We can all get there in the end but managing our money well is not always easy.
If you could go back to your younger self and whisper a few home truths at an early age, what would you say? The chances are that, while we might be keen to pass on messages of self-love and taking the opportunities we’re offered, managing money would also feature. Good money management is something everyone tends to wish they had learned earlier. It makes a huge difference to the life you lead and the way you feel about yourself. Which is why it’s always worth paying attention to the lessons others have learned.
The most important lesson: you must learn to budget
Money management isn’t possible without budgeting skills. What’s frustrating is that budgeting is not difficult to pick up. It’s a very simple balancing of what’s coming in to your bank account with what is going out. Budgeting not only ensures that you manage your money to avoid running out or missing payments but it also opens up opportunities. When you learn to budget you can create resources for big life events, from travel through to buying a home.
The most basic lesson: if nothing else, learn to live within your means
As humans we have a pretty complex relationship with money. It can make us feel good (or bad) about ourselves, make us angry or positive about the world around and provide an emotional outlet. But whatever your earnings or status in life, living within your means is the most basic lesson in money management. If you can do that then you’re money aware and you’re much less likely to get into trouble. However, credit is easy to come by so most of us at some point will have some debt. Whilst getting a home loan to buy a house is a sensible thing to do, adding to that some car finance for a new car every 3 years or personal loans to buy what they want may not always be quite so sensible.
The smart lesson: use debt wisely
A life lived entirely without debt is one that may well be missing a few essential components. Debt helps us to create, build and buy if we weren’t born into the money to do so. But debt is not ‘free money’ and should be used wisely. Borrow what you can afford to repay, make all your repayments on time, and borrow for something you really need if you want to get it right when it comes to debt.
The lifelong lesson: you can never stop managing your money
Even some of the wealthiest people have found themselves bankrupt and out of cash as a result of poor money management. So, whether your income is in the thousands, or the millions, you can’t ever stop managing it closely. Daily, weekly and monthly budgeting reviews will highlight things you need to fix, as well as any trouble ahead. Financial decisions always need to be considered against the context of what you already have – debt or wealth.
The savvy lesson: it’s always worth putting money aside for retirement
Budget planning and good money management isn’t just about creating wealth that you can enjoy right now. You also need to consider the years in the future when you won’t have an income. It’s never a waste of time to put money into a pension or an ISA for future spend. Careful money management now could give you the dream retirement that you deserve.