When it comes to money, what’s the best way to teach children how to manage it, and save for the future?
Whether you’re still in school, studying at university, or building your career, anyone who starts out an independent life controlling their own finances may think that the future is a long way off. Forget superannuation, saving goals, or investment planning – young adults have other priorities in their mind!
The value of money should be taught from an early age. Parents play a pivotal role in teaching those lessons, but there is no lesson in school which teaches students how to manage money! In fact, Generation-Y Australians are amongst the highest spenders in debt, which can be attributed to a lack of education or experience around this topic.
To help young adults cover their bases, Debt Fix has provided some important considerations to understand about money for those wanting to live a sustainable, and hopefully a comfortable life!
The Virtue of Self Control
Self-control is about understanding what you earn, and how much you can spend. Most people have the ability to allocate income to the necessary essentials, such as rent, food, living expenses etc. It’s not okay to use credit to splurge on luxury items if you can’t afford it! It’s easy for anyone to use credit to make purchases, but paying interest on credit cards can be hard to recover from without the right type of help. The lesson here is to use your credit card as sparingly as possible; try to buy the things you need, and place a lower priority on the things you want.
Knowing How to Spend Your Income
You may be familiar with the concept of budgeting, but do you understand how helpful this could be for you? Take control of your own finances, by taking charge and creating a budget. No longer will you have to ask yourself, ‘is this the best way to spend my money?’ You can see what disposable income you have, and how to best spend it for yourself. Keeping a budget is a great method of ensuring your expenses don’t exceed your income. It allows you to see how you spend your money which gives you a chance to make small changes in your daily life – who knows what kind of big impact it can have for your financial situation!
Savings for a Rainy Day
We all sometimes feel that we’re not getting paid enough, or the rent for the apartment is way too high. Young adults know all too well the concept of living pay check-to-pay check. Even if you feel that you’re spreading yourself way too thin, find a way to build an emergency savings fund. Life is full of surprises, and not all of them are good ones. Think of repairs, theft, loss of job, injuries – so many situations that may prevent you from earning an income, and necessitates the need to have a little extra in your bank account.
Avoid Getting Into More Debt
This is crucial advice. Consider the fact that nobody envisions themselves of getting into debt. It happens through desperation and poor planning. Whilst there are other circumstances that come to play, the main message here is to try and prevent yourself from getting into debt. Easiest way to do this is to avoid spending money if you don’t have it, and stay ahead with any bills you have to pay. If you already in debt, find out more about a debt consolidation process to see if this can help you.