It seems as if we never truly stop learning money lessons throughout our lives. However, the foundation we set in our younger years certainly has an effect on the way we handle our money later on. The earlier you learn these lessons, the more successful you will likely be in the future. Read below to discover a few money lessons to learn early on in adulthood.
Set Specific Financial Goals
One lesson that is important to learn early on in adulthood is the need to set specific financial goals. It can seem daunting to think of retirement at such a young age, especially when just entering the workforce. However, financial goals do not only include retirement. This could look like saving for a downpayment for a house, paying off student loans in five years, starting college funds for your children and many other things. It is important to know what you want in the future and set a plan as to how you’re going to achieve those goals. Your goals might look completely different from your friends’ goals, but knowing what they are is important throughout all stages of your life.
Identify Your Emotional Connection to Money
Money is a large part of every individual’s life, so it is no surprise that it holds an emotional attachment to it. A lot of poor spending habits stem from a person’s bad emotional connection to money. Let’s say that you grew up in a poor household and finally obtained a high-paying job that enabled you to move out on your own. However, because money was something you weren’t able to have in your youth, you may now overspend as a way to prove that you have plenty of cash to go around. Recognize that this emotional attachment to money can lead to you trying to find happiness through buying things. In actuality, accumulating more things will not satisfy you in the long run, and it could end up leading you into debt. The earlier you learn what sort of emotional connections you have to money, the more conscious you will be when it comes to spending and making wise financial decisions.
Make a Budget – Then Live Below Your Budget
It is important to make a realistic budget, one that allows you to make necessary payments while also leaving room for entertainment. However, you’ll find it even more beneficial to your future financial goals if you live below your budget. Just because you allocated $100 for dining out during the month does not mean that you have to use that up. Even if you only use up half of that money, that leaves you with $50 to put into savings for yourself. This will help you add more money into your savings, both for emergency purposes and future splurges.