Investing 101 | IGNITE

Invest in yourself.

As students, we often don’t think of investing. It’s a somewhat foreign concept for us, but something our parents and their parents are responsible for.

We may not realize it but investing begins early, as children. Putting a few cents into your piggy bank might not seem like much, but it’s the first step into developing self-reliance and building confidence. Many of us started with an allowance, which might be the only income we had, but it’s a good start!

Have you heard the term compounding? You can grow the money you save by investing it to earn a return. It’s a somewhat complex concept, but this is one of the simplest forms. Just focus on starting young because the younger you are, the higher your reward.

Interest is also an important concept to understand. It’s the cost of borrowing money, usually as a percentage. You can also let others borrow your money and charge them interest as well. Are you now interested?

Manage your money

An image of a green animated character putting money into a pink piggy bank. — *Via GIPHY*

Between tuition, living expenses and even books and food, there are so many obstacles to managing your money. Budget your finances by looking for a part-time job while you study, so you’re able to bring in a steady stream of disposable income.

Planning a budget entails being wary of “present bias,” which in simple terms means we tend to care more about the here and now than we do the future.

Ever gone for one scoop of ice cream and instead ended up finishing the whole tub? Ever spent half of your paycheque on shoes instead of saving for next month’s rent? Luckily, budgeting can help rein in our self-control, while still allowing room for spending on fun things.

Emergency fund

An animated image of a character with sunglasses and a hat shooting out of bills of money. "Make it rain" is spelled above the image. — *Via GIPHY*

The key question to ask here is, how much cash would I have today if I really needed it? The Financial Consumer Agency of Canada suggests saving the equivalent of three to six months of your regular expenses, although it very much depends on your circumstances.

Even though it may be tough to have a sizeable emergency fund set aside, any amount can help to keep you out of debt and avoid desperation when faced with a large and unexpected expense. For example, let’s say you study graphic design and your laptop broke. You can use your emergency fund for this necessary expense.

This also gives you breathing room and makes those smaller purchases a lot easier on your wallet, and gives you some peace of mind knowing that you’ve done all you can to be ready when you really need to dip into your emergency fund. Hopefully, you never do.

Start small

An animated image of a character viewing images on a computer screen with the text above spelling "I'm bidding." — *Via GIPHY*

Small contributions build over time and you need to take the time to really understand this process.

There are three investing habits to keep in mind. The first is to automate your spending. When you set an amount to go towards your investments every pay cheque, presuming you are working, you don’t even have to think about it. If you have another income source, you can still use this investing habit.

The second is to start with whatever you can afford. The biggest advantage here is to start early. Letting savings compound for long and uninterrupted periods of time means you will reap the benefits later on.

The other benefit is that once you leave the world of academia and begin your career, you can look back with pride and know you started small and ended big.

Be curious! Research different platforms and be mindful of the concepts that we have covered above. Investing is now easier than ever with so many digital options that are user-friendly. There are also experts in the field who can provide guidance, and be mindful of whatever platform you decide to use.

Invest in yourself

An animated image of a blue character digging a hole and dumping dirt with text above spelling "digging my own hole!" — *Via GIPHY*

Three key takeaways from investing are returns, returns and returns! If you take the time to research, save and budget, you’re well on your way to becoming financially stable.

What’s more, being financially literate means being cognizant of your limitations. Try to cut out those small purchases that you don’t need and putting away a tiny amount over time will benefit you in your future.

Check out the First Investment Club, which is a student-led community here at Humber Polytechnic, where you can find like-minded students who want to learn and grow together in the investment world.

Invest in yourself, because no one else can do it for you.

Feature image courtesy of PiggyBank via Unsplash.

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