As you move through life, there are certain financial lessons that can prove to be invaluable. Unfortunately, far too few of these are taught in school and it has only been relatively recently that a good financial education has been added to the school curriculum. While financial learning cannot be achieved overnight, there are a few areas on which you can focus in order to have a better understanding and appreciation of money in your life. So, in the following blog post, we are going to discuss just a few of these that can end up making all the difference to you.
How to Spread Spending Out
Many of us live in a way that involves pay-check to pay-check spending. Essentially, this means that all of your money is being spent at the start of the month, while you are having to live very lean times indeed as you approach its end. Of course, you still have your essential bills to pay, but even these can be cut back by shopping around. Then, it is the other nonessential aspects of your spending that need to be looked at closely. One of the best ways of doing this is by making a household budget. This way, you have a document that you can keep referring back to when you are tempted to spend too heavily. Hopefully, this will leave you in a position in which you are comfortable as you approach the end of the month!
The Dangers of Debt
The accumulation of some debt as you move through life is inevitable in many cases. For example, you are likely to need a student loan and a mortgage. However, some kinds of debt can be more damaging than others. While credit cards can be a useful tool if they are utilized properly, it is all too easy to slip into debt if you are trying to juggle too many of them and you end up not making the minimum payment. You always need to check the small print to ensure that you are not going to be taken for a ride. Even more dangerous are payday loans, which come along with huge interest repayments that you have to cover. A lot of people find themselves slipping into difficulties when they take them out. Personal loans can also be a problem – particularly if you don’t know the exact rules and regulations that govern your repayments. As much as possible, you should avoid these quick financial fixes as they can do more harm than good.
The Ability to Haggle
In many cultures, haggling is a natural part of life, but this often doesn’t tend to be the case in the Western world. However, if you can get the cheapest price possible by simply asking for it, why wouldn’t you do this? Once you overcome this initial discomfort, you can find yourself getting a better deal than you had expected. When many people picture haggling, their minds automatically go to market stalls, but you can also do your haggling over the phone and online. This can be particularly effective with your regular bills and subscriptions. By simply threatening to cancel, you can end up getting a more favorable rate as these businesses don’t want to hand you over to their competitors. At the same time, if you are unable to get the price that you are looking for, there are often new customer offers that are just waiting to be taken advantage of at the other businesses. So, all in all, it is a win-win situation.
What Your Credit Score Means
Many of us don’t talk about our credit scores until it is too late. If you are trying to obtain a mortgage or a business loan, it is inevitable that your potential creditors will look as your score to determine whether or not you are a reliable person financially and if they are likely to get the money back. Your credit score is based on a number of different factors, which include your history of borrowing, and any late repayments that you have made over the years. If you are worried about your current credit score, there are agencies that will allow you to look at it. So, this gives you get another incentive to think hard before you apply for yet another financial service such as a credit card – especially if you are already in somewhat of a precarious financial situation.
How to Use Credit Cards Wisely
While we have mentioned a lot about the dangers of credit cards so far, if they are used effectively, they can actually be highly useful tools and they are nothing to be afraid of on their own. In fact, having one or two can be invaluable in proving your ability to manage money and pay it back on time, which can be invaluable with mortgages, etc. Also, when you make big financial purchases on them, you have more legal protections. If you are able to settle the bill in full at the end of the month, you are not going to be hit with any interest repayments. However, you don’t want to get into a situation in which you are juggling all your bills and moving them from one card onto another.
Ways to Shop Around for a Deal
We live in a world which is very advertising and marketing heavy, and the whole point of these things is that they push you into making a purchase. However, impulse buying is not generally a good idea, and can often lead to buyer’s remorse. You are much better off taking your time and sleeping on it before settling on a decision. However, if you do decide that it is a good idea to buy something, you should take your time and shop around before making that purchase. The internet is an invaluable tool that allows us to look at a number of different prices before settling on one. As well as this, there are dedicated price comparison websites out there that allow you to shop around to get the deal that is best for you. For example, if you are going to go on holiday, you could use Skyscanner to compare the different airline and holiday booking website costs. After all, why would you pay more for exactly the same service if you don’t have to?
The Secrets of Investing
For many of us, the world of investing, stocks, and bonds appears to be one that is simply too murky and confusing to get involved in. However, there are plenty of tools available online that give you the option of finding out about this world, and you don’t even necessarily have to pay money to do so. Among all the investment websites, online classes, and podcasts, you may find that you gain access to some invaluable nuggets of information that encourage you to make your first investment. However, before you take on a decision of this magnitude, there are also plenty of free services that allow you to invest ‘pretend money’. This way, you don’t have to make any commitments whatsoever and you can get a sense of how investing feels before you are ready to get out your own checkbook. Another option is to check out a Financial Advisor Twitter account for more advice.
Your Tax Situation
In some countries, taxes from income are filed automatically, while others require you to submit a tax return each and every year. Understanding your tax situation is one of the best ways of ensuring that you are not overpaying tax. For some people, the best way of dealing with this is by hiring an accountant to take care of it for them. However, if you want to save further sums of money, you can attempt to look after your own taxes. Another big part of keeping on top of your tax situation is watching the news on a regular basis. This is largely down to the fact that the government are always introducing new measures that you need to keep on top of. If you find that you overpay your taxes, you also need to know about applying for a refund, which can be a handy little bonus!
The Merits of Renting or Buying
Probably the biggest cost that you are going to find yourself paying each and every month is your housing costs. So, you need to know about whether you would like to be renting or buying your property. The former approach is becoming increasingly common and has the natural advantage of allowing you to move around as needed. You also don’t have to worry about paying the costs for anything that goes wrong around the place. At the same time, you also know that you are filling a landlord’s pockets at the expense of your own. Getting a mortgage feels like more of a significant commitment, and it means that you are more tied down as a result. You also know that you need to take care of all of the different associated housing costs for yourself. However, not only are you likely to get a better deal than renting, you are also putting your money into something that is yours and you will walk away with some real estate at the end of it all.
Pay in Cash to Feel the Value
Nowadays, many of our financial transactions take place by clicking a few buttons or tapping a phone on a screen. While this modern convenience feels fantastic, it also makes it much harder to learn the value of things. So, from time to time, it can be invaluable to pay for some of your purchases in cash. This way, you can feel the weight of your spending, and it also gives you an appreciation for money that may have otherwise been lost somewhere along the way.
Plan Your Pension
The final piece of advice that we are going to offer to you is the planning of your pension. Ideally, you will start to get together this money at the earliest possible opportunity as you need to plan for a comfortable retirement. If you work in paid employment, this is often covered, but you still may want to have a separate private pension pot. If you are self-employed, it becomes even more vital that you think about it.
These money lessons represent some of the main factors that will carry you through life in a manner that is financially stable. Of course, learning about money is a lifelong journey.
