Mark Weitzel is a rather unusual university professor in Carolina: he managed to have 500 of his students leave campus $100,000 richer. Besides studying business and finance theory, these students are taught to do business and apply what they learn, with more practice than theory.
The people behind these young people’s early success at making large amounts of money are the so-called “Money Professors“, who give their students a series of personal finance classes and challenge them to meet the goal over the course of a single semester. In most years, a large share of the students succeed.
Weitzel’s mission is to make his students aware of how important it is to understand how money works. Unsurprisingly, most students want Weitzel as their professor.
These are 4 of the personal finance rules that Weitzel believes everyone should know by heart, both young university students and those who have already graduated.
1. Personal finance is exactly that: personal
When it comes to money, just as when you buy a pair of trousers, one size doesn’t fit all. Personal finance is personal, and that means there are no universal rules or set steps that work the same way for everyone.
Each person has their own skills and talents, and each starts from a very different salary, so the path one person should take will probably differ from another’s. And of course, what works for one person doesn’t have to work for someone else.
That said, there are a few universal rules or basic principles: spend less than you earn, save more, invest more and seek a better return on your money.
Beyond that, we have to make the right decisions for our own personal situation, regardless of what others do.
(See: 7 mistakes we make with our personal finances)
2. Time is your greatest ally
It doesn’t matter how old you are. Start saving right now, whether you’re 20 or 40. This is, without doubt, the first piece of advice this professor gives his students: every month you have to manage to save a certain amount of money. And what if you don’t earn enough to be able to save? Then you need to look for alternative sources of income.
Poor financial health shows clearly when you can’t save money every month. If you’re not saving, something is seriously wrong with your finances, and it’s one of those things that, unless you draw up a plan, usually gets worse over time. It never improves on its own.
Faced with this situation, most people think better times will come, but those better times rarely arrive. It’s never a good time to save.
The ideal age to start saving is “the younger, the better”. Even 19-year-olds have the advantage of physical strength and energy. It’s an age at which they can work hard part-time and start saving while they don’t have many expenses.
As we saw before, this is the huge difference between starting to save at 25 and at 35. Those who start early and know what they’re doing with their money only need to let compound interest do its work to have a small fortune, or even a sizeable one, by the age of 30 to 35.
What’s more, as we’ve said before, at 20 you can make plenty of mistakes and still have time to recover. It’s the perfect age to take risks, something a 50-year-old can’t say.
3. Common sense in personal finance
At the start of the course, Professor Mark Weitzel asks all his students whether they think most people are successful with their finances. The students unanimously say no.
So if most people are not an example of financial success, it makes sense to stop doing what most people do. Just because all your friends get a new car every five years doesn’t mean you should also sacrifice your personal finances to show off a car. Apply this to any area where people act like fools with their money. Identify the financial mistakes that cause most people long-term money problems, and don’t follow the herd, because most of them will end up on the edge of the cliff.
4. Mistakes are allowed, but not having a plan is not
Failing to plan is planning to fail.
Most people spend their twenties wrecking their finances, and their thirties trying to keep their heads above water, regretting what they did wrong in their twenties or wondering what they did wrong to end up so badly off. In their forties they start taking the risks they should have taken at 25 and desperately doing what they should have done calmly at 30. In their fifties, those who haven’t given up will try to get their affairs in order with an eye on retirement and their children.
Whether you’re someone who says money is important or someone who says it isn’t, start focusing on money now (the sooner the better), and that way you’ll avoid telling yourself later on: “Damn, money really was important after all.”
Follow, as far as possible, the advice we gave in our 34 money lessons: the sooner you understand the most basic concepts of financial education and draw up a plan, ideally in writing, the better. And, ideally, stick to it meticulously.
See also: What leads you to poverty, according to the author of “Secrets of the Millionaire Mind”
Featured image: AvroInterceptor, CC BY-SA 4.0, via Wikimedia Commons.
