Throughout our lives, we picked up a lot of lessons here and there. Most of the principles and values that we have are something that we got from our very own homes. As kids, we are like sponges that absorb all sorts of information. Now that we have grown, we should be wiser enough to filter through all of those lessons to figure out what should be followed and what should be forgotten.
If you want to manage personal finances the right way, you must follow the right financial lessons that you picked up in the past. That being said, you may want to increase what you know by reading about personal finance and money management. There is no excuse to not know because the Internet can provide you with a lot of useful information with just a couple of taps on your keyboard.
4 money lessons you should forget
But as we mentioned, filtering the financial lessons that you will encounter is important. Not all of them can be applied to your own personal preference or taste. Some can make the sacrifices that you cannot and all of these should be taken into consideration alongside your future goals.
While you are deciding what lessons to let go and what to retain, here are 4 money related thoughts that we heard as kids that you should probably try to forget.
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It’s not polite to talk about money. No, we are not encouraging you to go around and talk about your financial situation to just about anybody. But when it comes to your spouse and even your closest family and friends, it is alright to talk about money with them. This is most true when you are in a financial crisis. Getting out of debt, for instance, is very hard and most of the time, people who have the support of their loved ones get to be most successful in overcoming that crisis. It does not even have to financial support – a simple emotional push and encouragement is enough to help you out. But you will not get that if you are afraid to talk about money. When your friends know how you fare financially, they will be able to adjust when you decide to hang out together. At least, that is true if they are sincerely considerate about your financial well-being.
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Debt is never the right solution. This is not entirely accurate. We admit that there are debts that you do not need to make but we also believe that there are good debts that you can benefit from. For instance, you cannot hope to buy a home in cash so you need to get a loan for that – at least, most of us have to. Getting a home is not bad and it will in fact, increase your personal net worth. But you need to realize that selecting the right home, just what you need and not what you think will appear luxurious, is the key to make the smart choice about it. Stop thinking that debt must be absent in your life. In truth, it is our own reaction to this credit obligation that got us in trouble. If you know how to be financially responsible, you will know how to manage debt without it being a disaster. Even credit cards can be a staple in your life as long as you know how to use them properly.
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Money will not grow if you do not work hard for it. This probably the most popular misconception among the other financial lessons out there. While it is true, again, it is not entirely so. Money can grow if you leave it untouched as long as you leave it in the right place. We are talking about investing. You can invest your money in stocks and bonds and that can accumulate the longer you leave it. At least, this is when your money is placed in a growing company. Try to learn about investing by visiting Investor.gov. This is a government website that can teach you the basics of investing.
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You need insurance. Again, this lesson must be taken into the right context. While it can help, some insurance policies are just unnecessary. For instance, if you do not have dependents, what use will a life insurance be to you? Choose what you will get and do the math. If the chances of you using that insurance is very remote, then you may want to put that money elsewhere. A health insurance may be great but if you think that your money will grow more if invested, you can do the latter and just liquidate the investment if you need it. Know your options and be wise about where you will put your money.
Financial habits should you be focusing on
It is great that money lessons are being taught in our children’s schools but that does not mean they will learn everything there. We all have to consider the specific financial habits that we need to be focusing on and some of them we can only learn when we are financially independent. Here are some of the financial lessons that you may want to make sure you explore.
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Budgeting. This is probably one of the first lessons that you will need because it helps you organize your money.
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Saving. This is another lesson that we learned even as kids. However, there is more to this that needs to be explored. For instance, you need to know where you should put your savings so it grows even as you leave it intact.
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Investing. In connection to the previous, investing is a really important lesson that you need to learn when you start earning your own salary.
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Spending with credit cards. Cash purchases are easily controlled but credit cards are tougher. You need this for your credit history so you can build up a good credit score for future financial goals. You need to learn how to use your credit card so it will not lead to your financial demise.
- Monitoring your credit score. Your credit report is important because it shows how financially responsible you are. Not only that, it tips you of any identity theft done against you. Do not ignore this task because failing to pay attention to it can lead to a disaster you do not want to be in.