Money is a sensitive subject but it something we all need, when it comes to even the most simple financial decisions we make the wrong choice. The reason we make the wrong decision is due to a lack of education and financial awareness. We are going to take the complexity out of finances so you can make a truly informed decision. By learning the fundamentals of finance and money you can realize your goal of financial independence.
Without financial education you will never be able to make an informed decision on what to do with your money and how to avoid the various financial traps that exist. The most important thing you need to keep in mind is you are ultimately responsible for your own decisions. This is very important since there are some people who rely on financial experts for advice and while the advice may be helpful there is no one more focused on protecting your money like you are so always keep that in mind.
Understanding the Difference between Living in and Below Your Means
The first thing we need to review is the difference between at and below your means. We all love shopping, eating out and spending money but if you are living above or right at your means if something were to happen to your income then your entire world could be turned upside down. When a person is carrying a large amount of debt this stress will have an effect on their emotional well-being and relationships. One of the primary reasons that relationships fall apart in this country is due to financial strains which are a direct results of living above or at your means.
While living at your means is better than going into debt you should aim to live below your means whenever possible. By bringing in more money than what you spend you are reducing the risk of suffering the following.
- Taking on debts for emergency expenses you didn’t save for.
- Making rash spending decisions because you do not have any financial alternatives i.e. payday loan.
- Take time to spend with your family instead of working overtime to pay off debts.
Living below your means might sound hard but it is quite simple you just need to learn how to budget. In the past people consider “budget” a dirty word but when done properly it can be quite liberating. It is very simple to start, what you need to do is write down the names of all the different expenditures you have and how much you have spent on them over the last 30 days, This has to include everything. Now that you know how much money is going out you need to look at how much is coming in from your employment.
After you have crunched the numbers you should look for savings in your budget by making simple substitutions. A great example of this is switching that premium coffee from the coffee shop down the corner to instant coffee you can prepare at home. You would be amazed by how much money you can save. All of these savings can be used to finance activities you really enjoy and since it is within your budget you don’t have to feel guilty about it.
Reviewing the Benefits of Regular Savings
There is an old expression “A penny saved is a penny earned” which is very true when investing but also applies for savings. By putting a little money aside each and every pay period you will be able to handle unexpected financial challenges that come up from time to time. This is one of the most important simple financial decisions a person can make which is whether they should save or not. Unless you come from a very wealthy family you should save money. The following are a few benefits associated with saving.
- By having money saved up you will never have to borrow and be forced to pay interest.
- Gives you a considerable amount of personal satisfaction to know there is cash available if an emergency pops up.
- Peace of mind. By having money available for emergencies you don’t have to worry about losing your job or some other financial hardship because you are a prepared.
You need to develop a budget and start saving money now. There are helpful tips available online that will provide you with easy to follow strategies so you can start saving money. By saving money and avoiding debt you are going to achieve fiscal success and be able to make simple financial decisions based on personal experience. Make it a priority to teach your children these good money habits as well so they can benefit from it. By learning how to make the most of your money you can make the most of your life.