Financial literacy is one of the things that need to be taught and learned by everyone. It’s hard to imagine going through this life without ever having to handle money in one way or another. People need help with learning about personal budgeting, insuring and investing.
This should be taught even at a young age so that our kids will grow up not having to fear mishandling their money.
Many people are living from paycheck to paycheck and have a lot of debts that are not going to be settled soon. They don’t know how to budget and they overspend on things that are not assets. They use their credit cards like there is no tomorrow and they don’t know how to grow their money or invest. Insurance is just another expense that they think they can live without.
These are just some of the wrong mindsets people have about money management that needs to be addressed. It is not enough to be educated about money, what’s important is applying what you have learned.
We share with you tips from the experts that can help in personal budgeting. Once applied these nuggets of financial wisdom can help in building your income as well.
Check Interest Rates
Albert Einstein called compound interest as the 8th wonder of the world. He goes on to say that “He who understands it, earns it…he who doesn’t…pays.” This is the reason why it is crucial to know where compound interest is applied in your accounts. When it comes to investing, the best instrument is the one that pays compound interest. This is where you get to earn from compound interest.
Credit cards on the other hand charge compound interest for late and minimum payments. In this situation, compound interest works against you which is why you pay higher if credit card spending is unchecked.
Make A Budget
This is something that you need to learn how to do one way or another. It is something that you can’t do without if you want to reach your financial goals. Large companies like Amazon would not be where they are right now financially if they failed in budgeting. It’s not as hard as you think, there are a lot of free personal budget software that can help you out. The purpose of budgeting is to give you a clear picture of where your money is coming from and where it is going. The goal is to keep it in balance or not to overspend. For those who don’t have debts, a budget can help in making the right investments in order to make your money grow.
Know Your Net Worth
Once a budget is in place, you can now find out what your net worth is. You just get the difference between your assets and liabilities. This will let you know your financial standing. Imagine if you have zero debts and you invest your money well. As long as you don’t overspend, financial freedom can’t be that far behind.
Make A Vision Board
Vision boards are simply a collage of pictures that show your financial goals and dreams. Many are skeptical about these boards, but many success stories prove that these boards do work. Steve Harvey is one of the more popular celebrities who has a great vision board story and has been endorsing making boards as well. It is not surprising to discover that many successful people have made vision boards at least once in their life before they became successful.
Get A Mentor Or Financial Advisor
In your financial journey, it would be great if you had someone who can guide you every step of the way. Look for a mentor who has already achieved financial success and try to emulate what they did. Learn from their mistakes and copy the things that worked for them. You need to surround yourself with the best people around you, a good broker if you want to invest in stocks, the best insurance agent if you are ready to invest in insurance. Having someone beside you who has the same goals makes the journey easier and so much fun.