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- Financial Planning
Money Management Tips, Mistakes and Ways to Be Successful
Learning On My Own
I was one of the typical kids growing up with normal parents. Meaning they didn't know much about finances and in turn didn't teach me much about the topic. I suppose they expected I would learn about money and finances from school, since that's where I learned other job and people skills.
However, most public and even private schools DO NOT teach anything about personal finance. They have many topics about Economics and general Finances, but nothing about budgeting, balancing your accounts, or cash flow.
When I was younger, I would empty my little plastic piggy bank and count all the change in it. I loved to go to the bank with mom, use the drive-thru, and watch her make deposits or withdrawals (there wasn't much use of ATM's back then).
Anytime I wanted something from the toy store I would tell my mom "just write a check for it". I was too young to realize you actually needed the funds in the account to back it up. However, these days most people don't understand this simple fact. This is also the mindset of our current government: Buy now Pay later.
As we have all seen this concept DOES. NOT. WORK. And, like myself, no one has taught us any different, we just think this theory is normal, even mainstream. In school, I loved Economics, and anytime I could do extra credit or learn more for the class, I would. To me the topic of finances and money is intriguing, but this isn't how everyone feels about it.
I purchased my first house when I was 23. I didn't know anything about buying a house (what was I thinking). It was almost 2,000 square feet and had a 2 car garage, big back yard and a shed. It was a dream of mine, and I paid dearly for making that dream come true.
I didn't have any money to put down on the house, only the closing costs. My monthly payments had an additional $48 for PMI (private mortgage insurance), until I paid my principal balance down to 80% loan-to-value ratio.
My total monthly payment was about 40% of my income - OUCH! Keeping up the maintenance/cleaning was a daily chore, that sometimes took hours, especially the yard work. My parents grew up thinking that owning a house was the American Dream, but these days that dream has changed.
I was blessed to be able to sell the home, about 3 years after I purchased it, right before the housing market crashed. I didn't make a profit on it, but I didn't lose much either, just breaking even.
I learned a lot from my experience/mistake of jumping into something before I researched it, especially a big investment like a home. I am more cautious now with my investments and money. I simplify my thinking process and my approach to finances, if it's too complicated, I stay away!
Money management was pretty simple once I cut through all the financial mumbo jumbo.
- Live on less than you make - if you spend more, you end up chasing it for a long time. You don't want to leave debts for your children to sort through after you're gone.
- Manage your money yourself - no one will take care of your baby like you! So don't let anyone else manage your money or tell you what you HAVE to do with it.
- You don't HAVE to be in debt - obviously buying a home can take forever to save and pay cash for. But credit card debt, consumer loans, payday advances, and even car loans are completely unnecessary debts.
- Use Cash or Debit Card - "keeping up with the Jones's" doesn't hurt anyone but you and your family. Keep it simple and downsize your lifestyle now, while you are single or a new family, and it will greatly enhance your future.
Try not to make your finances too fancy or complicated. Saving accounts are for saving, insurance companies provide insurance, retirement accounts are for retirement and investing is for investing. Don't let people mix and match or sell you on "new and exciting" ways to criss-cross your money.
I don't know that much about insurance or investing so I find people who I trust and am confident they understand me and my money. I never let them fully take over my finances or start directing me to products "they believe in".
I use their expertise and customize it to my own situation, that's how I learn what's best for me. I got educated and became a Certified Professional Bookkeeper and Tax Specialist, just for the fact that I didn't want people to take advantage of me.
Who wants to be normal? NOT ME...let's get educated and be "weird" with our money!