade, and still up now it symbolizes wealth, hence all the jewelry that people love to wear to show off or just feel rich. Those who had a lot of gold had always been thought as rich and serious and it should not be any different nowadays! Investing in gold can be a really safe and profitable investment!
Gold price have been rising for a number of past years and they don't seem like stopping. And it shouldn't! Why in the world it should? Gold is a precious material and there is a limited supply of it, that's why it's price is just rising and not looking back! Gold has been used by traders, it has been used to fund crusades, it has been used as backing for currency, the list is endless!
What is more, gold has always been thought as a safe investment and it is even more important during any political or economical uncertainty (i know you're watching news and oftentimes think what is going to happen next). Empires fell, currencies collapsed, but people who had gold always felt safe and could live through any kind of problems!
And think about it, gold is very desirable as it is, but there is some sort of economy problems? (The Great Depression, Inflation) When investors feel that their money is losing value due to inflation they tend to invest more money in gold as gold price reacts to inflation and rises accordingly. Money can lose it's value to such level than a log of wood is worth more than a pile of cash! (1923-24 in Germany money was absolutely worthless)
What if a war strikes? And there are more and more wars going on today around the globe. During these times money can't buy everything, however gold has a much greater value due to it's psychological effects and it can always buy you food, shelter, etc.
Furthermore, gold is a valuable diversification tool and by no means should be included in portfolio! It has no correlation to stocks, bonds or real estate! Having a little gold somewhere can definitely help you sleep a little better at night. It always had it's magical sparkling warmth.
There are number of ways to invest in gold, it can be gold futures, coins, mutual funds, jewelry or even gold mining companies (swing that pickaxe for a better life!).
Another good way to look at gold's value is knowing that countries have huge amounts of gold in their reserves. Why? Simple. It's value is rising and they know it! The more gold they have, the safer they can feel, and you should be no different!

Summing it all up, gold can be valuable investment due to it's diversification uses, it's effect on economy and it's tendency to grow in value! Don't sleep, get some gold and let it's warmth lessen your headaches!

Forming your portfolio

Your portfolio is considered Good as long as it is Well structured, Diversified and it's risk does not exceed your risk-tolerance level.
Now, what do i mean by well structured? You see, investing is not walking in the park, it's full of dangers and it's always ready to take all your money and run! (Of course walking in park in the middle of the night is not too pleasant either, but at least a mugger can only take the money you have with yourself at that moment.) Now, don't cry, if you follow my advice, you won't need to worry about losing all your money. There are quite a few portfolio risk management tools that you must use.

First of all, it is structuring your portfolio. A well structured portfolio can save you a lot of trouble by itself. Structuring means, assigning a particular percentage of your money to one or another investment instrument. That would be stocks, bonds, real estate, precious metals, artwork, cash etc. The simplest way to structure your portfolio is buying only stocks and bonds. And usually that is more than enough. We'll talk about alternative investment methods later on. Now, bonds have much lower risk (almost risk-free) than stocks, also because the rate of return is fixed, you know precisely what your return will be, that's why bonds should make up a large portion of your portfolio. And then depending on your risk-tolerance, you can decide, how much stocks do you want. Even though stocks are sometimes volatile over the short term, they have proven to be the best investment for long-term growth. In fact, no other investment instrument has provided a higher return over the long term than stocks! That's why stocks should be combined with bonds. Bonds help to stabilise the volatility of stocks, cover short term stock losses and gives a tasty little profit when the times are good.

The second tool, and also one of the most essential is stock Diversification. Diversification is spreading stock investments into different stocks. You would not want to spend all your money on some company's stocks only to see it go bankrupt and lose everything you had. That's why diversifying your stocks is of key importance. Let's say you decide that 30 % of your portfolio would be bonds and 70% would be stocks. Now, you should diversify that 70% of your stocks. IT should consist of at least 5 different stocks in 5 different industry branches and possibly countries. Also it would be wise to choose investment with varying risk levels, as this would ensure that losses are covered by other areas of your diversified portfolio. Diversifying reduces the risk dramatically, which is exactly what we want.

Protect your money!

Calculating your net worth helps you see the realistic image on where your finances stand, however, in order for the image not to become worse, you must Protect your money!
Now, what do i mean by that? If you thought that you should grab your cash, stick in a sock and keep it all nice, warm and safe, resting in your armpit, while you drink juice, then there is nothing left to do but for you to slap yourself and order yourself to WAKE UP! Honestly. Do not, and i stresst that DO NOT keep your money at home! Avoid keeping large sums of money in your house at all costs! Now you may wonder: "Why all this fuzz, why keeping money in my house is bad? Should i put my money in bank? I live in a 21st century, of course i keep money in a bank, that's so obvious!" But, i would have to dissapoint you again.. Yes, keeping your money in a bank is a better idea, but it's not the Best idea! You see, while keeping your money in a bank, you gain interest, that's fine, but that is not enough. On the most cases, the interest rate that bank offers is not high enough to cover the worst nightmare for money -> INFLATION !
Yes, inflation majority of time is bigger than interest rates and this leads to your money losing it's worth. For those of you that don't know what inflation means:
"Inflation is a rise in the general level of prices of goods and services in a given economy over a period of time. It may also refer to the rise in the prices of some more specific set of goods or services. In either case, it is measured as the percentage rate."
Now, the bigger the inflation, the faster your money lose their value. Let's take an example, you have $10.000 and inflation rate is 10%, then in 5 years your $10.000 will only be worth 50% of it's value Today. Yes, banks help to reduce this creeping death, but it's still not enough.
The next logical question you should ask: "So what do i do now? Will i lose all my money? There should be a way!". And yes, there is a way. It is called - INVESTING !
Investing in BONDS is probably the safest and easiest way to protect your money from inflation! Bonds are absolutely great! Depending on your risk tolerance, bonds should make a large portion of your portfolio as they are one of the most important investing instrument there is.

Calculating Net Worth

Honestly, determining your financial status is a key step to financial life improvement.
Having your goals set and and all it planned is not enough. Having goals is a must, but in order to pursuit them, you need to clearly see your budget and then adjust your goals to them, to be more realistic, at least for the short term. So, in order to do that you must calculate your Net Worth, that's why you must follow these steps:

1. Write down your cash balance in the beginning of the year.
   
2. Add your expected income for the year. Check your most recent income tax return so you are sure to include all sources of income.
3. Subtract your estimated savings and investments
4. Subtract your annual expenses. Consult your checkbook to make sure you include all expenses. The amount remaining is your cash balance at the end of the year. If it is negative, you'll have to go back and see if you can eliminate some unnecessary expenses.
5. List all of your assets. These are the things you own, including your investments, home, life insurance, etc.
6. Subtract your liabilities; that is, everything you owe. Liabilities include your mortgage, charge account balances, loans, taxes, overdrafts, etc. The difference between your assets and liabilities is your net worth. If you calculate your net worth annually, you can monitor the growth in your personal wealth.
   

Having your net worth calculated helps you determine your current financial status, and coupled with financial goals helps determining the structure of your portfolio.