Finding the right balance between living life and your finances is certainly not an easy task. While, yes, some people are born with the natural ability to do so, most need to take the time to learn about personal finance and to develop good personal finance habits. That knowledge, good or bad, is often passed down from their parents.
However, if you are predisposed to your parents’ bad habits, it doesn’t necessarily mean that you are doomed to repeat them. In college, you are exposed to many classes like finance, economics, philosophy, science and other subjects that are geared to expand your mind. Often,
however, practical knowledge like how to rent an apartment, purchase the right car or handle a credit card is rarely taught in school. Instead, you are left as a highly educated young adult with minimal knowledge about how to survive in the real world.
What is important to understand as a young adult is the nearly infinite amount of ways that you can spend your earnings. There are also a nearly infinite amount of people ready to accept your money in exchange for any goods or services that they can provide. What is also important to realize is that you don’t necessarily need all these goods and services that they are willing to
offer. You have free will to accept or not accept these things. Grasping the concept of how much you actually earn each month and balancing it with the costs of your basic necessities will take you on the right path to developing good personal finance habits.
To start plotting a solid path to personal financial stability, consider charting exactly what you consider “necessities” and what you consider “choices.” Note, some things you say are necessary may not actually be (that monthly massage or partial season tickets to your favorite sports team, perhaps), so tighten the list to the bare bones essentials. Then, reflect on the choices you consider priorities. Do you love to go to restaurants more than anything else? Make sure you budget for this and find ways to save in this category, like credit cards with cash back or discounts through coupon sites. Are you more of a homebody, who loves new electronics? Make sure to look for deals on new products online, rather than jumping on the first offer you
Beyond prioritizing your spending and finding ways to save on your choices, you can also save money on your necessities. Consider looking for a cheaper apartment to rent, if you don’t spend that much time at home, or buying food at a grocery store, rather than ordering in. You can also use the internet to compare prices. Never accept the first offer that comes your way with things
like car insurance, a gym membership or cell phone service. Shop around and see what else is out there. You’ll be glad that you did.
Have you broken free from the financial habits of your family? How would you rate yourself in terms of financial responsibility?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.