7 Life Lessons They Didn’t Teach in School4 min read
7 Life Lessons They Didn’t Teach in School
UNDERSTAND WHO YOUR ARE MARRYING?
Show your partner who you really are financially, and make sure he or she shows you who they are before marriage. Don’t surprise your partner by changing your financial habits when you’re married (and ask the same of your spouse). At that point, it will cause significant issues. Money is one of the biggest things couples fight about.
The quickest way to a financial downfall is divorce. Think about it: Besides the emotional turmoil, at best you split your money in half. At worst, you lose almost all of it through legal fees, administrative costs, excess living costs, alimony, and child support.
HAVING AND RAISING CHILDREN COSTS LOTS OF MONEY
When you add up the cost of raising kids, the obvious expenditures come to mind: education, childcare, healthcare, food, and clothing. However, don’t forget to include things like a larger house, larger car, higher utility bills, entertainment, sports, and other activities they will participate in during their childhood.
The cost of having and raising a child is around $250,000 (before college expenses), depending on your income level and spending habits. That’s a huge expenditure for anyone! Ultimately, you will spend more money on them than on yourself. You can’t be selfish (monetarily or otherwise) if you are going to have children. More importantly, you need to fully understand the long-term financial (and lifestyle) tradeoffs of your decision. In financial terms, children are a significant expense that you and your spouse need to consider prior to starting a family
ALWAYS LIVE BELOW YOUR MEANS
If you want to manage your money successfully, this is one of the most important principles to follow. And this is where most Americans have gone, and will continue to go wrong. People want to have everything…now. They just can’t wait until they can afford it.
Wait until you can afford something before you buy it. It will feel better when you get it. If you continue to purchase things you can’t afford, you will be on a downward spiral that will continue until you go bankrupt. If you always live below your means, you will always have extra money to save and invest. Over the years, your money will continue to grow, and ultimately you will find yourself with significant financial security. Keep in mind that living below your means doesn’t mean living badly. It means you need to prioritize your spending and focus on what is most important to you. It means “living smartly.”
SPEND JUST ONE HOUR EACH WEEK LEARNING ABOUT PERSONAL FINANCE
You can spend this hour on personal finance in several ways. If you consistently do this, you will find yourself spending more than that one hour. Once you realize you’re gaining so much valuable information and becoming significantly more educated in an important area, you won’t be able to stop. So, where should you spend your time and energy? Start with free resources.
Think about it: During your school years, you spent no (or very little) time and energy learning about personal finance. What is one hour a week? Well, it actually adds up to a lot of time over a few years: fifty-two hours your first year, two hundred and sixty hours over five years, and five hundred and twenty hours over ten years. That’s a minimum of five hundred and twenty hours more than the average person spends learning about personal finance.
GET RICH SLOWLY
The fact is 99 percent of millionaires earned their money over time. Very few became millionaires overnight. We all have heard about the exceptions—lottery winners and those who inherit a big sum, to name a couple. It’s important to remember that these individuals are the exception. You also need to realize that it wasn’t just happenstance for the individuals who built their net worth over time. Most of them started with a little money (or no money) and little knowledge of how to make it. Just like you, they started work out of school and started earning a little money. Over time, their income grew; they saved more money, invested more money, and learned a little more about personal money management. They made both good and bad money management decisions. They didn’t “live large,” but they lived well. They didn’t care about conspicuous consumption but cared that they received the best value for their money.
So, enjoy the journey to wealth. It’s slow, but if you do it properly, you will realize that the rewards involve more than just money
SET (REALISTIC) SHORT-TERM FINANCIAL GOALS
It’s important to have short-term financial goals to be working toward. The goals need to be realistic and attainable. If not, then you will stop setting them. Your short-term financial goals should include—but not be limited to—saving and investing goals. You should include rewards as part of your financial goals
If you set financial goals (and keep track of them), you will have a good chance of achieving them. If you don’t set financial goals, you have absolutely no chance of achieving them. Set them both monthly and annually. Periodically, analyze them to see what you achieved and what you missed. Continue the process quarterly
ALWAYS KNOW THE SCORE
Remember, you’re managing your money for a reason. You want to increase your net worth over time. Thus, you must keep track of your net worth. This is very easy to do: You just need to develop a simple net worth statement and update it regularly. You then can develop goals and assess your progress regularly.
Net worth is what dollar value you are worth. To come up with this number, you add up all that you own and subtract everything you owe.