This week's article is a guest post from the blog NetWorthIsKing.com. The author, who uses the online moniker Mr. Compounding, grew up in Haiti and moved to the United States after graduating high school. In this post he shares with us some important life and money lessons he's learned since moving to the U.S.
After high school, I moved to the US to go to college. I went to Boston College and ended up staying in the Boston area after graduation.
I quickly realized that life in the US was not only a lot different, but was also the subject of many misconceptions. That's especially true when it comes to money. Here are some of the money lessons I have learned in my six years here in the US.
4 Money Lessons I Learned the Hard Way (after coming to the US)
#1: College alone does not guarantee success
Growing up in a foreign country, I often heard stories about people who left to study in the US and easily became successful. Where I'm from, the states are portrayed as a gold mine where everyone who works hard gets rich.
Once I moved here, it didn't take long for me to realize that this is a giant myth. Employers care way more about skills and experience than they do about what your diploma says. As a college student, you should look at your academic accomplishments as merely a way to show that you are a smart, disciplined and goal oriented person. To prove that you are the right candidate for a job or graduate program, you will need a little more than that.
If you're into technology, try to find a specific field where you think you can excel. Join campus groups that could help you develop these skills. Interested in “business”? By junior year, make sure you know if you want go into banking (investment or retail), management consulting, or something else and try to find an internship in that field.
A college degree is usually great for getting slightly above average paying jobs, but you get a lot more bang for your buck if you can identify the specific area you want to become an expert at.
For more detailed tips on how to plan for life after college, visit your campus career center. It should have good resources to help you get a head start and it's also the best place to keep track of all on-campus opportunities to connect with outside companies. That last point is critical as they often recruit on a strict schedule.
#2: Don't let companies take advantage of you
Back home, businesses use all kinds of dirty tricks to take advantage of customers. I remember one time my dad was refilling his car at the gas station and the employee pumping gas for him “forgot” to reset the counter at 0, which would make him pay for gas that went into someone else's car. Things like this happen everyday where I'm from.
I used to think dishonesty and greed was less common in the US. After all, there's more regulation, more competition and people are more well off so you would think the incentive to rip customers off was less of a factor.
I was wrong.
After graduation, on my very first month as an actual functioning adult, I signed a lease on a new apartment. One of the first things I had to do was find an internet provider. As any rookie would, I did little research and signed up with a provider by phone. They asked me a few questions to determine the internet speed I needed.
Based on my answers, it should have been clear that I had to have a pretty solid connection. The company did have a plan that satisfied my needs, one that used fiber-optic communications which are very fast. They put that plan at the forefront of all their marketing materials, including the ones that led me to calling them.
Nevertheless, when it was time to schedule the installation, they informed me that the service I was getting was DSL based. The one I intended to sign up for was unavailable in my area. That's basically the same speed we had in 90's internet. Needless to say I wasn't having that. I had to end my contract and it was a pain getting the cancellation fee waived.
Two years later, I can say with confidence that I have a much better understanding of how to deal with companies. Some of the red flags you should always be on the lookout for are long term commitments, confusing billing, old, famous brands and companies that have monopolies. You need to also watch out for hospitals- they are known to make pretty serious “billing errors“ from time to time. Sometimes, your only choice is to do business with a company that has some of the above characteristics. You just have to know who you're dealing with.
#3: Investing is the best way to become financially independent
You could be a doctor, lawyer or a recording artist. If you don't manage your money the right way, you will most likely have to work for most of your life. However, earning an average income does not mean you can't reach financial independence at a relatively young age.
This idea was completely foreign to me at first. In my home country, people traditionally work until they physically can't, at which point they become dependent on their children. That's completely normal in developing countries where capitalism has not been as successful as it is here.
But once I became familiar with the basic principles of investing, I realized how unfortunate such a plan was.
And the best part?
#4: Investing doesn't have to be difficult
Even when I moved here, investing still seemed like an activity reserved for the rich. I first thought that you either had to be a Wall Street banker or a rich individual to be able to venture into the world of investing.
There are literally dozens of ways and combinations for average Americans to invest their money. Such a big array of options can seem overwhelming and can cause the beginner to feel unprepared.
Nevertheless, the worst thing you can do is give up. Like many others in the personal finance world, I believe once you're debt-free except for your residential home and have a decent cushion in savings, you must be investing consistently.
My favorite investment vehicles are low cost index funds. They're easy to start, even easier to maintain and they're also cheap. In addition, no deep knowledge of the markets is required.
To start getting your hands dirty, I suggest reading personal finance books and blogs and listening to podcasts whenever you have some spare time. Regardless of your specific situation and needs, you will quickly find out that it's not rocket science.
Whether you are thinking about moving to the US or are already here, I believe these are some of the things you should know about money in this great country. Almost everyone here has a chance to be successful. But what you've been told about the way to get there is not always correct.
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