Guest Post by Nadine
Learning how to manage your money is one of those lifelong lessons that, unfortunately, sometimes really do take a lifetime to learn. Some people run up their credit cards, buy things they can’t afford, and eat out time and time again, and only stop to think about their spending habits when they’ve already gone bankrupt.
At the most basic level, managing your money is about discipline. It’s difficult to see something you want and not get it, no matter how old or wise you are. What a disciplined person will understand, however, is that not being able to get something now doesn’t mean you can’t ever get it, just that you might have to wait a little longer until you do.
Generally teenagers and young adults are guiltier of impatient and impulsive financial decisions, but even the best of us forget some of the basic rules of money management.
Here they are:
- Don’t spend more than you make. This is probably the most straightforward rule of money management, and also the one that is broken most often. Why? The answer is simple: credit cards. Credit cards lead people into thinking they have more money than they actually do, which can then lead to some very irresponsible purchases. The thing to remember is that credit is borrowed money that must always be paid back. Therefore, if you don’t actually have the money, don’t spend it with a credit card, and if you absolutely have to, make sure to never miss a payment.
- Don’t spend everything you make. Having money doesn’t mean you have to spend it. A much more mature strategy is to invest a percentage of what you make every month into a savings account, and be prepared for an emergency, or for a major purchase down the road, like a house, that you wouldn’t be able to afford otherwise, even with a credit card. Another wise thing to do is invest some of your cash into stocks or other kinds of investments, so that you can grow your money while it sits in the bank.
It has been surmised that the only way to really learn lessons, especially any lesson involving money, is by experience. And while experience is certainly an excellent teacher, there is no reason that you shouldn’t make an effort to internalize these rules as early as you can, so that the damage done by learning your lesson isn’t as great.
This is a guest post by Nadia Jones who blogs at accredited online colleges about education, college, student, teacher, money saving, movie related topics. You can reach her at nadia.jones5 @ gmail.com.