Money: Financial education and taking action

Many people have money problems even when they work fulltime. Here are some ways to help. 

Get some financial education

You need to know the financial basics. If you don’t know what assets and liabilities are or if you only have a vague sense of possibilities in investments, then you need to get some financial education. Read some books (there is a list under Recommended Reading), see a financial advisor or go to one of the many online sites that offer financial education. Once you understand how money works and how it can best be used, how you think about money will change.

Find out about investment options. Many people think the jargon around investing keeps them out of the game. But it doesn’t take too long before you understand some of the concepts and you can see there are many other ways to make money that are interesting and inspiring. People invest in many different ways depending on their interests and risk profile. You just need to have some curiosity and understand that the knowledge will benefit you, if you learn and take some action.

What are some of the questions you have about money and investments? Where can you find out the answers?
Take Action: Spend less than you earn

This may be basic, but so many people don’t actually do it!

For example, when you think about how much your salary is, you think of the gross amount (the amount before tax and deductions). If you divide this by 12, you may have a healthy monthly figure. But if you take out taxes, deductions like superannuation, insurance and then repayments and regular bills, it may not leave you much left over for the fun stuff. So you need to know what you earn AFTER deductions and what you are spending.

Spending money is addictive and a vice everyone enjoys to some extent. You work hard to buy more stuff and as you earn more, you spend more. If you get a raise, then you can buy that new car or new clothes, or get a better apartment in a better area.

But is it possible to do things differently?

  •          Think before you buy. Do you really need this? What does it add to your life right now? Are you buying it because of what you want other people to think? Will you still want it in six months? If not, is it worth it?
     
  •          Analyse your credit card bill. Go through the paper copy or download it. Categorise and total it based on the expenses e.g. supermarket shopping, takeaways and restaurants, entertainment etc. Look at how much you spent on things that weren’t necessary. How many items on your bill do you not even remember? Are you surprised by how much it adds up to?

How many of those expenses could you scale back and how much would it save you per week or per month?

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