Life Lessons about managing your money
by Arina Smith Management 22 December 2017
The valuable lessons we all wished we’d learned earlier.
Money management is one of the most important skills any of us will ever learn. And yet it’s not taught in schools and we’re left to pick up the basics as we make our way through life. Whether you’re looking to change your financial situation – or you want to pass on the essentials to the next generation – these are some of the most valuable life lessons anyone can learn when it comes to managing your money.
Budgeting makes a difference
It’s boring, it means you might have to spend less and there are many more fun things you could spend your time on. But budgeting is the foundation for good money management. If you don’t budget then you won’t be in control of your cash and that’s a life lesson that too many of us learn too late. Losing control of your money could mean overspending on your credit card and developing a bad credit score. That, in turn, makes it difficult to borrow at a reasonable interest rate so people have started looking for bad credit loans and other forms of short-term lending just to get by.
Good debt vs. bad debt
You might be that person who has avoided debt all your life and missed out on things as a result. Or perhaps you’ve been too quick to sign on the dotted line. One of the biggest life lessons for money management is knowing the difference between good debt and bad debt. Good debt gives you opportunities, such as learning or a roof over your head. Bad debt is spent on purchases you don’t really need and won’t benefit from in the future.
Living within your means is the key to successful money management
Especially when we’re young we tend to be really ambitious when it comes to earnings. Why live within your means when there are plenty of options to borrow or pay later to have that lifestyle you feel like you deserve right now? The reality is that living within your means is the only way to make money management simple, stress-free and a constructive way to start building the future that you want.
The small things can have a big impact
It’s just a daily coffee or a weekly impulse buy or a few extra items at the supermarket – right? One of the biggest life lessons for anyone to learn when it comes to money is how all the little purchases really add up. Coffee, for example, might be just $3 a cup but that’s $21 a week, $84 a month and $1,008 over the course of a year. Successfully managing your money means taking care of the little things too and too many of us don’t learn until too late how much of a positive impact that can have.
Prioritising your spending is important
And not the same as budgeting. As you might set objectives for your career, when it comes to finances, goals are important too. From those goals, you can decide your spending priorities and make sure that the cash you have works as well as it can for you. It doesn’t matter how little income you have, getting into the habit of setting financial goals and prioritizing your spending to help you meet them will go a long way.