Mastering personal finance skills is probably one of the most important things you can do to make a marked improvement to your overall quality of life. Getting a heads up about what you need to know in finance when you are young is perfect. However, I’m pretty sure most adults reading this didn’t have any formal personal finance education at school, but that doesn’t mean that we can’t start learning everything we should really know now.
How to budget
Budgeting is one of the most basic yet vital finance skill we all should have. So it’s surprising that 40% of households in the UK don’t budget at all. The first thing most people get wrong about budgeting is that they think it is keeping an eye on what you have spent. Really, budgeting is all about planning what you are going to spend, before you spend it. Get your spending planned by using apps such as MoneyWiz or Goodbudget and to make sure you are sticking to your budget use Monese.
Need vs. Want
How many of the newest purchases you have made were necessities rather than just things you wanted? Separating out your needs from your wants is another essential personal finance skill. In this consumer age there is almost no end to newer, bigger and more expensive upgrades to anything you can buy, so knowing when you really need to spend is important. It could end up saving you thousands over the years.
If you are not sure what category something is in (the needs or the wants), think about the outcome of not buying it. Does it leave you in a worse position than you are in now? If the answer is no, then it’s a want, and more importantly, it can wait.
How to say ‘no’
Take the effort to say ‘no’ more often. You’ll find the outcome is you have more time and more money. It works because you get to stop accepting any outside pressure to commit to things that you really have no desire to be doing, or spending on.
It also helps as when you do say yes to things it’s because you really do want to commit your time or money to it, which will bring you increased happiness.
How to be content
Learning to be content is one of those things that could change your whole life. You become less concerned with ‘things’ and wanting ‘more’ and find deeper satisfaction and happiness out of the things you already have. Now there is nothing wrong with treating yourself to nice things if you have the funds available to do it, but there are studies that show that chasing happiness from spending money on ‘stuff’ is not going to bring you long-lasting happiness, leaving you a constant void that you try to fill by buying more ‘stuff’.