As a kid I was never properly taught how to handle my money, much less proper money lessons.
It was one of those things where my mother just hoped I did as she said and not as she did.
Which ended up not working out too well for my financial health later on in life.
I remember constantly taking my coins out of my piggy bank and stacking quarters and pennies to count how much I had saved after just three days of stuffing the plastic thing with coins.
That’s to say, no matter what your age, money has always been part of our lives, money education…not so much so.
Then, after I started taking out credit cards and racking up debt (and starting to get scared) I thought, something had to change.
I’m still learning a lot of things (investing? What in the world is THAT?!) and there are some things I’ve simply had to learn the hard way.
To shed some light on your own financial journey, here are 8 money lessons you’ll most likely learn the hard way too.
You Need Checkpoints and Milestones
It’s really easy to veer off track when you have a savings goal that is just out there, flying somewhere in space with no clear path as to how you’ll get there.
Checkpoints force you to look over your shoulder and see what you have accomplished so far, and what you can do better.
Checkpoints and milestones will help keep you on track better and they’ll also help you reach your goals faster.
Having no checkpoints is like trying to drive your car cross country without stopping at gas stations.
There is no guarantee you’ll get to your destination.
Beware of the Initial 0% APR Credit Cards
Those are the BEST!
But only when you know how to handle them/you need to make an immediate purchase that you know for sure you’ll pay later.
Don’t get caught in the trap of, ‘oh I’ll use this card now and it won’t gain interest til later.’
You think you’ll pay it off later, but you can very much end up with a couple thousand of debt that has a crazy high-interest rate that sneaks up on you once the initial 0% APR is over.
And yes, I speak from experience. ?
Money Has a Funny Way of Controlling You
…If you don’t have a budget in place.
Now, the kind of budget and how much you allocate is obviously completely up to you. But be ready to take the consequences if you decide to invest $500 in dining out a month when you know full well you can’t really afford that.
Money has a funny way of dictating your future decisions if you don’t tell it what to do right NOW.
The simplest budgeting tip to practice always? Spend less cash than you bring in.
Notice I said cash.
Only because you have access to credit cards and savings doesn’t mean you should see it as available. Only stick to spending less cash than you bring in.
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Mindset is More Important Than Your Total Earnings
This one I learned from my mother, by learning from her mistakes.
Mindset is infinitely more important than how much you bring in each week.
The wrong mindset is why lottery winners often end up poorer than before they won the lottery.
For example, there is a tendency for people to spend more as they start to earn more.
Especially if you want to get into investing and build up a healthy savings.
Only because you earn more doesn’t mean your spending has to match it. It can stay the same, and the extra money can be put to better use than extra spending.
With the right mindset, you can start saving even with a small income.
It’s always financially healthy to either:
- See where you can cut unnecessary spending
- See where you can start making more income (a side hustle)
If you burn the candle at both ends, being financially savvy while building up your income streams, you’ll have a much better time meeting your financial goals and getting out of debt.
Which leads me to my next point—
Ideally, You’ll Have More Than One Income Stream
This is what every good finance advisor will preach. And it’s true.
When I first heard about this I remember thinking why I had never thought about it before. We are mostly brought up to think in a linear way, right? Get one job, get paid, and retire.
But there are ways, like blogging for example, to create an extra income stream that can help you live a better lifestyle, give you more options, and be better prepared for emergencies!
Creating a second third or fourth income stream during your spare time is pure genius.
For a complete list of side hustle ideas, check out my guide!
You Aren’t Saving If You’re Spending to Save
This one is simple.
If you look at a price tag on a jacket, and you see that it used to be $50.99 but they’re selling it to you for $33.99 and ‘saving’ you $17 then you aren’t REALLY saving $17…because at the end of the day, spending is spending no matter how you slice it.
So, it’s best to not always get carried away by the ‘humongous’ savings claims of retail stores.
If you’re spending to save then you aren’t technically saving.
Automation and Time Are Your Best Side Kicks
This is true for investing, and it can also be true when building up a liquid emergency fund.
To beat the overwhelm of having to save a huge chunk of money for when you find yourself in trouble, automating a certain amount to go into your emergency fund pile over time does add up…all without the extra hassle of having to constantly think about it.
It’s all about being savvy and using both to your advantage.
Price and Value Are Not the Same
Something can be priced a certain amount but be worth something completely different.
Hence why price and value aren’t always the same thing. And also why you can practice haggling! Ha. Err the better term is negotiating.
You can practice negotiating the price of something because often, prices can be contextual and be subject to more than one variable.
Learning to negotiate on price and value are good skills to have up your sleeve in general.
Investing Isn’t Only for The Rich
And you can start small while doing it.
I use the app Clink for example, that automatically withdraws a certain amount out of my checking account to then invest in ETF’s (exchange traded funds) for me.
This slowly adds up over time.
This is only a small example of how far you can take investing.
As the experts say, it’s best to invest as early as you can, diversify, and let time and compounding be your best friends.
Now, to actually be able to achieve this, you need to take action and create a plan as to how you can start today. Here’s a handy guide you can check out to help you get serious about investing.
Here’s To The 8 Money Lessons You’ll Learn The Hard Way
The good news is you can make better choices after you get burned from not making the right ones from the start!
These 8 lessons have been some of the key takeaways so far of being more money savvy and being smarter about your financial decisions.
Are there any money lessons you’ve had that I’ve missed?
Here are other posts on Money Hacks you can check out: