Budgeting can help keep you out of financial holes and help ensure your money is spent in ways worthwhile to you.
Investors to Young People: ‘Learn to Budget’
With students headed back to school and college expenses sending graduates into years of debt, it’s a good time to consider this question: What can young people learn from investors about managing their financial lives?
More than 1,500 Scottrade® investors offered their opinion in a recent survey.*
Live within your means
When asked what financial saying they would encourage a young person to live by, nearly half of those surveyed chose “Live within your means.”
“While this is advice given to young people, it’s clearly a wise lesson for everyone,” said Joe Correnti, senior vice president of brokerage product at Scottrade. “Students oftentimes are saddled with big student loans after graduation, so additional debt can create an even bigger burden. But everyone faces the possibility of hardship if they get into the habit of spending more than they earn.”
While all age-groups chose “Live within your means” as the top financial adage, 37% chose “Invest for your future (Plan for retirement)” as the most important. Perhaps not surprisingly, the percentage choosing “Invest for Your Future” increased with age. In all, 43% of seniors picked it – only slightly less than the 45% of seniors who chose “Live within your means.”
“Seniors know something that younger folks might miss,” Correnti said. “Time has a tendency to creep up on you. If you don’t start saving early for retirement, you might not save enough.”
Have a budget
When asked the most important financial subject a student should understand by the time they graduate from college, 44% of those surveyed chose “budgeting.”
Nearly half of younger generations viewed budgeting as the most crucial subject, while it dropped in significance for seniors. Seniors ranked “managing/understanding debt” nearly as important as budgeting.
“There’s a lot of common-sense behind the survey results,” Correnti said. “In general, long-term financial success starts with a budget. You don’t have to be a financial whiz or Wall Street stock picker to meet your goals. It can be as simple as having a budget, saving money regularly and allowing your investments to grow over time.”
“Financial success typically doesn’t happen overnight,” he continued. “But if you learn the right financial strategies and utilize them consistently, you’ll put yourself in a better position to meeting your financial goals.”
And budgeting can help everyone live within their means, Correnti added. “If you practice this one good financial habit, chances are you are taking care of other problem areas that you didn’t even realize existed.”
*The study was commissioned by Scottrade and conducted online between April 27 and May 10, 2015, with a panel consisting of Scottrade® clients. Results are based on 1,511 total responses. Margin of error for the overall poll is +/- 2 percent at 95 percent confidence.
Question: What financial advice would you give to young people?
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