Welcome to this money lesson.
We treat money as an end to all money conversations, whether as children or adults. The way we handle or spend money reflects our upbringing and cultural influence on our financial outlook. People spend money for a variety of reasons, including necessities, luxury and other insatiable human drives. However, funding problems make spending harder.
Human needs are insatiable, which means you will never fulfil all your desires. But if you can or want to try, how do you achieve them? Money is what you utilise. You buy stuff with money, go on dates with money, pay hospital bills with money and wish for more money. To put it another way, money makes things happen. The urge to earn more money is the negative aspect of money, and that in itself is not wholly negative. Having extra money opens up a world of possibilities for financial lifestyle.
Money allows us to purchase goods and services that can further our goals and ambitions. Having extra money can also open up opportunities to invest in other businesses, real estate, or the stock market, which can help a person increase their wealth even more. Money can also be used to pay for education, start a business, or get medical care. All of these things can help a person achieve their goals and live a more secure and satisfying life.
Even the most illiterate individual can understand income and expenditure. To understand your personal income statement, you do not need a degree in accounting or finance. Knowing these basic financial terms will take a long way towards helping you plan your future path, whether short or long-term. Simply put, income refers to money you earn or have earned over time (monthly for salaried employees or frequently for business owners and freelancers); and expenditure refers to money you will spend or have spent over time.
MONEY LESSON 1 – UNDERSTAND YOUR FINANCIAL STATUS
So the first money attitude this article recommends is understanding your financial statement. You should also understand that your expenses should never exceed your income at any given time; otherwise you should anticipate being in a difficult economic situation. Take a minute to study your financial statement for the previous 30 days to see what you made and spent. Only then will you have a complete picture of your economic status.
Without this knowledge, you may be tempted to make decisions that would put you in a precarious financial situation. Having a clear understanding of your financial statement will help you make better decisions when it comes to spending and budgeting. Knowing where your money is going will also give you a better idea of what changes you need to make in order to improve your financial situation.
This is to disprove the notion that as a person becomes more capable or earns more money, his expense list should automatically grow. It is logical that a person could have an instinctive drive to earn more money so that they can spend more. People have mentioned over and over again that they don’t make much money or that their current financial situation prevents them from meeting their long list of expenses. However, one financial mistake you should avoid is increasing your expenditures exponentially as your income rises, otherwise, you’ll find yourself in the same sandstorm you just escaped. So the only way to avoid being trapped in the same economic quagmire is to eliminate superfluous spending from your budget.
MONEY LESSON 2 – SAVE
If there is one cliché that has been around for a long time, and that no one pays attention to, it is this. Rainy days must have happened to anyone who has been around for a long time. This isn’t about rain that falls from the sky on certain days; it is about unforeseen expenses that are just as vital as those that you plan for. In a nutshell, these are the unanticipated expenses that have arrived, and cannot be avoided; all you can do is settle the bills.
As a result, the popular phrase ‘save for rainy days’ comes to mind. This simply means that everyone should have an emergency fund plan. Don’t get them mixed up; they are both yours. The distinction is that your regular savings strategy should be long term (months or years), whilst your emergency cash should be readily available to save you on rainy days.
Financial literacy is not harmful in any way; in fact, understanding how money works and having the appropriate mindset towards it is one of the many ways a person may grow to be a better person. Financial literacy enables you to handle your money more effectively, and it also allows you to confront your economic problems head on. This gives you a significant advantage, saving more money. Financial literacy can enable a person to make informed spending and earning decisions, which lead to a better economic position.
By knowing how to manage their money, people can avoid debt and take advantage of opportunities to save and invest. This can help them build wealth and achieve financial security, which is a significant advantage in life.
MONEY LESSON 3 – Stay Healthy
Without mentioning the importance of maintaining health in fostering a positive attitude towards money, this article would be incomplete. Simply put, money is the cornerstone of happiness because of its ability to provide standard healthcare. A person’s physical and mental health will serve as a foundation for earning and spending. Hospital costs can consume a significant portion of a person’s income and lead to wasteful spending. Eating a well-balanced diet, exercising regularly and getting regular medical check-ups can help to keep a person’s health in control. Only a healthy person is able to save. Medical emergencies depletes a person’s money quickly.
Your monetary mindset, or attitude towards money, has a big impact on your long term financial success. Many of our attitudes regarding money are based on ingrained childhood beliefs or previous monetary experiences. A person’s financial thinking or overall thoughts about money may be significantly altered by certain financial occurrences. The concept of money and how a person handles it is not inborn; rather, it develops over time as a function of circumstances and position. Follow this conversation in the next money lesson.