If only personal finance is readily available as a required subject in high school or college, our young people wouldn’t be so clueless about how to manage their money when they’re out in the real world and in charge of their own lives. If you believe that understanding personal finance is an adult-only thing, you’re wrong. You have to get started on the right path with a little willingness and a little research.
I could’ve benefitted from it too. Well, I did – in a hard way.
So, here are five important things to understand about your finances if you want to live a prosperous and comfortable life.
- 1. Know where your money goes. After contemplating on how you deal with your personal finances (like buying that $30 shampoo bottle with a free loofah), you’ll understand how important it is to ensure that your expenses are useful and aren’t exceeding your income. You can accomplish this through budgeting. There are thousands of free spend-tracking apps available for smartphones to get you started.
Making a small, manageable change in your everyday expenses can have just as big of an impact on your finances as getting a raise. That morning java adds up over the course of a month and seriously strains your possible savings.
- 2. Learn Self Control. I applaud parents who teach this important skill to their children. The sooner people (you) learn the art of delaying gratification, the sooner you’ll find it easy to keep your splurges in order. Although you can use a credit card the minute you want it, it’s better to wait until you actually save up your own money. Is it really worth it to pay off interest for a new gadget or a set of clothes?
If you have a habit of putting all your purchases on credit cards, you could end up paying for those items longer than you want. If you want to keep your credit cards for the simple convenience of the rewards they offer, ensure to pay your balance in full when the bill comes, and never carry more cards than you can keep track of.
- 3. Take Control of your Personal Financial Future. If you’re poor at managing your own money, others can take advantage of it and find ways to manage it for you. Some of these people may be ill intentioned, like those commissions-based financial planners. Others may be well meaning like your grandma who really wants you to purchase your own house even though what you can afford is an adjustable-rate mortgage.
Instead of asking others for advice, take charge of your finances and read a few books about personal finance. If you’re still uncertain about buying a house just yet, then properties for rent on McGrath is a good place to start looking for temporary homes until you are financially secure enough to get a property you want.
Remember, special background and fancy degrees is not necessary to become an expert at managing your own finances. Wondering when to start? How about NOW?