Learning how to save money is a skill we should all have. However, there’s a lot more to being financially prepared than meets the eye. As parents, we should be financially responsible but also ensure that we set the right examples to ensure that we are helping our children in the long run. Here are some money skills that we should all fine-tune:
Emergency Preparedness
So many of us only have enough money to cover the essential expenses, but it becomes critical for us to learn how to prepare for emergencies. There are a number of things we can do here such as budgeting and saving, but we should also go one step further and put a specific amount on how much we should save. The general rule of thumb is between 3 and 6 months of your earnings. That way, if you end up being on the receiving end of an attorney’s lawsuit you won’t feel the pressures. This will prevent piling up credit card debt or high-interest loans that can have a major impact on your financial capacity for years to come. An emergency fund will give you so much peace of mind that you don’t have to worry about the finances, which can help you and your children to deal with any stresses far more effectively.
An additional way to prepare for emergencies is to store some self stable foods in your pantry so that you can “shop your pantry” during a tight time. An easier approach might be to have a collection of pantry meals so you can easily feed your family with a lower than usual grocery bill to help tide you over. These two approaches are easier than you might think AND can be started within your current food budget without overwhelming you.
Delayed Gratification
We all know what we SHOULD do: save up for an item rather than using a credit card to get it instantly. We can all feel tempted by something, which is why delayed gratification helps to teach us all the importance of discipline. Impulsive spending is a very detrimental mindset because we think it will solve all our woes. Saving up for something allows us to determine if, at the end of the saving process, we actually need it.
Determine What You Want Versus What You Need
Money management is about understanding your needs versus your wants. Something like the 50/30/20 rule is a good barometer here. After you put 50% of your overall earnings post-tax on the essentials like bills and 20% into saving and paying off debt, you’re left with 30% to spend on the things that you want. We should all be able to determine what is essential and what is not. And when we pass this habit on to our children, we instill a far better approach to money management.
We understand that this might not be possible for everyone, after all, sometimes it’s more than 50% that needs to go to the essentials! It’s important though that you don’t go over your money to spend on things that you want. The reason for this is because ending up in debt is the last thing that you need, and you’ll have even more problems affording things in future. If you are struggling, it might be time to try and get a new job that pays more. Get your resume sorted, and you can check out something like Storeyline Resume reviews to get an idea about companies that can help with this. More money, less problems!
Look At Investing Your Money From An Early Age
If there’s a common opinion that’s expressed by people who are nearing retirement, it’s that they wish they’d done more with their money from an early age. While it’s important to still have fun in your youth, you should be doing more with your money to make it work harder.
Investing your money into fixed rate indexed annuities, real estate and other investment options is definitely worth doing from the moment you start earning money.
The Comparison Mindset
It’s easy to dismiss this approach as being tight-fisted, but if you need to make every penny count, this is where comparing costs between brands and stores will give you a much better ability to make your money work hard for you. We need to track our expenditures, but we also need to understand the concept of living within our means, and this encompasses making smart purchasing decisions. Understanding where something is cheaper and looking at what is value for money will ensure that we are flexing this money muscle.
There are many other money skills we should have, but these are some of the most important approaches that will not just help our finances, but also our mindset.