The Five Simple Money Skills You Need to Know
March 21, 2020 | Daniel Dewitt
It’s a sad truth of the modern world, but for all the hundreds of hours we spend in school, the vast majority of us are never taught anything but the most rudimentary financial skills. And considering that you’ll have to use and manage money every day of your life, it’s almost criminal that you spent less time learning how to do that than you did algebra or gym.
While there’s no way to teach you all the financial skills you need to know in a single article, we’re still here today to try and run you through a few of the most important. Here are five simple money skills you need to know.
Budgeting is the single most important financial skill you can arm yourself with. At its most fundamental it’s just the ability to accurately assess how much money you have coming in, and where it’s going out, but control the latter.
When you draw up a budget, you’re the one in control. A budget is like the wall of a house that controls the flow of movement and people. Want to go on vacation this summer? Budget it. Find out what your basic income is each month, how much of it goes to essentials like food and bills, and how much you’ll need to save each month to afford it.
Impulse control is hard in every aspect of life, and the urge to simply buy whatever you want is difficult to resist in the moment. It feels good to buy, and that good feeling would be ruined if we had to sit and stress over each purchase. And while it’s understandable to feel that way, learning to cut down on impulsive spending is hugely important because...
Thinking Long Term
This point goes hand in hand with the one above. Too much of our lives we spend in survival mode, keeping our head down and just trying to get by. Living like that though often makes us lose sight of our long term financial and life goals. Did you dream of owning your own home? Of living without stress? Of taking care of your family?
However much we may want those high-level goals, often they’re undercut by our everyday actions: eating out, splurging on clothes, and taking vacations to just name a few. If you’re serious about accomplishing your financial goals then it’s important to learn to keep your eye on the ball and sort what’s important from what isn’t.
Getting Rid of Credit Cards
What aggravates our lack of impulse control and inability to think long term most of us carry in our wallet or purse: a credit card. It’s no exaggeration to say that credit cards are the bane of most households. They achieve this by both making you think you have more money than you do and then hitting you with punishingly high-interest rates when you use them and don’t immediately pay them off.
Too quickly credit cards can snare you in a vicious feedback loop where the interest each month means you have to lean on their use even more heavily to get by.
Knowing When to Take a Loan
Just because credit cards are toxic doesn’t mean all forms of lending are. Products like flex loans and other short term loans are incredibly useful in emergencies or other instances when you need fast access to cash. There’s a reason that ‘flex loans near me’ will pop up in Google autocomplete so quickly in Tennessee.