There are money habits that will make you a financial failure but it can be corrected if you only learn financial responsibility. Learning to be responsible with your money is tough and it becomes more difficult if you do not start early. The more you get used to being reckless with your finances, the more it will be difficult for you to break the habit and get used to a new and better one.
This is why we have compiled some useful lessons that teens ideally should learn before they venture into the world of adulthood. Some of the lessons will take some getting used to and that is one of the reasons why you want to start early.
6 lessons that will help you improve financial management
Here are a couple of lessons that teens should learn prior to entering into adulthood. Ideally, you want to learn these as early as possible but being in high school should be old enough for you to understand the concepts.
Learning how to do things yourself.
The first lesson that you need to learn is not entirely a financial one. But if learned, it can be a great asset to help in wealth building. This lesson is all about learning how to do things on your own. DIY is always a great skill because it can keep you from spending unnecessarily. For instance, learning how to cook, will eliminate the need to order take out. That should cut a huge bill from your future expenses. Learning how to fix a car, even to just change the oil, will save a lot because the need for a mechanic will not longer be necessary. These things will add up to be a huge saving for you.
Being responsible for your actions.
The second lesson that you need to learn is how to be responsible for your actions. That should be a fitting lesson for financial responsibility. You need to know that any decision that you will make is your own. Regardless of the influences around you, it is not right for you to blame your friends or parents for your overspending habits. You could have chosen to walk away from every shopping event. Even if they are telling you what to do, it is still your decision if you want to pursue it or not.
Knowing the alternatives.
Did you know that one of the characteristics of a modest millionaire is they know how to budget from fun activities? Some people think that to practice financial responsibility, you need to stop wasting money on entertainment expenses – especially when you are still in debt. However, that is not how it should be. You need to continue spending for what makes you happy but you just need to know the alternatives that will keep you from the pricey ones. Being resourceful can help you enjoy life despite your financial limitations.
Reading the fine prints.
Here is one lesson that is rarely taught. It is boring so it will be difficult for a teenager to grasp the importance of reading the fine prints. If adults have a hard time with it, what more can you expect from teens? But nobody ever said that financial responsibility is an easy thing to do. Just like you need to go through with your exams or study all night just to pass your course, you should read the fine prints. The information you gain will pay off in the end.
Understanding good from bad debts.
According to Bankrate.com, debt can be a complex subject to learn. We may want to think that debt is entirely bad but that is not accurate. There are good debts that will help you improve your financial situation. You just have to learn how to identify it from the bad ones. Not only that, you need to learn credit management to be more responsible with your money.
Stepping back to look at the big picture.
Lastly, you want to learn how to always look at the bigger picture. It keeps your future in perspective so you can ensure that your present choices will not affect it. In most cases, people got into financial troubles because they opted to focus only on the present. That is not how you practice financial responsibility. You want to keep your eye on the mistakes of the past, the situation in the present and what you want to pursue in the future.
Why you need to be responsible with money from the beginning
Being responsible with your money is best done while young because you typically start on a clean slate. Although by the time you are a teenager, you should already have a couple of insights about life and personal finances. But still, you are young and it should be easy to put you in the right direction – as long as you are willing to learn and adapt.
An article published on StreetWise.co, discussed a study done by the TIAA-CREF about Millennials and the state of their personal finances. According to the study, this generation has the highest income and debts to match. That does not really promote a picture of financial responsibility. Especially when you find out that they do not have enough savings to their name.
Finding financial responsibility while in debt is difficult and that is one of the reasons why you want to use it to stay away from debt. To help encourage you, here are some benefits to being more financially responsible even at an early age.
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Helps you develop the good habits before you develop the bad ones. The great thing about starting early is you can develop the good ones before you are exposed to the bad ones. When you start earning money, you will be tempted to be reckless with it. Before that happens, make sure that the right habits are already in place.
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Allows you to start on your financial goals early. Another thing that should make you want to learn financial responsibility is it will help you work on your goals early in your life. That way, the chances of you achieving them early will also be high.
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Encourages you to set up your financial future right. Lastly, learning how to be responsible at a young age will help you setup your financial future the right way. It will help make the right decisions that will lead you the type of future that you want to have.
Apparently, learning financial responsibility is needed now more than ever. According to an article from FoxBusiness.com, the household debt in the country has risen higher. It may be viewed by economists as a good sign because consumer confidence is up once more. After all, people who are not confident about their finances will not put themselves in debt. However, you also have to realize that too much debt is the reason why everything was so bad the last recession. The rising consumer debt can lead us into another debt situation that this time, a lot of us may not be able to survive it. With a debt of $11.52 trillion, we may not be too far off from another crisis.
This is why it is important that you adapt a more responsible way of managing your finances. You cannot afford to let your finances be as bad as what your elders had. It will be a challenge, given the present economic conditions in the country. But soon, you will find that the lessons learned are all worth your while.