Think about your school days – algebra, chemistry, maybe a Shakespeare play or two. But did you learn how to balance a checkbook, understand how credit scores work, or the advantages of investing for the future? Unfortunately, many schools don’t prioritize practical financial literacy or other useful life skills for when kids venture out independently in the big scary world (hopefully, their parents did, though).
This lack of knowledge leaves many young people unprepared for the realities of dealing with money matters in the adult world. The good news is, it’s never too late to learn! Mastering these essential skills puts you in the driver’s seat of your financial life, helping you accomplish everything from getting out of debt to saving for a dream vacation or even early retirement.
Let’s break down the fundamental money lessons that rarely make it into the classroom but should.
1. Needs vs Wants: The Spending Trap
Living in a society obsessed with stuff, it’s easy to fall into the trap of thinking you NEED the latest sneakers, the fancy gadget, or the takeout dinner every night. Distinguishing between true needs (shelter, food, healthcare) and wants (entertainment, luxury items) is the first step towards mindful spending.
Advertisers are experts at making us crave things we don’t really need. Before any purchase, ask yourself, “Will this improve my life meaningfully?” If the answer isn’t a resounding YES, hit the pause button and save that money for something that truly matters to you.
2. Saving is a Skill to Master
Impulse control isn’t easy, which is why saving is so challenging for many. Think of saving like a muscle – the more you exercise it, the stronger it gets. Start small and make it a habit. Every time you get paid, set even a tiny amount aside in a savings account. Watch your balance grow, and soon, saving won’t feel so hard!
Pay yourself FIRST. Before buying those new shoes, automatically transfer that money into your savings. Even if you must start tiny, you’re building a habit with huge long-term payoffs. Automation is your friend, removing the temptation to spend that money impulsively.
3. Debt is a Wealth Killer
Credit cards, student loans, and other forms of debt can feel like a lifeline when you need them but become an anchor weighing you down long-term. The high interest you pay could instead be growing your savings or going towards a down payment on a house!
Not all debt is bad debt. Mortgages or responsibly used student loans can have long-term benefits. However, consumer debt from impulse spending is almost always a losing proposition. Focus intensely on aggressively paying down high-interest debt first while making minimum payments on the rest.
4. Investing: Make Your Money Work For You
The stock market or other investments might seem intimidating, but they’re crucial for building long-term wealth. Thanks to compound interest, even small amounts invested consistently grow over time. Don’t get scared away by jargon – there are beginner-friendly resources available!
Investing isn’t about getting rich quickly. It’s a marathon, not a sprint. Start with index funds, which are like a basket of stocks, offering diversification to lessen risk. The earlier you start, the more time your money has to compound, making even modest contributions potentially grow immensely over decades.
5. Credit Scores: The Mystery Number that Matters
Your credit score is a three-digit number that lenders use to assess your risk as a borrower. A higher score means you’ll qualify for better interest rates on loans and credit cards. Pay your bills on time, keep your credit card balances low, and don’t apply for too much new credit at once.
Your credit score is like your financial report card. You can check yours for free on sites like Credit Karma, which will give you a snapshot of your current creditworthiness and areas for improvement.
6. Emergency Fund: Your Financial Safety Net
Unexpected expenses happen – job loss, medical bills, or a broken-down car. An emergency fund acts as a buffer, preventing you from going into debt in a crisis. Aim to save 3-6 months’ worth of living expenses in an easily accessible account.
Having that cushion provides incredible peace of mind. When the unexpected strikes, you can focus on the problem, not panic about where the money will come from. Even saving a little bit regularly helps build that safety net over time.
7. Financial Planning is for Everyone, Not Just the Rich
You don’t have to be a millionaire to benefit from financial planning! There are free resources and affordable fee-only financial advisors who can help you create a personalized plan based on YOUR goals. Whether it’s retiring early or buying a house, a roadmap gives you clarity and focus.
Many people assume financial professionals are only for the very wealthy, which means they miss out on valuable guidance applicable to any income level. Think of it as investing in your future, just like taking a course to boost your earning potential.
8. Lifestyle Inflation: The Sneaky Budget Buster
As your income grows, it’s tempting to upgrade your lifestyle too – bigger house, fancier car, more expensive vacations. While it’s fine to treat yourself sometimes, uncontrolled lifestyle inflation eats away at your savings potential.
Consciously decide if that upgrade truly enhances your life. Often, the extra money spent is driven by wanting to impress others or “keep up” with perceived norms. Challenge that impulse and prioritize the financial goals that bring true long-term happiness, be it financial independence or travel experiences.
9. Your Network is Your Net Worth
Surround yourself with financially savvy and motivated people. Their habits and positive attitudes rub off on you. Seek mentors with the kind of financial success you aspire to, and don’t be afraid to ask questions! Networking can lead to unexpected opportunities, salary negotiation tips, or even lucrative side hustle ideas.
The saying “you’re the average of the five people you spend the most time with” applies to finances too. If your social circle is perpetually broke and focused on quick fixes, it makes your journey that much harder. Cultivate relationships with goal-oriented people and lift each other up.
10. Side Hustles: Unlock Hidden Income
Thanks to the gig economy, there are countless ways to make extra money outside your main job. Drive for rideshare services, sell your crafts on Etsy, or become a freelance writer—the options are surprisingly diverse. This extra cash can accelerate debt payoff, turbocharge your savings, or fund those fun experiences.
A side hustle can evolve into a full-fledged business with time and effort! Even if it remains a way to supplement your income, it builds your entrepreneurial muscle, resilience, and valuable life skills.
11. Your Health is Your Wealth
It might sound cliché, but it’s true. Investing in healthy food, exercise (even just regular walks!), and preventive care pays dividends down the road. Medical costs can be crippling, and ill health robs you not only of money but of the ability to enjoy the fruits of your financial labor.
View wellness as a non-negotiable investment. Small, consistent choices add up over time. Instead of crash diets, focus on sustainable lifestyle changes. Think of the money you save on medication and emergency room visits as going into your luxurious future vacation fund!
12. Maintenance is Cheaper Than Replacement
Regular oil changes for your car, cleaning gutters on your house, or even simple things like rotating your mattress are all important for preserving your investments. A little preventative maintenance extends the lifespan of expensive items, saving you thousands over time compared to neglecting them and facing a big replacement cost down the road.
Proactive maintenance is a form of self-investment, even if it seems boring. Set reminders, consult manuals, and invest the small amount of time needed to keep your appliances, home, or vehicles running smoothly.
13. Know Your Legal Rights as a Consumer
Understanding your rights as a consumer empowers you in situations ranging from getting a refund for faulty products to disputing unfair charges. Official consumer protection agencies’ websites offer a wealth of free information on everything from warranties to your rights if a company fails to deliver a service.
Regrettably, some businesses count on customers not knowing their rights and being easily brushed off. A little time spent reading up can put you in the driver’s seat when dealing with disputes, saving hassle and money. It sends a message that you won’t be a passive pushover.
20 Things Poor People Waste Money on, According to Suze Orman
If you’ve ever watched her show, you know Suze Orman pulls no punches. She’s all about calling out bad money choices, urging people to take control of their financial destinies and ditch those pesky spending habits that derail progress. While her advice can be blunt, she aims to empower folks to build wealth and protect their financial futures.
It’s important to note, Suze Orman gets flak sometimes for being too harsh. She’s not shaming people, but highlighting how certain expenses can sabotage big goals like homeownership or a comfortable retirement.
20 Things Poor People Waste Money on, According to Suze Orman
15 Primary Differences Between Being Wealthy and Rich (According to Dave Ramsey)
We’ve all daydreamed about hitting the jackpot and living like the 1%. But here’s the thing: True wealth is about a lot more than fancy cars and designer labels. It’s about rock-solid security and the freedom to call the shots in your life – something no lottery ticket can guarantee.
15 Primary Differences Between Being Wealthy and Rich (According to Dave Ramsey)
With an honors degree in financial engineering, Omega Ukama deeply understands finance. Before pursuing journalism, he honed his skills at a private equity firm, giving him invaluable real-world experience. This combination of financial literacy and journalistic flair allows him to translate complex financial matters into clear and concise insights for his readers.
With an honors degree in financial engineering, Omega Ukama deeply understands finance. Before pursuing journalism, he honed his skills at a private equity firm, giving him invaluable real-world experience. This combination of financial literacy and journalistic flair allows him to translate complex financial matters into clear and concise insights for his readers.
