By Hector Arrieta, Editor in Chief
“You wanna know what money sounds like? Go to a trading floor on Wall Street,” says character Jordan Belfort from The Wolf of Wall Street, directed by Martin Scorsese. Money is what makes the world turn round. It allows people to purchase goods and services that they desire. Want a bagel? That’ll be $2.64. Want a car? That’ll be $35,000. Want a house? That’ll be $548,000. Money is a resource, and like other resources, it can be drained if not used properly. However, money can also be grown if managed correctly.
“Start saving a little bit of money and set up a Roth IRA,” said finance savvy, English Department Chair Ken Favell. “Start planning for your future now. Start a Roth IRA now – super simple to do – put a little bit of money in there. Start investing maybe 15 percent or even five percent, any amount of money you have. Start putting it in there, and let your money grow tax-free over the course of your lifetime….Once you have no debt and you’re done with school and you’re saving up for a down payment on a house, then start looking at different mutual funds – ways to make your money grow.”
Favell mentioned a Roth IRA. For those who do not know, an IRA is a financial account that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis. There are two main types of IRAs: Traditional and Roth. A Traditional IRA includes an upfront tax break of up to $6,000 in 2019, investment earnings not being taxed as long as the money remains in the protection of the account, and withdrawals in retirement are taxed at your tax rate at that time. On the other hand, a Roth IRA is similar to the Traditional except that contributions are not deductible (meaning there is no upfront tax break) yet withdrawals in retirement are completely tax-free. Alongside these two, there are other variants of IRAs: Simplified Employee Pension (SEP), Nondeductible, Spousal, Savings Income Match Plan for Employees (SIMPLE), and Self-Directed.
While the idea of saving one’s money and allowing it to grow does sound great, one should know the reason why one is trying to save his or her money.
“There are three reasons why people should want to save money,” said math teacher Dan White. “You should want to save it initially for an emergency fund. What happens if your car breaks down or your iPhone goes kaput? Second reason is [that] you want to save up for a down payment on some purchase. ‘I want to buy a new car in three years,’ so you save money for that purpose. And third is, you want to save for the long run: for retirement or education. Depending on which of those purposes you in mind will somewhat dictate what you do with your money.”
However, in the event that students wish to begin saving money and looking into growing their money, there are few things that students should avoid.
“Do not go into debt for anything other than a house,” said Favell. “Stay out of debt. Do not go into debt for school; find a way to pay for it in cash. Do not go into debt for a car, which is the dumbest thing you could possibly do. Do not lease a car. If you lease something, that is being fleeced….it’s a con job. Credit cards are a con job. There are all kinds of myths that you need a credit card to get a credit score. Nonsense. There are many ways to build a credit score without getting a credit card.”
Verbum Dei High School is home to entrepreneurial students who find ways to make spare money during the school year. One such student is senior Jamie Partida who runs a business selling chocolates.
“It’s important to understand that I started selling chocolates because my dad stopped giving me money,” said Partida. “So the money I got was towards food at school, but the few extra dollars I would get, I would invest it in the business to keep buying more options for the customers.”
In any case, students should learn to better manage their money. Students should learn to save and invest money for the future, not only for themselves but for their future families.