A proper understanding of basic financial concepts is critical to thriving in modern day life. We live in a financially interconnected society that demands an understanding of the assets we may acquire through our hard work, as well as the liabilities we may assume by our consumer desires. Our current financial system can easily provide us with the ability to live beyond our means, via credit, but at great peril to those who do not understand its consequences.
The word “finance,” in its most basic definition, helps us acquire an asset by funding its purchase through borrowings from another party. This can start with credit card accounts at an early age, student loans as teens, car loans as young adults and home ownership as more mature adults.
Without finance, we would live in a cash economy, which would restrict activity to those who patiently saved fully for their purchases. A sizable portion of our country’s wealth creation has come from home ownership, which is commonly financed by a lender. Our economy thrives on finance and credit — companies are built and lives are changed with the proper use of financial instruments to knowledgeable borrowers and investors.
Our financial lives are composed of two basic parts: our assets and liabilities. In our youth we spend more time borrowing money on things like education and transportation needs to get a start on life. As we mature, we try to acquire more assets than liabilities to achieve a positive net worth. Later in life, if successful, we become investors and hope we have learned how to manage the assets we have accumulated to support our retirement.
I strongly encourage parents and educators to purposefully teach our children basic financial concepts. In doing so, they can enter their adult years more prepared to make these incredibly important decisions that can affect the outcome of and opportunities in their lives.
The Finance Camp was created to provide teens in the Roaring Fork Valley with a direct, hands-on learning experience with seasoned financial professionals. We will be teaching investment skills using real funds deposited into our students’ accounts after they earned their spot in camp by performing an equivalent value community service activity.
The camp is my way of sharing the immensely valuable mentorship lessons I received early, often, and continued throughout my career from several Wall Street legends. I hope to inspire and offer my guidance to new generation of young investors who may follow their own dreams.