Financial Understanding Can Boost Your Confidence
Going back a few years for me, I can remember many of the things that I learned during my four years in the toolbox called high school. English, history, science, etc. were things that proved necessary and beneficial, but after tossing my cap in the air and saluting sayonara to my teenage incubator, I started working at my first job. Let’s just say the real world hit me like metal fold up chair to the face. I actually had to learn to responsible about something high school barely taught me, my finances.
I was grateful to have a professor named Paul (we called our teachers by their first name. It was a pretty liberal school.) who taught us about credit cards, from the history of it credit itself, its future, and how not to get tangled in its possible web of debt. But, although it’s possible, it’s not unavoidable.
Financial literacy is the basis to having control over your money and how you either increase it or decrease it. For the good things in life, increase is the main goal of the situation if you’re on the smart side of the spectrum. To increase your finances one must understand these following things:
1. Save more than you spend
People have a natural ability to look at number presented at their income and automatically imagine the things that can be purchased with this newfound wealth. I know because I’ve fallen for this mind tactic many, many times. The ego can trick you into believing we need these things because it will add to their self value in some way.
Possessions will never had to your value the same knowing your financially stable and have an account of money that you can sit comfortably with cases of emergency. Spending less on things that don’t add value to your bank account and can be categorized as a “want” instead of a “need” can be add positive effects to your bank account therefore adding fuel to your self esteem.
2. Pay yourself before you pay your creditors
Who are you working to spend your hard earned money on? Are spending money more on other such as retail stores, restaurants, and other frivolous things, your throwing your money to waste. It takes away from what you could be adding to your personal confidence deriving from your financial stability.
When you pay yourself first, your saying “The safety I would feel from my financial stability is more important than the false confidence that [insert item here] would temporarily provide.” Paying yourself first creates a mentality of self worth because your stability is taken into consideration by the person who 100% care about your wellbeing: yourself.
Add 20% — 50% of your income into a saving account once received. The savings account could be located with your usual checking account. To add greater security from frivolous spending, open an account for another bank and keep our savings there. This can also help with annual interest added to the money when meeting the bank’s criteria.
3. Budgeting is your best friend.
We’ve come to a day and age where the swiping of our credits card and debit cards in no brainer. But the problem with that is the psychological effect is has on our finances. You can’t physically see the money leaving your account, therefore removing the sense of loss that comes from giving away something you’ve worked hard for. That’s where consumerism plays a factor. We can shop without thinking because we don’t see the effect of that swipe until later on.
Cash is king. It’s the easiest way to see the money that is leaving your financial holdings. And seeing that transaction of your money leaving your hand effects the mind because part of something you’ve strived to collect and increase more of is being decreased from a purchase that wasn’t total necessary. When you look down at your wallet, you’ve realized you’ve just decreased your holdings, which decreases your confidence value in way. These transactions are unnecessary.
The best way come against that is by carrying cash more than you swipe your card. In fact, leave your card at home. Seeing your cash deplete or seeing it increase is the challenge you’ll face, but when you see yourself come home with the same amount (and more if this was on a paid work day) will add to your self esteem and therefore your happiness.