There are so many people making hundreds of thousands of dollars each year and still dealing with unpaid bills, debt, credit card loans, and other financial miseries. And also there are those who earn a few thousands of dollars but they have all bills paid, all debt and loans cleared. Why is that some people are not good with money while some are exceptionally well with it? It all about the financial knowledge that taught us to master our money.
There is an old saying that money without financial knowledge is the money soon gone. Without taking your more time on more money philosophies, let’s look at the 8 FINANCIAL LESSON YOU SHOULD MASTER BY AGE 30.
1. Have Well Defined Financial Goals
This should be your priority number 1 when it comes to financing. In order to master your money, you should know how to deal with it. Having well defined financial goals not only clears the picture of your long term financial life but also allows you to become better with money. With financial goals, you can create a better future for yourself.
Financial planning is not rocket science, its start with a simple step of creating a budget and eliminating all unwanted expenses. Paying your debt and lowering your credit card bill step by step. It’s high time to sit back and analyze your bank balance before writing your goals. It’s a small step to the biggest change in your financial life.
2. Create An Emergency Fund
An emergency can happen with anybody and at any time and it can harm you financially. One of the best ways to be prepared for such an emergency to have a sufficient amount of funds. In simple words, you have to prepare yourself financially for any adverse condition in the future. Having an emergency fund for the next 6-9 months is always a good idea.
Emergency funds come handy in many ways, you might lose your job, you might fall sick, you might need some urgent money, and trust me these things are very common. Also, you need to keep this in mind that emergency fund is for emergencies only not for your vacation or fun night. Be very careful with that.
3. Save More Than You Spend
Well, this is a simple rule. If you want to have control over your finances just spend less than you earn. At the starting of every month, we spend like crazy which left us with nothing in our pocket to survive the last week of the month. Saving Money is one of the best financial hobbies. The sooner you start the better it would be for your future.
Start saving at least 30% of your paycheck every month for various goals you have in your mind like, save for paying debt, save of your children college, save for retirement, and many more but save. There is a famous quote which states that “if you save money today it will save you tomorrow”. Start Saving.
4. Stick to Budget
Well, it looks so basic that most of the time people forgot its importance. Budget is the foundation of your financial planning, it tells you how you should spend your money in order to get maximum return. Budgeting is the starting step of your financial journey but people don’t take it seriously and end up making huge budgeting mistakes.
Budget open the ways to analyze your expenses, where and how much is your money going? and how you can control it? Plus having a preplanned budget doesn’t allow you to waste your money or literally useless things. This way with the budget you end up saving more than ever.
5. Generate Multiple Sources Of Income
Putting your all eggs in one basket and what if suddenly basket drops, oops I am sorry. So the same happens with your source of income. People with a job as their only source of income suffers greatly. Their whole financial life, all financial dreams are based on only that single source of income. And a sudden loss of that source of money can put you in some serious situation with money.
An average millionaire has at least seven sources of income. Having more sources of earning is better because it not only made you have control over your money, but also it helps you achieve financial freedom. So focus on generating more and more sources of income and trust me you will thank me later.
6. Don’t Create Huge Debt
Believe it or not we under more debt now than we are ever before. Student Loan, Car Loan, Mortgages, Credit Card Debt, and lots more. To match our lifestyle needs, to buy that car, to buy that home even though we can’t afford we end up buying such things and this creates a long list of debt to pay. And guess what, we spend our whole life cutting our expenses here and there, compromising on our need here and there to pay that debt.
Creating a debt which you can’t pay is not at all a smart idea. You know it’s like a chain where you create debt and to pay that debt you need debt and to even pay that debt you need more debt. This cycle continues for years. So buckle up yourself and stop creating a huge debt to buy that useless car just to make your neighbor jealous.
7. Invest Your Money Wisely
In your 20s you seriously want to grow your money faster and the best way to do that is through investing. The 20s is the time where you should experiment with your money most, you might fail in some field but it only made you better with money. Investing is the holy grail when it comes to making money from money.
Investing will help you in building your wealth and it is a good source of some serious passive income. And it’s ok to take risks for higher rewards.in your 20s. Workout on some plans, invest your money wisely in order to get maximum returns. Invest in some good portfolios to get long term benefits.
8. Insurance Is Important
Everybody wants to become rich. Everyone wants to go on a successful financial journey. But sometimes your health can be your biggest obstruct on the road to richness. Health doesn’t come with a guarantee and our lifestyle even made it worse. Bad health not only makes you suffer physically and mentally but also financially.
That long list of hospital bills can seriously put all your financial goals onto the hold. It’s important to give importance to health insurance because not only it saves you from any financial disaster but it also supports your family financially while you are on the hospital bed.