How to adopt good personal finance skills
One of the biggest problems facing the west and many other parts of the world is debt, bad financial planning, spendthrift habits, and so forth. In some ways, this is a negative sign of a basically good trend, that is, people's incomes are in general going up, more and more folks have access to technology that makes their lives easier, and so forth. But lots of us get stuck in a horrific rut financially and we have no idea of how to escape it. Take heart, my friend, help is on the way. Let's consider a few ways in which we can adopt good personal finance skills.
1. Adopting good financial skills, like any other skill, starts with a first, somewhat difficult, absolutely crucial first step. And that step is: budgeting. Most of us know what it means to budget, at least in a vague way. Budgeting is a way of not spending outside your means. We figure out how much income is coming into the home, we figure out how much we're paying for essentials such as heat and electric, groceries, insurance, and so forth. Then we turn to non-essentials, i.e. movies, eating out, video games, poker night, etc.
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2. Once we've got this financial map laid out (and we can't take for granted that it's an easy thing to do-most people are shocked to realize how much they spend on, say, Doritos and soda pop in a given week), we've got to get out our economical cleaver and ruthlessly chop away. We've got to get rid of essentials that aren't really essentials, say, tooth whitening. We've got to do things such as switching from name brand cold cereals to their genetic brothers and sisters which taste identical and will stretch your dollar a long way.
3. Of course, non-essentials, that is, things we can literally live without-we're stuck on a desert island, we won't die without the dollar movie etc.-but things that are nevertheless very important to our psychological equilibrium, sense of balance, social life, and so on. As important as these things are, though, if you want to develop good financial skills, this is the area above all areas that you must focus on with deadly, deadly ruthlessness.
4. Let's see you see two movies a week. Add that up. Eight dollars for a ticket, four for a drink, five for pop corn, and so forth, times two. How many times do we eat out a week? How many times do we eat out a week without noticing it? Again, we pour a lot of money into little junk food items that we buy while purchasing gas and so forth. We forget about that quick trip to the hamburger joint between meetings. Chances are, if you're really serious about adopting good personal financial skills, you're going to find that you have quite a bit of money left over once you've cleaved and cleaved and cleaved your nonessentials list. But I would suggest you that you buy as many Woody Allen movies as you can, because hey he's the best.
5. So, let's say you've saved a little money through the budgeting process. Adopting good financial skills means that you don't immediately spend it on a toy. You might want to put it toward a credit card, toward opening a savings account, towards investing. In fact, you might want to use it to get started working with a financial expert who can REALLY help you get your financial train on track.
6. Even if we've done all of this to the T, there's still the matter of discipline to think of. In many ways, spending money is as addictive as taking a drug. It relieves stress, takes your mind off life, gets you excited with a new book or movie or dress or giant inflatable John Wayne doll for a little while. But we all know that those things always end up collecting dust somewhere, and when enough dust collectors collect, we could be way over our heads. But following these few simple steps, and then finding out more on adopting good personal finance skills, and, most importantly, sticking to them, is a guaranteed way of keeping your hair and your sanity. Not your hair though. Or your sanity. But it's a good way to adopt good personal finance skills.
