Learning and mastering personal finance skills is an important way to help yourself maintain a better quality of life. No matter how old you are, developing personal finance skills as soon as possible makes a difference in multiple aspects of your life. This way, you can give yourself more time to enjoy the benefits of your work.
1. Separate Wants From Needs
Sometimes what we want really is what we need, but not always. Before you make purchases, ask yourself about the consequences of not making that purchase. For example, are your running shoes old, worn, or falling apart? Or are you simply looking for an excuse to buy new shoes? Answering these questions will help keep more money in your pocket.
2. Learn How to Negotiate
Whether you’re buying, selling, or accepting a job offer, negotiation is an important personal finance skill that many overlook. While it may be easier to simply accept the amount of money a client or employer offers you or to just pay the asking price for a product, you can save money if you practice and refine your negotiation skills.
3. Create a Monthly Budget
Maybe you use a spreadsheet, notebook, digital chart, or bulletin board—however you think and work best, use that technique to create a detailed budget that lists your income and expenses and allows you to monitor your spending. Using tools you already know how to use can help you avoid overspending and stay on track to reach your financial goals.
4. Bargain Hunt
Bargain hunting is not just a skill for the frugal-minded. You can often save dramatically (50%, 75%, or even more) by buying used clothes and appliances instead of new ones. Visit thrift stores like Goodwill and St. Vincent de Paul, or look out for bargains and clearance sales at your favorite shops.
5. Say No
Contrary to popular belief, it isn’t actually polite to say yes when you’d rather say no. Similarly, it isn’t impolite to say no in the first place. Learning to say no can help you save time and money. For example, if you don’t want to volunteer your time to coach your niece’s soccer game or buy overpriced chocolate to support your neighbor’s fundraiser, simply say no.
6. Learn to Have Enough
Instead of craving the latest and flashiest products (new, flashy tech can be tempting for many people), practice gratitude instead. Try to feel grateful for what you have rather than wishing for things you don’t have or need. Be patient with yourself and work up a sense of contentment for what you have over time, whether material or immaterial.
7. Do It Yourself
To save money, some people use the internet—often YouTube—to learn how to make repairs around their homes. For example, instead of paying specialists $50 to $100 per hour (or even more!) to do basic plumbing and electrical wiring repairs, try to learn how to perform house repairs and maintenance on your own. Just be sure to stay mindful of any appropriate safety precautions.
8. Invest
If you haven’t begun investing, now is a great time to begin. Open an investment account, like an employer-sponsored 401(k) or an individual retirement account (IRA). If retirement isn’t your goal, consider opening a taxable brokerage account, which will allow you to withdraw money without paying additional taxes.
9. Set and Pursue Goals
Having great financial skills means having excellent problem-solving skills. Great problem-solvers achieve their financial goals. Try to set financial goals, such as saving a certain amount by the end of the year or depositing a certain amount into an IRA, a 401(k), or a certificate of deposit.
10. Monitor Your Credit Score
Establishing credit is a good idea, especially when you’re still young. But even if you’re older, you should aim to maintain and improve your credit score—this means developing healthy spending habits where you pay all bills on time and avoid dependence on credit cards. Good credit matters for various reasons, but common ones include renting or purchasing a home or car.
11. Pay off Debts
Debt is often unavoidable when you have long-term personal and professional goals—think student or home loans. However, debt tends to grow, and it can start sucking up your income, keeping you from creating a savings fund that will help you weather emergencies. Try to pay off debts from credit cards, student loans, and payday loans as soon as possible.
12. Save for Emergencies
It’s no secret that many Americans don’t have enough cash to sustain themselves through an emergency or sudden income loss. Regardless of your circumstances, it’s important to save for emergencies when possible. You should strive to set aside between three to six months of living expenses in case the worst happens.