You can't save your way to riches if you don't have a big enough income to save just like you can't dig a big hole if your shovel is tiny. Too many people, too many financial websites, too many financial advisors, too many financial shows have for too long advocated saving with a deep lack of attention to the more important sid of the equation: INCOME.
Of course, even if you have an enormous income but still manage to spend it all, you won't build wealth. But that is not at all relevant to what we're discussing here. What we're saying is that there are simple mathematical and physical principles govern the world we live in and based on these principles there's something we know that's true:
the maximum amount you can save is your full income - this would be not possible in most cases it would require not spending anything
So, if you're earning $30,000 a year but are the most magnificent saver in the world, the most you can possibly save is $30,000 but realistically you'll be considered an ultra-saver if you manage to save $20,000 a year.
Contrast that $30,000 per year example with someone who earns $300,000 a year - clearly that individual has a much bigger shovel and has a lot more room to take advantage of saving. In effect, this person who makes $300,000 can benefit more from saving because the more he/she saves the more they can put away for building wealth up to their income. In effect, if they can spend $10,000 a year like the person in the $30,000 example, they can save a huge pile of money every year and build a lot of wealth.
People should be focused on saving, but they should equally (if not more intensely) be focused on generating more income for themselves os that they can put more money aside. This is easier said than done and that's the reason most financial resources tend to focus on saving rather than increasing income - everyone simply wants to pick the low-hanging fruit.
Most people in history created their livelihood -- either by creating income or by actually producing the necessities of life with their own hand and toil -- within family or communal units. The idea of working at a job for a larger entity such as a corporation is extremely new in the grand swath of human history. In effect, almost all of the people who ever lived could in effect be classified as small business owners - this is even true today as most US employment comes still from sole proprietorships or small businesses.
Why is it useful to understand the history of work/labor?
This idea is very important to people living in modern societies because we have a view within our minds that is quite different from reality. Many people believe that:
Going beyond the present day and having at least a basic conception of the things our ancestors did to create substance and value in their ancient worlds will assist in opening up your mind to new opportunities, new ways of combining life with work, and new ways of creating value for others.
Hunting and Gathering - The First Sole Proprietorships
For most of our history, we hunted meat and gathered fruits and vegetables to feed our families and our very tight-knit communities. The lifestyle involved simply waking up with the sun, looking for food during the day, and resting in the evening. Bedtime was when it became dark and no hunter-gatherer had to plan very far ahead.
The first really interesting thing to think about when thinking about how hunter-gatherers provided for themselves is how there were almost never any intermediaries. Besides the possibility of occasional trade within tight-knit communities, hunter-gatherers had what can be considered a two-step method to getting what they wanted. In terms of purity of execution, this was the most basic/fundamental way of obtaining food and water - a hunter gather would literally expend energy in order to obtain the final product he/she sought.
The second interesting thing arises from the first - hunter-gatherers didn't create value for other human beings in order to achieve their goals. Of course, a hunter-gather might want to provide for his family and create value in that pursuit, but that's not what we mean here. What we mean is that hunter-gatherers either went to pick edible growings or killed animals in order to obtain sustenance. In that pursuit they did not serve any other human being in any way - they simply went out into the world and obtained what they needed from it. Contrast that with today's world where we almost exclusively have to earn our livings by creating value for other people, be they your employees or your customers (which are also your employers in a sense). We're not making a normative statement here - we're simply making a descriptive statement.
The third very interesting thing about thinking of the working hunter-gatherers performed is that they had a direct understanding of how their efforts and skills translated into the final product they obtained. Of course, hunter-gatherers likely had some sort of quasi-religious beliefs where they imbued objects, the weather, etc. with spiritualistic aspects and they might have relied on them to provide. However, that doesn't detract from the simple physics of hunting and gathering - every hunter-gatherer must have understood how it was their own physical efforts out in the world that were the proximate cause of their gain. They could have thought the ultimate cause came from the skies or from the tree spirits or elsewhere, but they surely understood that the proximate cause was their own effort - they surely understood that without themselves leaving their cave, picking growing, or killing an animal and dragging it home, their families would not have food to eat. Contrast that with today's modern corporate worker who works in a corporate office or campus and who has
These complex factors can include things such as
Yes, a person's well-being still depends on themselves and everyone must take responsibility for their lives - you must work hard and well so that you're able to do well in your job and in life. However, it is abundantly clear that the level of mental control that a person feels over his or her method of meeting wants/needs should have been far greater in the past than in today's complex and interconnected environment where so much of the economy is not visible or understandable by a single individual.
This understandability of relationship between soil and result could be psychologically beneficial to human beings on many levels. This isn't a psychology website and we're not purporting to have any theoretical or empirical underpinning for these statements, but it does seem to make sense that an individual who has a clear "a leads to b" understanding of the relationship between toil and result -- as opposed of "a to b to c to d to a BLACK BOX to e to f to g" understanding -- would have greater psychological comfort and less psychological stress.
In no way is above supposed to make you envy a hunter-gatherer - we live in a far richer world (both physically and mentally) than our ancestors and anyone who would want to give up today's peace, today's luxury, and today's comfort for a hungry dangerous life of basic subsistence and survival is a quite unusual person.
Agricultural Revolution and Farming
After many centuries of foraging, humans ended up farming. This happened gradually over the course of centuries as well, but the end result was the literal transformation of human life from a nomadic existence to a settled life that would be far more familiar to the modern person.
Although life transformed as well as the approach fro providing for it, humans still operated at a family or communal level - humans still remained in effect small business owners. The business changed, of course humans went from hunting and gathering to
Humans mainly operated as family units after the agricultural revolution according to current historical data with larger family-based communities existing for things that went beyond the family. In effect, each household ran a small farming business that employed the entire household from a relatively young age by today's standards.
Here people had a bit more complexity - their toil no longer immediately translated into value creation (eg. food to eat) but had to go through the intermediate step of waiting for the seeds to grow into plants. The same is true for livestock - farmers and heard had to wait for livestock to grow and spend time and energy on breeding instead of just going out into the wild to kill game.
We can see that from hunting and gathering to farming -- things which make up by far the vast majority of human existence -- we operated in very small-scale communities and were in effect creating our livelihoods within our family units. In effect, all hunter-gatherers and farmers until the Industrial Revolution turned farming into big business can be classified as small business owners in the very broad sense of the world. These individuals worked primarily for themselves and their families. Farmers in certain eras might have had to pay taxes to lords or barons or other elites, but these can be thought of as quasi-taxes. Almost all of humanity did not know the meaning of providing your labor (either in the form of physical or mental exertion) to another individual in return for some sort of payment - this was the case for many reasons, one of which was an economy that was so poor that it could not sustain such interactions in a meaningful way.
Artisans and Craftsmen - Sole Proprietors Throughout History
Beyond farming, there have been at times in history a class or artisans or craftsman. This class developed after the Agricultural Revolution as settled communities were needed in order for this class of people to arise. They mainly operated in larger cities and they ran what can be considered small businesses. The words "artisan" and "craftsman" is too narrow, however, as these individuals operated a large variety of business. These businesses including:
All of the above can also be classified as small businesses. They are more like the small businesses we think of today - instead of directly producing their own livelihoods, these artisans and craftsmen would set up shop and serve their communities. They would very likely have most of their family involved in the business and live either close by or directly above their shops.
The Modern Working World
Although the majority of US jobs still come from small businesses, most people think of work as something you do in a large-scale setting such as a corporation. Most people even aspire to such work.
This work is quite different than operating a small business because it involves providing your labor to a larger entity that you do not control and likely can never fully understand (not even the CEO of a large firm fully understand what's really going on). This creates a sort of "black box" effect where you provide your labor into a "black box" and then some income is given to you. You aren't totally sure about the actual value you're creating for the firm and you don't fully understand how your labor fits into the bigger puzzle.
There are of course many benefits working in jobs - most of these benefits come from a certain stability that is not always present in running a small business. However, there might be some psychological costs that affect a person in the following ways:
Working in a job might make a person blind to other small but very profitable opportunities where their skills might be used. They might not ever consider opening their own business, running their own website, consulting on their own, or providing value on a small scale. This is unfortunate because it is in such small setting where you are able to capture the full value of your efforts (instead of the employer capturing most of the value). This is really how people get rich today - most people will never get rich working for a job and saving a large portion of their income; the vast majority of people in our world get rich in entrepreneurial activities.
Some Examples of Employment Throughout History
Although most people worked for themselves throughout history, there were some interesting examples of employment throughout history. Here are a few:
An undergraduate degree is a wonderful thing and college or university can be an amazing experience. You’ll learn a great deal, but almost as importantly as your educational experiences in college, you’ll expand your horizons and your mind beyond basic academic pursuits and you’ll grow personally into a more interesting, sophisticated, and happier (hopefully) person. However, to have an amazing college experience, you’ll want to make sure you to do the below 8 things - they’ll help you manage expectations and reduce both financial and personal stress so that you can focus on school. They’ll also set you up for a successful financial and professional life once you’re out of school.
1. Understand What an Undergraduate Education Really Means in the 21st Century
An undergraduate education isn’t what it used to be. Today, a college degree is more like a high school diploma than a ticket to a great job and a great salary. You must understand what an undergraduate education really means in the 21st century for your learning and for your career if you are to make the most of your college or university experience and if you are to avoid being disillusioned and disappointed in the future.
We won’t go into the history of education here, but since the end of World War II, a Bachelors degree was an almost sure fired way to get a good job and earn a good income for your entire life in the Western World. Almost regardless of what you studied, if you graduated from a decent college or university, you would very likely be able to enter the workforce and earn a good income as some sort of white collar worker (or a more technically-oriented blue collar worker). You would have a stable job with a stable financial life.
Since the turn of this new 21st century, however, things have been gradually changing. The 1990s saw a massive proliferation of high-powered, connected, and affordable technology for both consumers and enterprises. Today, that technology is reaching even the most remote and forgotten parts of the world. That technology, which was a novelty for many years, is now permeating deep into everything and is beginning to transform enterprises around the world in ways that are too numerous to describe in this article, but here are just a few:
Who would have thought ten or twenty years ago that so many smart college graduates would be working in places such as Starbucks - this would have been almost unimaginable to someone int he 1980s, for example, where a Bachelors degree from a reputable college or university meant you would almost surely find a decent career. Today, however, too many college graduates can’t get good work or are forced to go to graduate schools to pursue a Masters degree or professional degrees in order to have the same shot at a good job their parents or grandparents had just by obtaining a Bachelors degree.
Whether or not this is “right” or “wrong” or why this is occurring are are very interesting discussions, but they are beyond the scope of this article, which is intended to make sure you’re very successful in your undergraduate education and beyond. What you need to understand is that times have changed and that your college degree might just turn our to be the equivalent of a second high school diploma. Your college degree might be very useful to your personal and intellectual life, but it might not be very useful for your career unless you choose one of the handful of majors whose graduates are very in demand with only a Bachelors degree (majors such as certain types of engineering, accounting, data science, or computer programming).
Don’t take the above as anything more than it isn’t meant to be - a simple statement of what seems to be currently occurring. The above discussion is not at all meant to dissuade you from pursuing a college degree. An undergraduate education is way more than a ticket to a job - it is an opportunity to grow both personally and intellectually, it is an opportunity to become a more interesting and well-rounded person, and it is now an opportunity to see what you might really want to do with the rest of your life. Unlike past generations, graduating with your Bachelors degree will just be a starting point for most students in terms of their careers and their professional development.
Check out the very interesting (and slightly dark) video below for one take on what the future of work means and how the "rise of the machines" will affect employment:
2. Save at Least $1000 for a Small Emergency Fund
Having a $1000 emergency fund before heading off to college is a must and a bear minimum - do your best to save more. There will very likely be unexpected expenses that come up and you’ll want to have the cash available to take care of them without going into debt and without stressing out too much over them. Here are just a few examples of possible finical emergencies in college:
You might already have $1000 or more saved up from gifts you’ve received over the years or from a job or two you’ve had during high school. If you don’t have that $1000 saved up, then start saving it now. You can easily save up $1000 with a part-time job (or two) during the summer before you start your freshman year at college or university. You probably won’t want to work hard the summer before college and that’s understandable, but if you can manage to work hard anyway and do the right thing of putting a starter emergency fund in place, you’ll set yourself up for a much better college experience with a lot less financial stress and worry.
Remember, $1000 is a bare minimum - try your best to save as much as you can. A big cash cushion for when you’re in college will almost never be a bad thing. Don’t worry so much about where to keep the money - keep it in a simple and safe savings account and don’t invest it until you’re really ready.
Now, as a young college or university student, it might be tempting to spend some of your money on frivolous and unnecessary things. That’s not good, but it’s understandable - we’ve all made financial mistakes (and other types of mistakes too). However, you must have the discipline to not touch the money unless it’s an actual financial emergency or unless you’re going to purchase something that is fundamentally important for your education, career, or health. Don’t waste the money you sacrificed to have (you either sacrificed by earning it or you sacrificed by not spending it if the money was a gift) on frivolous and useless pursuits no matter - your future self will thank you.
3. Set up a Ride-sharing Profile (eg. Uber or Lyft)
Ridesharing services such as Uber and Lyft are transforming transportation around the world and have the ability to create a much safer world. If you’re heading off to college, you will be wise to make sure you have a profile properly set up on at least one ridesharing service so that you will never drive under the influence of alcohol or any other sort of mind-altering substance and so that you will have a ride in case your only other option is riding with someone who is under the influence of alcohol or some other mind-altering substance.
If you’re under 21 in the United States, you shouldn’t be drinking at all per the law, but students don’t always follow the law on most college campuses - in fact, it’s statistically very unlikely that someone will reach the age of 21 in the Unites States without having had an alcoholic beverage. So, you have to be smart and prepare beforehand.
A ridesharing profile will allow you to be able to leave your car at home if you know you’ll be drinking. Even if you didn’t plan to drink but decided to drink anyway, you can leave your car at your destination and take an Uber or a Lyft home safely if you have ridesharing profile set up - you can return the following morning to your car in a sober state. Additionally, if you happen to ride as a passenger with someone who ends up drinking, you can safely ride home using Uber or Lyft instead of having someone who is under the influence drive you home.
4. Read The 7 Habits of Highly Effective People
Read The 7 Habits of Highly Effective People by Stephen Covey. There are many great books you can read (both fiction and non-fiction) that will expand your mind and heart and make you a more effective college student, but the 7 Habits of Highly Effective People is a book that can be counted on in many different situations and for many different people - that’s why I am comfortable recommending it to pretty much every reader.
The book is slightly geared towards an older individual than an 18-year-old freshman. There’s a book written by Covey’s son titled The 7 Habits of Highly Effective Teens as well, but a person entering college is too old for that book. An entering college freshman is sort of in a limbo zone between the two books (People vs. Teens), but I would recommend reading a book that’s a bit out of your league than a book that you’re already too old for. As you grow older and mature in your personal and professional life, you’ll be able to refer to the book and reread parts of it (or all of it).
5. Make Sure Your Health Insurance Is Set up Properly
Your college or university will likely require that you have health insurance in place. You’ll either still be on your parents’ health insurance plan or you’ll have to purchase it on your own or from your school. This is basic stuff, but it is important. You have to make sure you have good and proper health insurance in place because you don’t want to get sick or injured and have to incur debt to pay for your medical bills while you're pursuing your undergraduate degree. You want your college or university experience to be safe and fun, but if it somehow ends up unsafe or unhealthy, you want to make sure your medical treatment is covered and that you won’t have to stress out too much about it. Speak to your parents about this to make sure you're on their plan but take initiative on your own - you might want to call your health insurance provider and let them know you’re going to school and see what they say if you’re planning on remaining on your parents’ health plan. If you’re going to purchase health insurance at your college or university, take the time to see what’s covered, what doctors you can go to, and what the copayments are - you’ll likely be able to find this information on the college’s or university’s website.
6. Check Your Credit Score (and Monitor It Consistently)
Your credit score is important because it roughly is used by lenders and other institutions to determine your creditworthiness - to determine how reliable you are financially and how likely you are to pay back a loan based on various metrics. A good credit score isn’t a necessity for finical success (especially if you have a lot of money and won’t be borrowing money throughout your life) but it is very useful to have a good credit score and a strong credit history.
You’ll likely have none or maybe one credit card of your own as an entering freshman and you probably shouldn’t be applying for more during college, but you still will want to know your credit score and monitor your credit score and credit history over your time as an undergraduate and beyond.
It’s a good idea to check your credit score and credit report at least once a year, but I recommend that you do it at least every six months. There are a lot of free online tools that can help you do this. Credit Karma is a popular and free tool but there might be other products and service that do a better job. Credit Karma is free, but there is advertising involved - they pitch various credit cards and other financial products to you.
Every time you check your credit score, see if your credit score dropped since the last time you checked. If it dropped, find out why. Additionally, check your credit report to see if there are any new things on it that you didn’t do (eg. new credit cards, new loans, etc.). Finally, check to see if there are any derogatory remarks (eg. late payments) on your credit report.
Your credit score is going to start out low because you don’t have much of a credit history as an entering college or university student, but you’ll want to make sure your credit score doesn’t fall and that your credit history doesn’t have derogatory remarks. If your credit score is low in the future, you might find it difficult to purchase a car, rent an apartment, get loans for graduate school or professional programs, open up new credit cards, or get a good loan for the purchase of your first home. You have your whole life ahead of you and you hopefully won’t go into debt, but you might - you might need some sort of loan. You want to make sure your credit score is top notch so that you actually can get the loan and that when you get it, you get it at a good interest rate.
7. Create a LinkedIn Profile
You probably have a Facebook profile set up already (Like us on Facebook if you do!), but there’s another profile you should create before you begin college - a LinkedIn profile.
If you don’t know what LinkedIn is, think of it as a Facebook profile for your professional life. Your LinkedIn profile is like an extensive online resume where you can list not only your work experience, education, and skills, but where you can also:
LinkedIn will become more useful as you go through college or university and then enter the workforce, but it’s a great idea to get a head start now. Here are a few things you can do on LinkedIn starting in your first semester or quarter at college or university:
If you do the above, you’ll have a solid LinkedIn profile when it’s time to look for part-time jobs, internships, and even full-time positions after graduation.
8. Sign up for Khan Academy
Khan Academy is a very useful free online learning platform that’s great for anything but especially seems useful for mathematics. You can use Khan Academy to review basic things before you start classes, but it also proves useful during actual exam preparation for many students. Khan Academy has short videos on a variety of subjects such as mathematics, life sciences, physical sciences, economics, finance, and other useful subjects. Surprisingly, Khan Academy’s videos are of decent quality and seem to provide quite accurate information in relatively easy to understand video bites.
What if you’ve already started college or university?
If you’re already in college or university (whether you’re a freshman, sophomore, or junior), you can and should still do everything on this list if you haven’t done so already. Just because you didn’t read this article before you started college (it might not have been around then) doesn’t mean that it’s too late do do the important and useful things above - it’s never too late to do the right things and it’s surely not too late for a young college student like yourself to move forward in your life and make some wise moves.
Here are the notes I took from a lecture during my first year in grad school on presentation fundamentals. The lecture was given by a professor who has a PhD in English literature as well as an MBA and who is somewhat of an expert when it comes to technical and non-technical communication in various forms. The notes are not very formal, do not articulate all of the information given in the lecture, and are intended primarily to be a starting point for learning about how to craft high quality presentations.
I recently sat down with a top-rated resume consultant in Los Angeles, CA with a Ph.D. in communications and many successful years of experience in resume consulting to look over my own resume and get some guidance on how to craft a resume that will stand out in 2014 and the next few years.
Although opinions vary, it is not considered best practice to include your LinkedIn information on a professional resume. I was told by the consultant that putting your LinkedIn URL or other similar types of URLs on your resume make it seem like the resume is a little pointless. He said "what's the point of giving your resume if you're just saying 'take a look at my LinkedIn profile for my complete profile, this resume is just a brief sonopsis.'" The consultant stated sarcastically that if you're going to put your LinkedIn profile, "...you might as well not have anything except a blank sheet with just your LinkedIn profile, which will save the resume reader some time."
Of course the resume is a brief sonopsis and your LinkedIn profile will likely be much more in-depth, but you don't want the person reading your resume to think that he or she has to go online and go to LinkedIn to really get to know you. They should be able to get a feel for you based on your resume and not have to do more research. Your resume should stand out. Your resume should be enough for them to make a decision about whehter or not they want to get to know you better. That's hard to do, but that's the point of a resume.
The conversation surprised me because I though I was smart and savvy by including my LinkedIn information on my resume. I have since taken off my LinkedIn URL and I believe my resume, revised and crafted to express what I want it to, is better for it. I am, however, open to putting the LinkedIn URL back and making any other changes if I feel they are appropriate or if circumstances change.
Do you have your LinkedIn URL on your resume? If so, why do you think that's a good idea?
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