12 Life Lessons You Need To Know For a Financially Sound Life
There is a lot of useful advice around the internet – including a lot on this site – that will teach you how to handle debt, and how to work on moving on to a more sustainable, financially sound life. While this is all well and good, dealing with one debt doesn’t guarantee that you’ll avoid falling into the same habits that got you into debt in the first place. To make sure it’s only a one-time thing, you need to incorporate a more robust, sensible approach to finances into your life. Taking care of the pennies and dollars will help you on your quest, but by adopting a larger, more philosophical look at your finances, you’ll be on your way to a happier, less stressful life. Below, we take a look at twelve life lessons that will help you achieve this.
There is no Correct Financial Plan
There are no two financial plans that look the same. Everybody is different, and what works for one person might be a complete disaster for you. There are far too many factors that go into a financial plan; job, size of family, lifestyle, debt, and so on and so forth. In any case, while there are a lot of smart people out there who have financial advice that might be beneficial to you, nobody has all the answers. You have to figure out what’s right for you because nobody else will be able to do it. Seek advice as and when it’s necessary, but remember that nobody is going to care about your financial health as much as you do.
Live For You, Not Your Friends or Family
Unfortunately, many people get themselves into a financial mess solely because they’re trying to impress other people. It’s bad to fall in debt because you’ve overspent on things for yourself; it’s much worse to compromise your future because you’ve been buying things to impress other people. Everyone has a different trajectory in life, and while the pressure to dress well and go on expensive travel trips can seem insurmountable, it’s important to remember that ultimately it’ll be you who has to live with consequences of overspending – not the people you’ve been trying to impress.
Think For Yourself
Pressure to fit in or keep up with other people can also lead us to make much bigger financial errors, for example when it comes to the expensive things like owning property or buying a fancy car. There are countless numbers of people across the country who have bought an expensive house because they thought they should, ignoring the fact that it wasn’t the financially sensible thing to do. Rather than purchase a property, look at houses for rent instead. You’ll get all the benefits of the property without the long-term, often more expensive financial equipment. You can always buy a piece of real estate eventually if you decide you really want to, but it’s hard to scale down from owning to renting if you’ve committed before you’re ready.
It’s Good To Talk
If there is one thing that would significantly improve the state of personal finance in this country, it would be to make it more socially acceptable to talk about it. Getting into debt is a vicious circle. A person realizes they’re struggling financially, and then they’re so embarrassed that they keep their circumstances to themselves, often creating more damage in the process. While it can be uncomfortable, it’s important that you create a space where you’re comfortable talking about any financial errors you’ve made. Remember, it’s not the mistakes we make that define who we are: it’s how we respond to them. If you’re speaking to someone you know and trust, you can be sure that they’ll only reply with compassion and helpful advice, not judgment.
You’re Being Conned
The temptation to spend money on clothes, technology, and the other things we all buy too much of, is real. But this temptation has been deliberately manufactured by companies. You wouldn’t, if you were, say, born in the woods, naturally want to own a device that is useful but mostly a gimmick, such as a smartphone. People – most people – happily part with their cash each year just so they can get the latest version, with all of one new feature included. Now, that’s not to say you shouldn’t buy anything. It’s just important to establish what is a real desire and what isn’t. If you’re passionate about hiking, then feel free to buy all the hiking gear you can comfortably afford. But be wary when it comes to buying the things where the desire hasn’t come from inside you.
Establish Your Priorities
Money is a tool that makes the world go round, but it’s the world itself. To live a financially sound life, you need to restructure the way you think about money in your mind. While it’s tempting to keep money on your mind at all times, remember that money in itself doesn’t mean anything: it’s how you use it that really counts. Make a list of the things you value in life, and make a note of how money can help enrich those priorities. It’ll make saying no to the other things that are draining you of money much easier. If you suddenly realize that you don’t value cable television, for instance, then you’ll be able to cut the cord and add a big chunk of money back to your bank balance each month.
Investing in the Right Areas
It’s also important to note that, just like spending money on the things you value, spending money – even significant sums of money – or going into debt isn’t necessarily a bad thing. Everybody is an investor to a degree. If you’ve ever spent money taking a course to top up your skills, then you’ve invested in your future. Make the distinction between ‘good debt’ and ‘bad debt’: an example of bad debt would be spending more money than you can afford to go on a luxury vacation.
Your Social Group Can Help
We’ve established that to have a financially sound life, you need to essentially define what you consider to be a healthy financial life, and ignore what other people are doing. However, this is easier said than done, especially when it comes to things like friends and family. You can’t choose your family, but you can choose your friends. Spend time with (and date/marry) people who have a similar outlook on money as you do. It’ll make things much more bearable than if you were hanging around a lot of clearly wealthy people when you’re struggling, and they’ll be able to give advice and support for your situation – purely because they will have been there themselves.
An Eye on Tomorrow
Tomorrow never comes, it’s true, but we’re sure you intend on sticking around in the future, and as such having one eye on what your financial situation will be when it comes is important. While living a modest life within your means will ensure you won’t fall into debt, having a plan to save money will make your future more secure. Circumstances can change very quickly, and while things might be OK right now, you’ll want a nest egg just in case you need it years down the line.
Your Background Isn’t You
One thing that many people struggle with, especially when it comes to finances, is making the financial transition from that of their parents. There’s a reason that people usually end up in the same financial standing as their parents: it’s what they know. However, if you’re trying to afford a luxury car because you grew up with one, but you can’t actually afford it, then you’ll have to swallow your pride and buy a car you can afford. The traditional symbols of success are not acquired overnight, but the rush to have them can often result in people making bad financial decisions.
Remember: Life Is Simple
It’s easy to get wrapped up thinking about money. How much we have, what we can do with it, whether there’s a possibility to have more. But if you have a roof over your head and food in the fridge, then you’re one of the luckiest people on earth – ever. Life can be very simple if we just take it for what it is, rather than always asking for more, more, more.
Be Engaged With your Finances
The many expenses – and sometimes debt – that we have can mean we’re often reluctant to become engaged with your finances. We want to hide away from the problem, not tackle it head on. But if you’ve incorporated the life lessons we’ve outlined above, then you will have a healthy relationship with your money – even if the picture doesn’t look so healthy at the moment. It’s not the most important thing in life, but it is a factor, so treat it with importance.
As with many other things in life, wise life lessons can prevent us from making a mistakes, and shows us a way to get out of the mistakes we’ve already made.
