Boning Up On Money Management
In this age of free-flowing data and immediate access to massive amounts of information, encountering a subject that’s still taboo is a rare phenomenon. Information sharing between parents and their kids is more open and honest than ever before, yet there’s one topic that’s avoided in many households: money and personal finances.
Parents who have no problem talking about sensitive topics with their children clam up when it comes to the money they make and how it gets spent. As a result, many people enter adulthood knowing very little about the basics of household financial management.
Learning how to manage your money is a necessary life skill. Though it may not seem important when you’re young, it will become more so later in life. As your income and responsibilities increase, your personal finances will likely get more complex. Learning the basics of sound financial management now is a ticket to dealing with money more effectively when you have more of it.
Unfortunately, many people don’t learn about money management until they’re deep in debt and in full panic mode. This can, and does, happen to anyone regardless of education or income level. Credit is available to just about anybody, and for those who aren’t disciplined in their approach, the ease of credit can be devastating. Easy-to-borrow money enables us to get the things we want—right now!—and far too many people have taken full advantage, buying houses that are too big, cars that are too fancy and wardrobes that are ridiculously large.
One fact escapes these people: they’ve bought their stuff with money that isn’t theirs. It all has to be returned to the lender—with interest. The piper must be paid.
The past couple of decades have seen consumer debt rise astronomically as saving rates drop. People have forgotten lessons from past recessions and assumed that the value of their homes will always go up, and that increases will offset the cost of the money borrowed to buy them. This same psychology extends to consumer goods with more dire results; long after the fancy shoes are gone, the balance remains on the credit card—at 18% interest or more.
Here are a few pieces of practical information that are good for everyone to know. Learning them when you’re young will give you the basic financial knowledge to keep your financial future “in the black,” ensuring your money works for you, rather than against you.
- Remember that credit cards are not free money. If you carry any monthly balance at all, they are the most expensive money you can borrow, short of a payday loan company. (By the way, don’t use payday loan companies. Ever. Just don’t.)
- Use debt wisely by carefully considering the reason you’re taking it on. There is good debt and bad debt. Good debt can allow you to buy a house or attend post-secondary school. Just never forget the fact that it’s not your money. The more you can save up for what you want, the better off you’ll be in the long run. Bad debt, such as credit card debt, grows as you buy stuff that depreciates in value—anything you can buy in a mall or online, for example.
- Acquire basic knowledge about finances. Learning about saving, investing and budgeting, as well as protecting what’s yours with appropriate insurance, is one of the most valuable gifts you can give yourself. Read articles, take classes or just Google it. The information is out there.
- Learn to get help from experts when you need it. You can get good advice on money matters in many different ways; part of educating yourself is to figure out where to go for the help you need.
Since this is a career magazine, a few words about career opportunities are in order. Remember the first point in this article—that parents don’t like to talk to their kids about money? Perhaps it’s because they aren’t very knowledgeable themselves and need advice as well. Many people struggle through on their own, with inappropriate investments, out-of-control debts, and very little to protect their savings if an unanticipated event happens, like premature death or illness.
There is a tremendous need for professionals who can offer guidance on achieving financial security. Providing advice in the financial field is a potentially lucrative career choice for people with strong interpersonal skills and the desire to run a business that helps others. While you’re weighing your career options, take some time to learn about this one.
by Angela Fennelow
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