Dollar Cost Averaging
As an investor, you want to get the most for your money. You want to get the highest return and pay the least for your investments. This ensures that you get the most for your money.
What is dollar cost averaging?
If you want to make the most money, dollar cost averaging is the way to go. Dollar cost averaging is a very simple principle. You buy stock on a regular basis paying the same amount each time. For example, you invest $500 every month into the stock market. One month you might buy 50 shares, another you might buy 60.
By doing this, you are buying more shares when the price is lower and less when it’s higher. For example, let’s say you put $500 into the same company each month. In month one, the price is $10 per share, so you buy 50 shares. In month two, the price is $9 per share, so you buy approximately 56 shares, 6 shares more than before.
In month three, the price goes down to $9 per share, so you are able to purchase approximately 63 shares. Then in month 4, the price moves up to $11 dollars per share and you purchase approximately 45 shares. Finally, in month 5, the price is $13 per share and you are able to purchase 38 shares.
What have you gained from dollar cost averaging?
By the end of the four months, you have purchased 251 shares for $2,000. At $13 per share, it is worth $3,263. If you had spent all the $2,000 in month one, you would have only been able to have 200 shares now worth $2,600.
Even if you spent all the shares in the third month, you would end up with about the same amount of shares. The reason this works so well is because you are spreading out your risk. When investing, you should always buy low and sell high, but you never really know when it will be at the all-time low or high.
A Good Habit
Investing regularly is not only good to get the benefits of dollar cost averaging, but you can also reap the benefits of continuous the investing. If you only invest sporadically when you can, you are likely to invest less. Investing less means fewer capital gains and less interest earned.
Risky Investments
- Paulo Coelho
What is Risk?
We are often told to take risks in life, but what does risk mean when it comes to investments? Risk is defined as a source of danger or possibility of incurring loss or misfortune. For example, you are taking a risk when you decide to go out the night before a big exam instead of study. You might end up failing your exam.
At first, risk sounds entirely unnecessary. Why would you do something that could possibly lead to misfortune? When you take a risk, you are not just setting yourself up for a possibility of failure, but you are also setting yourself up for the possibility of something extra.
You took the risk of failing your test so you could have a good time going out the night before. If you did not take that risk, you might have spent the time studying, but you wouldn’t have been happy staying home.
What does risk have to do with investing?
Risk plays a huge role in investing. An investment can be risky to varying degrees or riskless. Riskless investments are those investments backed by the governments such as government bonds or and FDIC insured savings account. Because the government backs them, you are guaranteed to get your money back. The only problem with riskless investments is that you usually won’t get a very high return.
You have to take a risk to get a higher return which is why there are risky investments. The higher possible return on the investment, the riskier it is. The riskier the investment, the less likely you will get a return at all or even your principle investment back for that matter.
Why buy risky investments if you might not get it back?
Simple answer, a riskier investment gives a higher return. Sure, there’s a chance you might not get your money back, but that’s why you need to research your investments and weight the risks.
If you notice there are bonds for sale that offer 25% interest for a new start up company, you can’t just buy it and think “Well, I might get my $1,000 back and if I do I’ll get $1,250 back.”
Look into the company. Does it show promise? Do they seem like the’yre the kind of people that will pay you back? 25% interest is very high for a bond which would make it very risky.
On the other hand, there might be a bond that promises 8% interest from a company that has been around for a while and that you may have bought from before. Should you invest your $1,000 in this company for 8% or stay save and invest in a government bond for 4%?
This is where you need to way the risk. You decide if it’s right for you. Remember that if you don’t take any risks, you will continue to get a small return. The stock market is full of risk. You could invest in the stock market for the next 50 years and get a low historical average of a 10% return, or you could stay safe and invest in 4% interest government bonds.
Taking a little risk could mean thousands or even millions of dollars for you.
Should I always take the risk?
Generally, if you are young, take more risks, if you are older and nearing or in retirement, take very little risks. As a teenager or someone in their 20s, if you lost $25,000, you still have 20 to 30 years to get it back. If you lose that money when you are 65, you could be cutting into your living expenses in retirement.
Understand your risk and don’t always take the safe route. Take the risk and you could end up enjoying a much richer retirement sooner because of it.
What are money market funds?
Money market funds are very similar to mutual funds. With a mutual fund, your money is pooled with other investor’s money and it is all divided among many different investments.
Money market funds are the same, except the money is invested in government securities. They are not federally insured like general savings accounts, but they are lower in risk than regular mutual funds.
What types of securities will my money be invested in?
Money market fund accounts invest in highly liquid and low risk securities. Liquid means that it can be taken out very quickly. A savings account in your bank is highly liquid because you could go to the bank and take out money right away. Real estate has low liquidity because it would take time to get the money back that you invested into it.
The government securities that they invest in are usually certificates of deposit (aka CDs), commercial paper of companies, and other short term investments. In the
How do Money Market Funds work?
The value of a money market fund is always $1. The value doesn’t fluctuate like a share of stock, it earns interest similar to a bond. The securities always include short term bonds that reach maturity in 90 days or less. This allows for low risk.
If you are interested in investing in a fund, I would suggest a traditional mutual fund. They are higher risk, but can probably earn you more money. If you are interested in low risk government securities and don’t have a lot to invest, I suggest going for government bonds.
What are Dividends?
If you are new to investments, you may or may not know what dividends are. Hopefully you understand what a stock is and how it makes money. It is simply a piece of a company that you can own. Let’s say a company has 1,000,000 shares of stock that cost $10 each. You can purchase 10 shares for $100 dollars.
How do you make money from stocks?
Over time, the value of these shares of stock may increase or decrease. This is based on the supply and demand principle of economics. As more people want to buy stock from a particular company, the price of that stock increases. The reverse happens when more people are selling their shares, the price goes down.
Where do dividends fit into all of this?
When a corporation is doing well, they may decide to pay dividends. This is a payment to their shareholders separate from stock increases. The increase from their stock doesn’t come from the corporation, but the dividends do.
The amount of dividends depends on the corporation’s net income and how much they are willing to pay. It could be anywhere from $.25 to $1 or more per share. So, if you have 100 shares of stock of a company and they decide to issue $.50 per share in dividends, you will make an extra $50. This is usually done on a quarterly basis.
Should you search for dividend paying stock?
Some companies almost always pay dividends. These stocks are popular among retirees because it is another source of income. Whether or not you look for dividend paying stock is entirely up to you.
I wouldn’t suggest you buy stock only based the fact that they pay dividends. You should conduct proper research of any company you are willing to buy stock in and there is no problem making dividends one of your criteria.
Of course, if you are young, you have more time and can take more risk. Many of the younger companies don’t pay dividends because they are still becoming established, but they might give you a much higher return.
Do your research and think about all possibilities.
DRIPs-Dividend Reinvestment Programs
DRIP stands for Dividend Reinvestment Program. Sometimes you have the option to participate in a Dividend Reinvestment Program, or DRIP, when buy stock in a company. It is very simple. When you buy a stock you can choose to have all the dividends reinvested in the stock.
For example, let’s say you buy some stock from CVS. If you buy 20 shares of stock and they pay dividends of $.50, you will receive $10 in dividends. Instead of paying you, they will automatically reinvest it and buy you more stock. If they stock cost $20 per stock, they will buy you ½ of a share of the company.
How can you participate in DRIPs?
Some stock brokerage firms will give you the option to participate in DRIPs through them. With sharebuilder, they will automatically reinvest your dividends for you in more stock.
You can also participate directly with the company. You can send a check directly to the company and pay much smaller fees. It is also better because you don’t need to buy a large amount of stock shares, you can start very small sometimes as low as $100.
For an example of how to invest directly to a DRIP, see CVS’s plan here. With this plan, there is not transaction fee for the reinvestment of dividends.
Why should you use a DRIP?
Investing in DRIPs is a great way to start investing when you have little money. You can invest $100 in a company directly and watch it grow through capital gains and reinvested dividends. By reinvesting dividends, you will also receive more shares.
Some programs require you to own one share of stock to start. If you are investing directly, it is easiest to just buy a share online through sites such as oneshare.com or singleshare.com. You can also purchase these as gifts for children.
If you are interested in investing and you don’t want to have to invest $1,000 or more to start, you should consider participating in a DRIP. You can also invest very inexpensively through Sharebuilder.com. Their commissions are on $4 per transactions and you can invest as little as you want.
Give it a try and start making money! If you are under 18, you should talk with your parents for help.
Investing in US Savings Bonds
You may have received them for your birthday or have a stash of them from when you were born. I am talking about U.S. Savings Bonds. As you may know, a bond is a written promise to pay back the principle, or what you originally paid for the bond, plus interest once it matures.
What are
U.S. Savings Bonds are bonds issued by the National Treasury. The type EE bonds are the type that you have probably received from family friends and relatives as gifts for birthdays, graduations, major achievements, etc.
EE Bonds are government issued and are low risk. Low risk is good because you don’t have to worry about losing money, and government issued bonds are always low risk. As of May 1, 2005, all EE bonds earn a fixed interest rate. This allows you to know what your bonds are worth at all times.
How can you get
U.S. Savings Bonds are easy to get. If you are still young, you can have your parents get them for you from the bank. You can get them in paper form in the denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. You buy them for half their face value, so if you purchase a $50 savings bond you only pay $25.
Don’t let this fool you. You will only gain interest on what you paid for. For example, if you pay $25 for a $50 savings bond, you can’t try to sell it to someone for $50 three days later.
Bonds are also available electronically from treasurydirect.com. With electronic bonds, you pay face value. If you pay $25 you get a $25 savings bond. There are no denominations, so you can pay $25 or more at any amount. This means you could buy a bond for $235.23 if you really wanted to. You can purchase up to $5,000 in one year.
What should you do with the
The best thing you can do with them is to save them. If you’ve only had them for a couple of years, they won’t be worth much more. If you’ve had them since you were born and are 15, they are worth a bit more, maybe double the principle. Still, I advise you to save it.
Spending your savings bonds on some music or a weekend trip is a waste. Think about how long you’ve been hanging onto them. Years of accrued interest should really be spent wisely. Now I know, how is that money any different than the paycheck you got last week? Well, it’s not, but the longer you keep it the more it will be worth, and besides, you don’t really need it now.
Savings Bonds should be saved until you really need it. I suggest you save it for college. If you are lucky enough to have scholarships or other help for college, spend it on a new car when you graduate or, better yet, put it towards retirement. Just remember to save, save, save!
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Get a job with Snag a job
So your finally old enough to get a job or your last job or you’ve finally broke free from the job you hated. Maybe you are just looking to make some more money. Whatever your situation is, you need a job.
Sign up with SnagAjob.com if you want to find a job. After you sign up, you can search for jobs in your area. You can find anything from retail to sales and more.
It is a great site to find part time and full time jobs. If you aren’t ready for a career and are working your way through school, Snag a job is great because they are all flexible hourly jobs.
You don’t have to wander through the mall, guess which ones are hiring, and be turned down by the manager. Also, you don’t have to settle for a nearby supermarket job because you didn’t know about the available jobs at new places or stores you didn’t know were hiring.
A great benefit about snag a job is that you can apply to a job right through the site. You could even apply to multiple jobs at once.
SnagAjob.com is the best place online to find a job. Sign up now. Even if you don’t need a job just yet, it’s good to have something to fall back on.
Find the best part-time or full-time hourly job in your area. Search on Snagajob.com. It’s FREE.
Wall Street Survivor: An investing Simulations Game with Prizes
If you want to get started in the stock market, but you don’t have enough or even any money at all, you should check out Wall Street Survivor.
Wall Street Survivor is a Fantasy Stock Market Game. You start out with $100,000 to manage. You are able to trade stocks just like in the real stock market, except you aren’t using real cash.
The best part is that there are cash prizes.
- There is a large cash prize for the best trader over a few months time.
- There are three weekly top winners that get between $100 and $250
- Finally, there is a daily draw for anyone one that makes a trade that way who wins $100.
With Wall Street Survivor, you get research tools, stock screeners, and advanced charts to help you gain more on your stocks and learn more about trading. Whether you are a business student or are just fascinated with the stock market, this is something you should look into.
Spend some time with Wall Street Survivor until you have some of your own money to invest in the real stock market. Who knows, maybe you’ll with cash and then be able to invest that it in the stock market?
FREE TO PLAY - Fantasy Stock Trading Challenge
Save money for college with Upromise
College is very expensive and the cost will continue to increase. Most of us don’t have a million dollar trust fund or other large sums of money, so the best we can do is save for college. upromise.com is a great new program to earn, save, and pay for college.
Earn more money for college when you spend
A great unique part of upromise.com is that you can earn money for college savings when you spend money on everyday things. You earn rewards for spending money at sites like ebay.com, wal-mart.com, and others. This is a great feature if you already spend money on these sites. Why not get this money back and put it towards college.
There are hundreds of stores, as well, that you can shop at and get a percentage back. They even have a credit card you could use if that would work for you.
Save money for college
upromise.com will also help you save money for college. They will help you set up a college savings plan. You can choose to set up a 529 plan and get your savings tax deferred. They help you along the way. Talk to your parents about the program to learn more about saving.
Finally, paying for college
They give you resources for college loans, grants, and scholarships, too. The rewards program is a great feature, but if you need a lot of money now, they can help you too.
Probably the best part of this program is that it’s FREE to sign up. You don’t have to pay a dime. All the money you put into it is savings going to college and the only money you spend is what you would normally spend anyway. You just get a percentage back towards college.
Talk with your parents about upromise.com. You have nothing to lose. I only wish I knew about this program much sooner. The younger you are, the more money you will be able to save for college, but even if you are older, upromise.com will be a big help.
Start saving now to avoid loans in the future!
The Millionaire Next Door by Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D.
The Millionaire Next Door by Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D.
So you picture most millionaires living in multimillion dollar mansions that earned their money through entertainment and inheritance. Sure, they make up some of them, but most millionaires did not make their money this way and don’t live this way.
In fact, most people that live in huge beautiful houses and have beautiful expensive houses aren’t even millionaires.
This book will uncover a lot and clear up your misconceptions. It gives the surprising secrets of
This book is quite long and has small print, but it is a definite eye opener. You may be surprised at how the majority of
I really enjoyed the book and believe it gives those who want to be wealthy some hope. You don’t have to invent something or star in a movie in order to be a millionaire. It takes hard work and good money management. Most of these millionaires live well below their means.
It gives statistics on what types of cars, houses, and credit cards millionaires really own. It compares and contrasts consumption habits, income and wealth, and concern, fears, and worries, of the two different types of income earners.
I would recommend you read this book the next time you blow you money on something mindless and wish you hadn’t. The next time around will be very different.
Rich Dad Poor Dad by Robert T. Kiyosaki
Rich Dad Poor Dad by Robert T. Kiyosaki
If the Intelligent Investor is making your mind numb and you need a break, you should pick up Rich Dad Poor Dad.
This book, which is also part of a series, is a love or hate book. It is a New York Times Bestseller, and yet some people can’t bash it enough.
I think it is a beneficial book to read. I can’t say yet that I can recommend his whole series because I have read the others. I’m not sure if I will because I don’t know how much more can be said about the topic.
This book emphasizes the importance of being financially literate. I agree, financial literacy is very important and will get you ahead of everyone if you use it right.
He discusses the differences between his poor dad, who is his real dad, and his rich dad, who is his friend’s dad. While his poor dad, who is a college professor, struggles to pay the bills, his rich dad is, well, rich, and never finished high school.
It may sound backwards, but he makes a lot of good points and gives a lot of valuable information. He presents the information in six lessons. These lessons discuss how the rich don’t work for money, teaching financial literacy, starting a business, taxes, the rich invent money, and work to learn don’t work for money.
He gives a good explanation about financial statements and demonstrates his points very well. It is a well written book and a quick read as long as you are enjoying it. I would recommend this book to help get you on the right mindset about money and set you up for a good future in money management and earning money.
The Intelligent Investor by Benjamin Graham
The Intelligent Investor by Benjamin Graham
If you’ve ever browsed the business section at the bookstore, more than likely you passed by a copy of The Intelligent Investor. It is a classic business title that was written by one of the best value investors Benjamin Graham.
If you are at all interested in value investing, even if you just want to know what it is, you should pick up a copy of this book. It is the book to read on the topic.
It was first published in 1949 and has since been updated several times. The current edition includes commentary by Jason Zweig and a preface and appendix by Warren E. Buffett. These only add to the value of the book.
I will admit this is a long, tough read. I read about 100 pages and had to start over because I realized I had no clue what I was reading.
This is not the book you want to start with in your investing career. It is dry and tedious. You may find that you can only read a few pages at a time, or who knows, maybe you’ll be able to fly through it.
Once you know a little about investing and the stock market it will do you good to read this book. It talks about investment versus speculation, inflation, stock market history, market fluctuations, dividend policy, and margin of safety.
If you have trouble with the reading, there are footnotes on almost every page. A lot of these are also to make up for the time difference because the last time Graham revised it was in 1973.
I would definitely recommend that you eventually get around to reading the intelligent investor. It will compliment you business library as well as make you a well rounded investor.
The Five Rules for Successful Stock Investing by Pat Dorsey
The Five Rules for Successful Stock Investing by Pat Dorsey
I hear all the time buying stock from a company without researching it first is just the same as gambling. Okay, I can believe it. It makes sense because if you don’t know anything about a company how can you be sure how well it’s going to do?
Easier said then done.
I was determined to find information on exactly how to do this, research a company. I would read, “look at the P/E ratio”, but what is a good P/E ratio. Or, “read the annual report”, but what exactly am I looking for.
While browsing through books, I came across The Five Rules for Successful Stock Investing by Pat Dorsey. This book goes beyond just advising you to buy mutual funds. I wanted to pick my own stocks, and I finally found out how to go about it.
After the introduction, it begins by going through each of the five rules. At the end of each chapter, it gives a checklist to recap what was discussed.
I got a lot out of chapter three which went into specifics. It even gives you specific equations to help you evaluate profitability.
There is a whole chapter which explains financial statements. Unless you an accountant, this will be very useful information. In analyzing a company- the basics, it talks about what basic areas to look at including growth, profitability, and financial health. After this it goes through analyzing management, which is also very important.
It is quite a large book with a lot of good information. It also includes a discussion on valuation, a guided tour of the market, consumer and business services, asset management and insurance, and a lot more.
It may take you a while to read, but it includes a lot of good headings and title. This way, you can sift through what you really want to read. Already know a lot about banks? No need to waste you time, just skip chapter 17.
This title is well written and gives a lot of examples. It’s not a completely dry read, so you shouldn’t get bored too quickly, but it’s also not written for entertainment, so you probably couldn’t finish it in one sitting.
I’m sure I will probably refer back to this book often as it contains a lot of valuable information and is a good overall introduction without being too basic.
Investing in Bonds by David Scott
Investing in Bonds by David Scott
Stocks are a very popular investment choice, but it’s not the only one. In fact, you shouldn’t invest all of your money in stocks, but diversify. A great way to do this is to also invest in bonds.
As with any type of investment, I knew that I needed to teach myself about bonds, and when searching for some good reading material, I came across Investing in Bonds by David Scott. It is a thorough read giving a lot of good information about bonds.
The book begins with the fundamentals including why organizations issue bonds, what bonds represent, and different features of bonds. The different features of bonds such as coupon rate can be confusing and I found this book cleared it up for me well. Here it also discusses the downside of bonds and how they compare to stocks.
It then goes into the specifics of bonds including corporate bonds, U.S. Government bonds, and municipal bonds. It goes into a lot of good detail about the background of these types of bonds.
The rest of the book goes into more in depth information and specifics of bonds. They even have a whole chapter about the risks of investing in bonds. I think this is an important chapter to read because people often think that bonds are safe and that they can’t lose money like they can in stocks. The last chapter gives sources of information about bonds.
This is not necessarily a fun read. It’s not full of jokes and stories, but is short and to the point enough that they wouldn’t be necessary. There aren’t too many books about bonds and only bonds that give you all the information you will need, but this does. It is also a good book to keep for reference later on when you get further into bond investments. It is also nicely priced.
Understanding Stocks by Michael Sincere
Understanding Stocks by Michael Sincere
Way back when I was new to investing, I decided that I really needed to know the truth about how stock investing works. I couldn’t go on trying to figure it out for myself through my own reasoning. I knew I was way off. Little did I know how much information I was really missing.
I made a trip to the bookstore with two things in mind, cheap and informative. I only wanted to basics. So many of the books I saw were so specific that I was beginning to give up, until I came across this book, understanding stocks. On the back it says, “Everything the novice investor needs to know to get started in stocks.” I found what I was looking for.
This book gave me exactly what I needed, the basics. It tells you exactly what the stock market is, what a share of stock is, the history behind the stock market, and the two different forms of stock research. It also talks about other forms of investments including mutual funds, and bonds and specific terms are described relating to them.
He gives some good information about where to buy stocks and placing orders. I found the examples including specific math functions were very helpful in explaining points.
I really found interesting the different ways of making money in the stock market including the well known buy and hold and many others I would have never thought of. The last section includes uncommon advice. In this section he talks about what makes stocks go up and down, why people lose money in the stock market, and his own opinion about the stock market.
I thought this was a good book to get started in the stock market with. So many of the other more advanced books assume you know the basics. This book will give you those basics to move on into more complicated reading.
The Neatest Little Guide to Do-It-Yourself Investing
Neatest Little Guide to Do-it-yourself Investing by Jason Kelly
A few years ago, when I was on vacation and making one of my daily trips to the discount bookstore, I was browsing the business section and came across this tiny little book The Neatest Little Guide to Do-It-Yourself Investing. It was on sale for a good price, and I decided I couldn’t lose. I figured it would be something good that I could start working on and maybe get a few pointers.
I think this is one of my favorites. I don’t think I was ever able to read it all the way through from beginning to end because I kept skipping forward whenever I saw what was coming up that looked appealing.
I really enjoyed the way it was written. It was very easy to understand and there are a lot of interesting examples to prove his points. It covers everything from understanding the opportunity and risk in stocks to finding money to invest, which was my favorite section. In the chapter entitled “Find $500 per Month to Invest”, he gives several unique ways to save and earn $500 per month. Some of these ideas I would have never thought of or known exist, and I even tried a couple out.
The main form of investing that he advocates is mutual funds. He gave some very good advice about mutual funds and even some real life cases of success in mutual funds. He gave the Simplest Investment Plan ever.
Each chapter is concluded with a chapter recap. There are great for when you need quick information and aren’t sure which exact page to find it on. There are also many great resources at the end of each chapter including several financial publications in print and online.
Overall, the book was very well written. Some of the points may seem basic, which makes this book great for the beginner or someone just getting starting. I would definitely recommend you get this book and read it!
College and Hard work
You’ve applied to school, gotten accepted, and have now started your college education. How important is college to your financial security and success?
It is very important. The harder you work, the better your grades will be. Even if your employer doesn’t ask you for your GPA, your grades and hard work in college will greatly affect your career.
If you simply go to class, do the bare minimum and just get by, you will graduate and have a degree. But, once you start searching for a job, you won’t know what to do. When you get to the interview you will be unprepared. Even if you do get a job, you will find out that everything you should have learned is lost from your memory and it will become increasingly difficult to do well at your job. Moving up and succeeding in your career will be out of the question.
When you are in college, you must work your hardest. Sure, you can have fun and maybe party once and a while, but schoolwork must always be your top priority. Get the grades and you will get the recognition.
Just as important as grades is involvement. Stay on top of things. Know when the career fairs are and always attend. Go to the seminars and start getting to know people in your field. As they say, it’s who you know.
Do internships and volunteer work to gain skills and work on your resume. Understand that college leads to your career. Look at it as one big job application and training process. If you just go to college and do your classes you will be lost.
Ultimately, work hard in college, stay on top of things, and reach for success. When you succeed at school, you will move on to succeed at your job which will earn you the money to reach financial security. Everything you do in life is interrelated. Keep that in mind and things will be a lot easier than they seem.
Scholarships and college savings plans
Scholarships
We have now established that college is expensive and have giving you some great ideas to save on college costs, but it will never be completely free, you will need some money. Your parents’ paychecks will only go so far, what else is there to do?
The first option is to apply to scholarships. Scholarships can give you anywhere from $100 to your full college tuition. When you are applying to colleges, check with your guidance counselor about local scholarships. These are often the easiest scholarships for you to get. This doesn’t mean they are super easy, just that most of them will only be open to those in your school and you will have a bigger chance.
When you have applied to a school or two, look at any scholarships they offer. There might be a scholarships designed for your area of study or more broad scholarships. Some college scholarships aren’t offered to freshman, so remember to check back often while in college.
Finally, I strongly recommend you open up an account with fastweb. It’s a great place to find scholarships tailored to your talents and qualifications that you couldn’t find at your school. There are many essay scholarships that you could win, even if you think you never could with your grades. Many of the scholarships are drawings that you don’t need to do a thing for just as long as you’re a certain age.
The earlier you start entering into these scholarships the more likely you will get one for two reasons. First, the more you enter the better your chances. Second, if you end up writing lots of essays, as you go they will get better and better. Your improved writing skills will improve your chances of getting some cash for college.
Make sure you take these scholarships seriously. There’s no point in entering to win a scholarship with an essay you spent 30 minutes on that you didn’t proofread. You probably won’t win. Take the time to look it over and research if necessary. Ask a teacher to look it over and give you tips.
Don’t rule out the more complicated scholarships. It might seem like too much work for something you wouldn’t get anyway. How many other people do you think are thinking that way? If everyone thinks “why bother” that means there are less people entering and you’re more likely to win.
The same goes for the scholarships that took you a while to find. The scholarships that are being advertised all over might get thousands of entrants and be much harder to win. That’s no reason not to apply for those, though.
College Savings plans
In addition to scholarships, you and your parents can start saving ahead of time. If you are only just starting high school or, even better, still in middle school or younger, you can start saving and save a lot for college.
If you aren’t sure where to start, check out upromise.com. If you just start putting away money into a savings account, your money will grow very slowly. With upromise.com, you can start a 529 savings plan.
With a 529 plan, your parents can put money away into an investment and they won’t have to pay taxes on it so you can save even more. The money will grow much faster than in a low interest savings account because it’s being invested.
Another great thing about upromise.com is how you can earn money. If your parents join, they can earn points that go towards savings from shopping online, eating out, using their credit card, and more. This will help boost your savings even more.
Finally, when you are ready to start college, they will help you find loans and grants to pay for college.
It’s a great program to bring everything together when trying to save and pay for college.
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How to save money by taking more credits
A bachelor’s degree requires 120 credits. If you take 15 credits, about 5 classes, each semester, it will take you 4 years to complete.
When you pay for tuition full-time, you will pay a flat fee for the semester whether you take 12, 15, or 18 credits. This means that the person that takes 12 credits per semester pays the same amount as the person who takes 15 credits a semester, but it takes them a whole extra year to graduate. This costs them one extra year’s worth of tuition money for the same amount of credits and the same degree.
Think about it. If you take 18 credits per semester, it will only take you 3 and a half years, or 9 semesters, to complete. In fact, one semester will only have 12 credits. If you took one summer class each summer for three summers, you would be able to graduate a whole year earlier.
How many credits you take will depend on several things. Start your first semester by taking 15 credits. This is a pretty standard workload. If after one semester of 15 credits you feel it was overwhelming, cut back. If you feel like you had a lot of extra time on your hands and could do more, than try 18 credits.
It will also depend on if you work. If you’re working 20 to 25 hours a week or more, this might be overwhelming. If you work 10 or 15 hours, it might be worth the try.
The general study rule for college classes is that for each hour you spend in class, spend 2 hours studying. That means, for a 15 credit hour workload, you will study for 30 hours for a total of 45 hours. That’s like working a little more than full time. If you tack on 25 hours working, that’s 70 hours of work each week.
If you find that it only takes you 1 hour of studying outside of each class, than with an 18 credit hour workload it will only be a total of 36 hours. That’s only one hour more than with 15 credits. If you do spend 9 hours per class total, that’s 54 hours. That might be okay for someone who doesn’t work.
The trick to taking 18 credits per semester is in what classes you take. If you take 6 demanding classes, it’s going to be too stressful. If you take 6 easy classes, eventually you will end up having to take all the demanding classes together. Unless you are super smart and find all the classes easy, this won’t work either.
Instead, mix up the easy classes with hard ones. Take 2 easy classes, 1 moderate class, and 3 difficult classes at once. For the easy classes you might only spend a couple hours of week studying, but you might use several more hours for the difficult classes.
Even if you don’t take 18 credits every semester, you might try taking 18 credits a few times. If you are double majoring, this will help you graduate on time. For instance, if you need 132 credits total for your degree, you will need to take 4 extra classes. You might decide to take 18 credits during each spring semester if your job is less demanding in the spring and you have more hours, or if you don’t do a sport in the spring.
Taking more classes may or may not be a good idea for you to save some extra money and time while in college. Test it out or pass it up. You know what you can handle, but don’t be afraid to give yourself a challenge.
Commuting vs. Living on campus
Another option you have to save you money in college is to stay at home and commute. If you don’t live near any colleges then you have no choice but to live on campus. On the other hand, if one of your top college choices is less than 45 minutes from your house, you should definitely consider commuting.
When you live on campus, you have to pay for room and board. Sometimes this can be as much as tuition. If you live at home, you automatically delete this cost. The only cost you will have to pay for that you wouldn’t living on campus is more gas. This might be quite a bit, especially if you live 45 to 60 minutes away, but it still won’t compare to what you save on room and board.
You have to talk with your parents first. If you think you’re living at home for free and your parents expect you to pay room and board, you will run into some trouble. Usually, they will let you live at home for free as long as your going to school.
If I live at home, won’t I miss out on a lot?
Probably not. If you live close by, there’s no reason why you can’t still spend time on campus with friends and come to any activity that you please.
Living on campus might seem really exciting. You finally get to move out on your own and have your own place. It’s exciting in the beginning and then gets old fast.
Have you ever shared a room with a sibling? Maybe you did when you were living and then got your own room when you got older. Remember how exciting that was? Well, living on campus is just going backwards. Except this time, it’s not with a brother or sister that you know well but with a complete stranger.
You’ll deal with issues of sharing a room and maybe a suit. Your roommate might like to bring friends over or stay up late while you like your sleep. If you and your roommate don’t meet eye to eye, there can be trouble.
Even if you couldn’t ask for a better roommate, there’s still the part about sharing a bathroom, eating in a dining hall, and bumming rides off of people while you are still a freshman and have no car.
Sure, you’ve moved out of your parent’s house, but you’ll probably return come winter and summer breaks. You’ll be back where you were and might run into authority problems after having a taste of living on your own. On the other hand, if you never moved out, there would be no sudden problems to deal with.
In addition to money, you need to talk to your parents about rules. I suggest having a conversation with your parents about chores, responsibilities, and going out. Make sure they understand that you’re not in high school anymore, nor are you a minor. They should give you more breathing room.
Still remember that you will and should have responsibilities around the house and need to respect your parents. Now that you’re over 18, they don’t have to let you live with them. They are doing you a huge favor by letting you live in their house. If they aren’t charging you anything for room and board you can consider that a huge blessing from them. Discussing possible issues in the beginning will help avoid them in the future.
If you think this is all too much to bother with, you can just live on campus. If you live close to school you might even try living on campus for a semester or two and decide if you want to continue later on. Think about what you can save by living at home. It might be worth it and it might save you thousands of dollars.
Private school vs. State school
You might be looking into 3 colleges right now. One is your dream college. It has a great curriculum and every program you’ll ever need. It has a beautiful campus and tons to do. You couldn’t ask for more, except maybe one thing, a cheaper price tag. The school of your dreams costs about $40,000 a year including tuition, fees, room, and board.
Then there’s your second choice. It’s closer to home and offers a lot of good stuff. You like the campus and you know some friends there who love it. It has your program of choice and some cool activities you could get involved in. It’s your backup choice and costs about $28,000 for everything per year.
Finally is your last choice. It’s a state school and it costs $13,000 including everything and it has your major. That’s about all you know about it. You didn’t look much else into it because it’s a state school and all you need to know is that it’s your cheap alternative.
What is it about the $40,000 a year school that is so much better than the $28,000 dollar a year school? It’s pretty obvious. It’s just not as good. You love everything about the more expensive school, and the cheaper one is just not as good.
What about the $13,000 a year state school? Whether it’s because it’s so much cheaper or because it’s a “state” school, you probably didn’t even give it much of a chance. You want to know the truth? State schools are just as good as private expensive schools and sometimes better.
State colleges have had the idea of being “lesser” than the more expensive private schools. They might have been in the past, but not anymore. State schools today have been becoming very hard to get into. People are acknowledging how much cheaper they are and soon finding out that they are even better than many private schools.
Look at
Go back and look over your school choices. Research the state schools and try to lean towards them. You will save money and you might even like it a lot more than you ever would have the private school.
While you’re looking into state schools, you might want to take a look at community colleges as well. Do a lot of research, though, because there are some not so good community colleges. Still, some are very good. If you go to a community college you can take care of all your general education requirements and save loads of money.
College Costs
There are many more costs to college than just tuition, but tuition is definitely a big one. The cost of your tuition can be calculated 2 different ways. This depends on whether you are full-time or part-time.
If you are going as a part-time student, this usually means you are taking less than 12 credits or 3 or less classes per semester. In this case, you will most likely be charged per credit. Depending on the school you choose, this can cost anywhere between $100 and $1,000 per credit, maybe more.
When put this way, college seems a lot more expensive. It can be a motivator to know how much you are paying for each class. If you are paying $1,000 per credit, that equals $3,000 for a 3 credit class. You’ll think twice before you decide to skip classes that could cause you to fail.
Most students just out of high school who are going to college for the first time go full-time. To be considered a full-time student you have to be taking between 12 and 18 credits. In some schools, it is possible to take more, such as 21 credits, but that is overly ambitious. You’ll possibly be sacrificing the possibility of getting As in those classes as well as being able to work and have a social life.
Along with tuition, they tack on fees. These include activity fees, computer fees, lab fees, alumni fees, and others. You will also need to buy health insurance if you aren’t covered under your parents or another plan. This can be pricey.
Look carefully at these fees and make sure you aren’t paying for things that you don’t need. Some are optional and if you don’t want to pay them, you need to make sure you are filling out the correct paperwork, if necessary.
The next major fees are room and board. This will depend largely on whether you live on campus or with your parents. If this is your first year of college, your parents probably won’t charge you and probably not through the next four years either. You need to discuss this with them before school starts.
If you are going to live on campus, you will need to pay for your room and purchase a meal plan. The cost of the room will depend on several factors. Is it a single, double, triple, or quad? This refers to how many beds it has. It will also depend on if it’s a part of a suite.
The difference in the costs will vary from school to school. Some schools even offer apartment style accommodations. The differences in prices may vary by a couple hundred dollars each semester. You shouldn’t have to pay the same amount for the same sized room shared with 3 other people that someone else gets all to themselves.
As a freshman, you usually get to choose your room last. They often have dormitories, now most referred to as resident halls, just for freshman. As you go on through college, you may even decide to get an apartment with friends off campus.
Then there is the meal plan. Of course, if you life off campus, you won’t need to purchase one. Some schools do offer a commuter meal plan. This might give you the option to put $20 or $50 on your ID card for times when you are on campus during a meal or just need something to eat. Most will still let you pay with cash.
As a freshman living on campus, they usually require you to buy a certain size meal plan. They may require you to buy 10 or 21 meals per week. Some people choose to skip breakfast, not recommended, or carry cereal bars or other food for breakfast and snacks in their room. This might save you money.
As a sophomore or older, you may or may not need to purchase a meal plan. It’s up to you. It’s best to look into it and decide which would be cheaper. The meal plan would probably be cheaper than McDonald’s twice a day.
After the major expenses come the little things. The biggest of the little expenses is probably a computer, but at least it’s a one time expense. Not every school requires you to purchase a computer. There are usually several computer labs all over the campus. Still, it might be a good idea to purchase your own.
The rest of the costs depend on you. If you drive on campus you will need gas. If you want to do anything fun, you will need spending money. When you first move into your dorm, you’re probably going to want to spend some money on dorm essentials: bedding, lamps, posters, etc. For school work you’ll probably need to pick up some school supplies: notebooks, pens, pencils, etc.
You can definitely save a lot of money on these little costs. The simplest way? When you want to buy something but you don’t need it, don’t buy it. That really was simple wasn’t it?
Of course, it’s easier said than done. You can start with your dorm room décor. When you first move in, you’re going to want to go all out and make your room look fabulous. Maybe you’ll want to show off your design skills to your new roommate.
After a month or so, you’ll notice that you either spend little time in your room, or you couldn’t care less what it looks like. Now do you regret spending $200 on a throw rug that only gets kicked across the room anyway?
Think before you spend and only buy what you absolutely need. If you want to be stylish, there are many stores that offer cheap and chic decorations. Be sensible. Also, try to pick things that will last you most or all of your school. There’s no sense in buying a new comforter every year.
Books
If you haven’t already, read up on why it is important to learn everything you can about investing first. Yes, it is very important, and here is where you can find out exactly what you should be reading to learn all you can. In fact, you should read whatever you can about anything having to do with your finances. The more you know, the more financially secure you will be. I’ve provided as much information on my site as I can, but these books will provide you even more invaluable information.
How do I decide which books to recommend?
I’ve chosen books to review that I have read myself and have found very informative. I am always surfing amazon.com for the latest book on business and finance so that I can stay up to date. The benefit of books is that it’s most likely new, fresh information.
I love to read, including fiction and other areas, but business is my favorite. I hope you will come to love the area of finance as I do, or at least will be able to find some good information that you were looking for. Maybe you will learn something that will earn you some extra cash or that will get you ahead of the game.
Read my reviews and decide what you like best!
Books
The Neatest Little Guide to D0-it-Yourself Investing by Jason Kelly
Understanding Stocks by Michael Sincere
Investing in Bonds by David Scott
The Five Rules for Successful Stock Investing by Pat Dorsey
The Intelligent Investor by Benjamin Graham
Rich Dad Poor Dad by Robert T. Kiyosaki
The Millionaire Next Door by Thomas J. Stanley, Ph.D and William D. Danko, Ph.D.
Visit the Teen Money Central Amazon store for more great investing books!
What do you need in a college?
Why are you going to college? Most of you will say to get an education, but ultimately you will need that education to develop a career. Maybe you don’t know why you are going, but you should know that eventually you will choose a major and graduate with a degree.
The first most obvious thing you will need in a college is your chosen degree program. There is nothing more frustrating then enrolling in and starting at a college only to find out halfway through the first semester that your major isn’t offered there. Hopefully you will be smart enough to avoid this and make your major availability one of the first things you look for in a college.
This really is important no matter what your major is. Even if you think your major is so common it’s probably offered at every school. When it comes to college, or anything in life, never assume.
Along with major availability, you need to look into the procedures it entails. For some departments, such as theater or music, you may need an interview and/ or auditions. Also, some majors are formed as programs and you need to be accepted into them in addition to the school.
If you are unsure what you want to do, the best idea is to look for a school that offers a little bit of everything. Try to make it geared towards your interests. For example, if you love math and science, you should look for a school that offers many quality programs in this area. Even if you go to a broad school and when you finally choose your major they don’t have it, it shouldn’t be too big a deal to transfer. Just make sure you focus on general education requirements.
The most important thing to remember when it comes to your school choice and major is to avoid any unnecessary years of college, transfers, and any other burdens the best you can, but it’s still okay if it doesn’t work out the way you planned.
The next point to look for in a college is difficulty level. Quality can also come into play here, but we will talk more about that in chapter 3. The level of difficulty will depend on how well you do in school and what you feel you can and want to handle.
If you struggle for Bs and Cs, you know you won’t be going to Harvard. That’s perfectly okay. Harvard, Yale,
Of course, your grades will have a lot to do with whether or not an Ivy League school will accept you, but there is more to it than that. Every school will look at more than that. They also look at SATs, community involvement, accomplishments, and other activities in and outside of school. If you’re not well prepared in all areas, an “ordinary” school will have to do.
But remember, even if you can get into a school, it still might not be for you. My number one reason, of course, is the price. Ivy League schools are very expensive. On top of that, you probably won’t be working, which will put even more of a financial burden on you.
Besides money, you may find it to be too much to handle. Yes, it’s a lot of hard work, but if you got into the school in the first place, you should be able to handle it. There is also a lot of school involvement.
My point in this whole discussion is that you really need to want an Ivy League education in order to sacrifice the time and money. It’s only four years of your life, but the financial burden can last a lot longer and affect you even more.
I can’t emphasize enough how important it is to research you potential colleges. You need to know what you’re getting into before you start.
Is religion an issue? Do you ant to go to a Christian or
Do you want to go to a party school or a dry school?
Will you want to study abroad? Do they offer you that opportunity?
Is it too far away?
Do they let you bring a car on campus?
Once you know what kind of school you want to go to and have several possible universities, it’s time to move on to the next step.
College
Everybody knows that college is expensive and the cost is only expected to go up. The cost of college might be keeping you from attending or is causing you to worry about taking out loans that you won’t be able to pay off until years after you graduate.
I am going to show you how you can afford college. Find out:
commuting vs. living on campus
save money by taking more classes
about scholarships and college savings plans
how college and hard work can lead to financial security
Save money for college with Upromise
Dotschools.com - Find a college that’s right for you!
Learn what you can do to afford college, and quite possibly, avoid loans altogether!
Choose a career you’re going to love
Right now, you may be working at a part-time job at the mall or supermarket, and I can probably guess correctly that you don’t love it. In fact, you just might hate it, and I doubt you would ever want to be working there for the rest of your life.
The career you choose to go after is most likely the career you’re going to have for the rest of you working life until retirement. You could go back to school later to change your job, but that takes time and can be a hassle and nobody starts a career expecting to do something else in the future.
This is why you should be careful and choose a job you know you’re going to love.
Don’t just look at the money. Just because a job pays a lot doesn’t mean you will be happy doing it. Still keep in mind that just because it pays well doesn’t mean you’re going to be unhappy. Money doesn’t equal happiness or unhappiness it all depends on whether you like the job and lifestyle or not. Don’t use money as a deciding factor unless you think you won’t be able to survive on what it pays.
If you’ve done the internships, gotten the four year degree, and finally got your dream job and hate it, take action. You might just need to give it some time. It was your dream job, right?
If you still hate it after giving it some time, don’t stay. Make sure you do what makes you happy.
You only have one life to live and you will probably be working through most of it. Do what makes you happy. It’s a simple, yet effective point to live by.
Specialty Schools- Know your careers
If you want to be a pharmacist, your local state school may not have your career path available. This goes for many careers. When choosing a college, you need to make sure it has what you want and need.
I’ve heard of students spending lots of money on their dream college and then after starting their first semester, they find out their school doesn’