Shubh Patni
Shubh Patni

Shubh Patni

Do These Things As Soon as You Turn 18 to Be Financially Secure

Give a gift to your future self

Shubh Patni's photo
Shubh Patni
·Dec 1, 2020·

7 min read

Do These Things As Soon as You Turn 18 to Be Financially Secure

Photo by Brooklyn Morgan on Unsplash

Like myself, I guess you just finished your high school and are looking for a college, or thinking if it is even the right choice. You are confused about what to do next, how to earn money, and which internships to take — I wouldn’t take an internship if I were you (more on that later)

In school, we learned about trigonometry, economics, history, languages, and whatnot. But never about personal finance, which is equally important — if not more.

So, Let’s learn what our system failed to teach.

Retirement Policies

I know you are not retiring soon, and it makes me sound like a boomer to talk about it. But it is very important for you to prepare a retirement fund as soon as you can, to make your money work for you.

This is because of a phenomenon called Compound Interest. In simple terms, compound interest gives you interest on the total amount at the end of each time period rather than the amount you first invested.

If you put $1000/year on 10% interest/year, next year it will be (10000.1) +1000 = $1100, the next year (11000.1) + 1100 = 1210, then it will be 1331 and so on

Governments around the world have retirement policies to make sure that the elderly population depend on themselves for their financial needs.

I would highly recommend you to do research about these funds based on which country you live in and at least sign up for one policy. You will thank yourself when you will withdraw these funds.

In the US, one of the most popular retirement schemes is **ROTH-IRA. It allows you to add after-tax money and withdraws are tax-free at retirement. ROTH-IRA is very flexible and allows you to take out contributions without taxes or penalties. You can contribute up to $6000/annum or $7000/annum if you are above 50. [10 Best Retirement Plans In 2020 | Bankrate To have the best retirement, it's wise to create a plan early in life - or right now if you haven't yet done so. By…bankrate.com](https://www.bankrate.com/retirement/best-retirement-plans/) [Backdoor Roth IRA: What It Is And The Benefits Of Setting One Up | Bankrate* If you want to open a Roth IRA and make too much money to do so, don't fret. While high-income individuals are shut out…*bankrate.com](https://www.bankrate.com/investing/ira/what-is-a-backdoor-roth-ira/)

In India, there are two major retirement policies called the **Public Provident Fund (PPF) and [National Pension Scheme (NPS)](groww.in/p/savings-schemes/national-pension.. Both policies give you tax-free returns and are long-term funds.

In PPF, you can invest a maximum of 1,50,000 Rs/annum and it has a lock-in period of 15 years. In this fund, the return is guaranteed, and it is risk-free. Currently, the rate of interest on this product in 7.1%

In NPS, you can’t redeem the money until you are 60, but it allows partial withdrawals in case of emergencies. NPS gives you the freedom to decide which fund your money goes into, and thus the rate of interest can vary based on your fund allocation. It has a higher risk and potentially greater rate of return when compared to PPF.

You can invest in both the funds if you have enough balance and remember to read all the details to gain maximum returns.

NPS Vs PPF: Which is a Better Option to Build a Retirement Corpus? Retirement as a concept is dear to all of us. The first thing that comes to mind is no more getting up early from bed…etmoney.com

Don’t Do Internships

This is my opinion and let me tell you why.

Generally, Interns are paid less and sometimes not paid at all. This is because our society has created a requirement for internships — do x internships before you go to college, even if it is unpaid — this has increased the supply of free interns.

It is often advised to get ‘work experience’ before you go to college or get a job, even if you don’t get paid. In some rare cases, it is workable.

If you get to work under your role model, dream company, or someone you look up to, it’s once in a lifetime opportunity. But otherwise, internships will just make you work a lot for next to nothing — sorry, I forgot, you get a useless certificate.

Instead of doing internships, I would rather suggest you start your own business, YouTube channel, or a blog. It is very common advice nowadays, but it is still worth it for the long term. And even if you don’t grow much, you will have experience creating your own thing*. *You will learn to work for yourself, handle multiple tasks, and learn new skills.

I have a YouTube channel and this blog. It has been over 6 months and no growth in YouTube (67 subs) but I learned a lot about filmmaking, photography, video/photo editing, communication skills, etc.

My blog has performed better than I expected, I earned around $900 in 3–4 months and currently have 139 followers. The Pandemic Won't Be Over Anytime Soon, Here's a Financial Checklist | Data Driven Investor It's been eight months since countries all around the world started to impose lockdown to curb the spread of the novel…datadriveninvestor.com

I have received a few offers from people on LinkedIn because they liked my work. Also, all the content I put on my channel and blog; I OWN IT. My channel and blog show my skills and they find work for me.

I don't accept most of the work because I am busy growing my own thing. But at least now, I don't have to try too hard to find work and work for nothing, just to gain so-called ‘experience’ — all this with almost no social media presence and followers. Imagine the potential.

If you start a YouTube channel or blog, it will always be your secondary source of income and will give you countless opportunities. We are living in a very uncertain world, you can lose your job any day, but a good social presence will at least pay the bills.

If you still want to do internships, I would suggest that you take part in programs like **Google Summer of Code**, they are paid and will give you an enjoyable experience.

Dropshipping

If you are not patient enough to wait for over a year to get growth in your YouTube channel or blog, do dropshipping.

I know it is not feasible in the long run, and it is risky, but it will give you real-world experience. I would suggest that you try dropshipping a few times, with different products, and you will learn how to sell, advertise, create webpages, and manage your business.

I have lost over 25,000 Rs ($330) dropshipping smart watches, but because of my own mistakes.

I tried dropshipping two times and on my first try; I made some money — around $120.

The second time; To save money on customs and taxes, I ordered goods from my father's company name and as it did not have an import license; I lost all the products I ordered, to customs. The first time, I used my name, for that you have to pay a fee and don’t need a license, so it worked out.

It was a good experience, and even though I lost money, I learned a lot. It helped me develop important skills that I feel will be useful later in life. So at least try it.

Invest

Investing is one of the best ways to make money while you sleep, and it has the greatest returns in the long term.

It is better to make mistakes early on and learn as much as possible because you don’t have anyone dependent on you. You don’t have to invest a lot, just put your pocket money or part of savings in Bitcoin, Ethereum, Stocks, or whatever you are interested in.

Even if you lose everything, you won’t starve the next day, if you are dependent on your parents.

Tip-Don’t put money in options because then you can really mess up.

I would suggest that you invest in a cryptocurrency because it is relatively new, you will get to learn a lot, and it holds huge promise for the future. You can do day trading, hold for the long term, or whatever you like.

Just set a limit, put down some rules, and never break them.

Other than these tips, you should open a bank account, get a credit card, and put some effort into building your credit score. At this age, you may not be able to do much, but at least you can develop a habit and have a good credit history.

If you are looking to make quick money, I would suggest that you do freelancing online rather than doing jobs locally because then you can develop your freelancing profile, and with time, you can charge more fees for similar work.

Please share your own tips or suggestions so that everyone can take benefit from them.

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