In today’s world, money lessons are taught in some schools but not in others. If you went to school a while ago you may have had some basic money lessons, or none at all. Fortunately, you can still learn real-world money lessons that will help you today. Even if you’re not doing so well at financial literacy, you have a chance to turn things around if you apply these money lessons today. Here are the money lessons you wish had been taught in school. Learn them now, and your bank account will still thank you!
- Learn how to build and live by a reasonable budget. The word reasonable is the key–and that means including some of the things that make life worth living for you. Is that eating out once a week? Freedom to see a movie once in a while? Money to travel? Whatever it is, build it into your budget along with the essentials like rent, food and utilities. A good rule of thumb is to apply 60-70% of your income to those essentials, and 15-20% to savings. The other 15-20% is for fun. As they say, all work and no play makes Jack a very dull boy!
- You may have been taught to save money, but did your money lessons include smart savings? To save smart, put your money where it can take advantage of compound interest. Compound interest means that you earn interest on the interest your money earns. Where can you earn compound interest? Check out mutual funds with low fees.
- Were you taught to avoid debt? That’s all well and good, but what about the “necessary” debt like a mortgage or student loans? How to pay those debts off quickly is a money lesson that should have been taught in school. Basically, not all debts are created equally. You should make it a point to educate yourself on interest rates, then pay your debts off in order of the highest interest first. Once you pay off a high interest debt, add that payment to the existing payment of your next-lowest interest rate debt until that one is paid, and so on.
- How to file taxes is a money lesson you wish had been taught in school. Even if you always file online, it’s smart to acquaint yourself with each year’s tax laws and the process of filing so you can maximize your deductions and get the most money back.
Now start applying these money lessons today so you can be as money smart as possible. Your future self will thank you!