The significance of having the right thought about money is quite enormous. When you have the wrong mindset about money, the resultant effect is usually financial dependence, an alarming situation, which many financial experts are kicking against.
Sadly, cultivating the habits by following the simple rules of personal finance is lays the problem. It is about psychology, which a teenager could easily understand.
One of the rules says, do not spend more than you earn which is entirely understandable, but adhering to this rule becomes difficult.
There are basic personal finance principles which everyone must understand, before our insatiable search for wealth is satisfied. The tendency to achieving wealth is quite high when there is the willingness to understand and follow the rules.
However, here are some of the personal finance tips that will help you change the mindset about money.
Account For Every Penny You Spend
We are spending a lot of money without knowing, but we keep lamenting that income is not quite enough. The failure to account for every penny spent is a roadmap to financial dependence which must be avoided.
“We’re more and more detached from our finances, we’re not using cash anymore, so we’re not watching the dollars leave our wallets,” says Farnoosh Torabi, a New York-based personal finance expert.
“The Internet makes it so easy to buy things; we don’t take the time to reflect on whether we’re making the right decisions for our finances.
However, one of the useful and practical ways to account for every amount spent is by having a budget. Having a budget is helpful; it allows you to avoid unnecessary spending.
Meanwhile, it is not enough to have a budget; it has to be followed to achieve results.
“Budgets are an essential part of creating a healthy financial life. Without budgeting, you can’t track what you’re spending. Budgets are like a map. You wouldn’t drive across the country without a GPS so why not the budget? Zina Kumok, Blogger, Debt Free After Three says.
For people who don’t want to think too hard about categories and percentages, I advocate the 50/30/20 rule, which says that 50% of your pay should go to living expenses, 30% to entertainment/shopping and 20% to savings and debt payments.”
Whatever The Case, Always Save
No matter any amount you earn, savings remain a prerequisite to achieving financial independence. This is a standard tip which almost everybody is familiar with, but how many people are saving a certain percentage of their income.
“Set a savings and investment amount for each week and have it automatically put away. What you can’t see, you won’t spend,” says John Rampton, a serial entrepreneur, and a global online Influencer.
If you are the frugal type that doesn’t question or think twice before dipping hands into your wallet, it becomes an issue. You will always want to spend on anything that comes your way.
“We spend a lot of money, but we forget and don’t make the most of it. . . . You can spend as much as $300 or $400 a year if you use a different [ATM] two or three times a week,” Torabi Adds.
Pay For Value And Spend Wisely
Money, no matter how small must be spent wisely by channeling it to the things that bring value. Considering the proliferation of smartphones, most teenagers and youth spend more on them than to invest in something meaningful.
According to Ramit Sethi, in his book titled “I Will Teach You To Be Rich,” he said: I believe in paying for value. If you’re going to get value out of something, you should pay for it, and you should enjoy it. I will hold something like my iPhone for like 3-4 years until it doesn’t work anymore. You buy the best, and you hold for the long-term.”
Conclusion
Other personal finance tips could be applied before you start seeing the result in your financial goal. It’s a journey that requires resilience and patience. Let me know your thoughts in the comment section.
