Transcription - Start off on the Right Foot in a Tough Economy with Money Management from Mint.com CEO Aaron Patzer
June 18th, 2008
Start off on the Right Foot in a Tough Economy with Money Management from Mint.com
Hi I’m Aaron Patzer, the founder and CEO of Mint.com and today we’re going to cover some money topics specifically for young professionals. So number one , how to choose the right credit card, number two why you should start investing as soon as possible and number three how to have more money without working any harder.
So number one how to choose the right credit card. If you’re like me you get three to five credit card applications in the mail every week and some of them have pretty pictures of beaches, some of them are from your Alumni or professional association – so which do you choose? Well the right credit card for you completely depends on who you are and how you spend. If you carry a balance you’re going to be slammed with all sorts of finance charges, and the most important thing for you to do is to find a good zero percent intro rate card so that for the next 6-12 months you don’t have those pesky finance charges building up. If you have the discipline to pay off your balance in full each month you really want to optimise for rewards, you can actually get a credit card that pays you for every dollar that you spend and you shouldn’t settle for anything less than 1% cashback or one point or one mile for every dollar spent and you can actually do much better.
Second piece of advice would be to start investing while you are still young preferably while you are in your twenty’s.
Male 1 being interviewed on the street by female 1
Female 1 “Are you saving for retirement?”
Male 1 “No I was, but I’m not anymore”
Female 2 “I do save for retirement I have a 41K and a Roc IRA (?)”
Male 2 “I am saving for retirement too and I have both of those”
Female 2 “Good for you”
Lets say you make a 10% return on a $1000 investment – after the first year you will have $1100, after the second year you’re earning interest not just on the original $1000 but on the interest for the first year as well and you’ll have £1210. So you’re interest earns interest each year and it starts to grow out of control -in a good way. That’s compound interest, the longer you let it ride the better off you’ll do.
The third topic today is how to have more money without actually working any harder. Banks really like to give away things like free checking and free savings accounts because then you deposit you’re $10,000 in there and they go off and loan that money to small businesses or for mortgages at seven or eight percent. So they are getting seven or eight percent on the money you put in and that is interest that could be yours. So if you switch to a bank like ING or HSBC or eTrade bank you can get three, four, five percent interest on your deposits and for the average person that means $500-$1000 in additional income every year without working any harder.
So in conclusion, number one – get a credit card that pays you. Number two – start investing as early as you can, and number three make sure that you get a bank account that pays you at least three or four percent interest.
