Even people who have had quite a bit of experience of facing the challenges of real-life find it difficult to implement money-making skills.
Here are some lessons about personal finance that everybody in their life should have knowledge about
1. Change your money mindset:
Most of the people would associate themselves as middle-class or a little above or below it. Money mindset is such households revolve around being skeptical of earning through different means. It is highly doubted amongst these people that you can make money online.
People also believe there is a scarcity of money around the world but this is not true. There is enough money, you just need to learn the right way to attract it.
2. Set your goals
It would be hard for you to find the passion to earn or save if you don’t have a clear financial goal. Whether it’s your dream car or a house you have been eyeing, defining these goals early would help you to draft a plan to reach your destination effectively.
Consider the S.M.A.R.T. (specific, measurable, actionable, realistic, and time-bound) approach while establishing financial goals. Opting for this method would make your goal more reachable and also motivate you along the course.
3. Importance of budgeting:
Budgeting is probably the most important thing in the world of finance. It seems a lot easier to think of it than to implement it. The one rule that you will come across in finance is the 50-30-20 rule. It says that 50% of your income must go to the basic needs that are essential like food; water, electricity, etc.
30 % must be given to your ‘wants’. It might be a dress you like or a holiday you want to take while 20% must go to savings and should not be touched at any cost. While this is completely subjective, try to save the most you can and spend the least on ‘wants’.
4. Importance of Investing:
Savings is great but one thing that is more important than it is investing. With the inflation rates going up with each passing year, your money would just be a worthless piece if not invested correctly. As said, money makes money, and this is exactly what you should plan to do if you want to have a better future.
There are so many ways for you to invest. If you are ready to take some financial risks then stocks and mutual funds are the best for you.
If you want a safer option, you can opt for fixed deposits. Make sure that you do not invest all your money in the same way.
5. Don’t make money your source of happiness:
Frugal living is the key to living a happy and content life. Nobody would mind a million dollars in their bank accounts but it becomes problematic when you start associating your happiness with it.
In that case, you will blow money every time you look for happiness in your life. Try to attach yourself with happy habits that do not require a lot of money like reading books, watching movies, etc. compared to fancy dinners, exotic holidays, etc.