Learning about finance doesn’t have to mean understanding stock investments or building a portfolio. Sometimes financial knowledge just means managing the money in your bank account. To build a solid financial foundation, study the three tips below.
1) Live Within Your Means
This doesn’t have to be boring or punitive. Living within your means simply refers to setting your financial goals, working to achieve them, and spending accordingly. For example, if your primary goal is buying a better car but you pay high rent because you live alone, finding a roommate you can get along with is a way to reach your goal. Initially sharing your space may be a sacrifice, but if it brings you closer to your goal, it’s worth it. And while you’re at it, start your emergency fund by putting away at least one month of your portion of the rent.
2) Thrift Isn’t Enough
Just begin careful with your spending isn’t enough anymore. Everyone is talking about a side hustle because everyone needs one. Take care with this extra money, though. If you’re tired from your second job and treat yourself to unhealthy food or extravagant, unnecessary purchases, you may end up wasting the time you put in on the second job.
3) Learn Your Minimum, Then Build A Budget
Don’t worry about worksheets, tracking or other budget-building homework. Instead, seek your minimum. For one month, only pay cash for things you buy. No credit or debit cards may be used during this time. Get to enjoy the feeling of cash in your wallet.
Also, don’t buy anything you don’t absolutely need right now. Little or big purchases make no difference. If you’re thirsty but you’re on your way home, you don’t have to buy a bottle of water right now because you have water at home. See retailers and advertisers as people who are trying to talk you out of your money. Remember that you’re smarter than that. Keep your money in your wallet.
Honor Your Energy
While you’re studying these financial concepts, remember to honor your energy by determining your real hourly wage. For simplified example, if you make $10 per hour and work 40 hours per week, you make $400 per week, correct?
Not really. You don’t get the full $400 in your bank account. There are quite a few deductions that come out before a portion of that $400 goes in your account. In addition, you put time into your job that you don’t get compensated for. How long is your commute? Is your lunch fun or are you stuck at your desk? Add that time to the hours that you have to work and look back at your paycheck. If your $400 paycheck is only $300 after deductions and you had to commit 50 hours of effort to get it, your hourly wage is $6.00 per hour. Spend with care.