5 Personal Finance Lessons That Changed My Life

in LeoFinance2 years ago

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When I was young, I had no idea how much money mattered to me. In fact, it's only been in the last few years that I've realized just how much money matters—and how little I knew about it growing up. Now that I'm in my early 30s, and hopefully wiser (probably not), here are some of the biggest personal finance lessons that changed my life:

Budget Doesn't Restrict, It Empowers

I always thought of budgeting as something for the poor and the broke & it would affect my freedom to do what I want. I figured that if I was making money, why would I need to create a budget? My problem was that I spent too much money on frivolous things and didn't realize it until it was too late.

Creating a budget can be extremely helpful. It ensures that you stay within your means and make sure that any extra money is saved or invested instead of going toward something unnecessary. The first step in creating a budget is to make a list of all of your expenses, including rent/mortgage payments, utilities (electricity, gas, water), groceries, and other food costs. Then add up how much money you make each month (this should include any side hustle income).

Find out what percentage these different expenses are taking up in relation to each other by dividing them into categories. This will give you an idea of where most of your income goes so there's no mystery about where it could be cut down if necessary!

Go Debt Free Before Financially Free

I was the kid who always got an A+ in math, but when it came to paying off debt and managing money, I was an F student. Lol, jk.. I was an F student in math as well. 😂😂 For me, figuring out how best to pay down my debts was like solving a Rubik's cube: It took me months of trial and error before I was able to find an approach that worked for me. But once I did figure it out, my life changed in ways that were hard even for me at first (a numbers nerd) to believe.

Are you feeling confused about how to pay off your debt? What amount of interest you should be paying each month on your credit card? Should you pay invest first and then repay debt or vice versa? Don't worry, you're not alone!

First of all, you need to see if interest rate on your debt is high, for example: 6% or above, then you should pay your debt first and then invest later. Me and my wife bought a house and took a massive loan. My mission is to repay the load by the end of next year to avoid getting burned with so much interest. When it comes to credit cards, anything above 1% monthly interest on credit card payments is a ridiculous imo. Generally it can go as high as 25% including hidden fees, charges and taxes so be cautious while using credit cards and never miss a payment.

Emergency Fund Will Turn Crisis Into Inconvinience

I used to be a seriel spender, but when I started my career as a freelancer, I made it my mission to put away 20 percent of my income in the bank. It was hard at first, I had to cut back on travel and eating out, but the discipline paid off. In a few years, I saved enough money to survive for 6 months in case of emergencies.

So what do you do with your emergency fund? Use it only for emergencies, duh! Don't touch it for anything else. But if you find yourself putting off some big purchases because you don't have enough cash flow for savings and expenses, put half of any extra money into your emergency fund until it's full. Then use the other half to buy yourself something nice!

Don't Forget To Reward Yourself

I think it's important to reward yourself for staying on track with your money. You went out and worked hard, so you deserve a treat!

What kind of rewards are you going to give yourself? What will be your biggest reward? Will it be a weekend getaway or a night at the movies? Maybe it's buying that new pair of shoes or taking home dinner from your favorite restaurant. Think about what will make you happy and then go for it!

How often are you going to reward yourself? One time per paycheck? Once every two weeks? Make sure that whatever schedule works for you won't cause problems down the road—you don't want to spend all of your earnings before the next payday!

Lack Of Money Is Lack Of Financial Literacy

Here’s the thing: if you don’t know where your money is going, how can you expect to make a change in your financial state? By educating yourself about personal finance, you will be able to pinpoint areas where your money could be used more efficiently and effectively. You can easily plan for the future and make informed decisions if you continuously educate yourself with current trends and technology. Lack of money is more about lack financial literacy than lack of income.

Conclusion

I hope that by sharing my own personal finance lessons, I can help you avoid some of the pitfalls and make smarter financial decisions in your life, especially if you are young. I realised the importance of financial literacy much later in my life but you don't have to.

If you’re looking for more tips on how to improve your finances, please follow. I’ve also got plenty of other cool articles on topics ranging like 'how to make money online', investing, personal finance, crypto and DeFi.

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I think I'm rather fortunate to not be working at the moment. The side hustle (which is writing)does a lot for me and over time, I've come to understand the importance of Budget. That reminds me that this month is ending. Lol
The only fun thing I like to do is cook and read books🤣...that wouldn't be hard to keep up with. I also try my best to avoid debts. Thankfully, I can't afford a credit card, it's not even within the power of our system. So I'm glad. I hate debt. The only debt I ever accumulate is regarding my data subscription as I can get lazy to go out or my bank app acts up. So I borrow and pay. Very small interest. This helps me a lot. Thank you!

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Aunty, I am starving. Can I have some food, Miss Chef 😋🥺

Shey you can cook? Coman take ingredients!😂

😂😂😂 you know I don't like cooking like you do nau 🤧😏😅

Do you guys know each other? I want to be friends with someone who can bring me good food xD

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Kpam!!! @deraaa, finguru wants to be friends with you 😃

Do you guys know each other?

We are good friends here on Hive. We attended the same newbie initiative. And we built our relationship from there up to this point. 🙈

Wow. That's really cool! xD Hive relationships are the best. :') Have you guys ever met offline?

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That's awesome. How much I miss being a youngster xD

Now you need to do two things @deraaa:

  • Increase you income or sources of income.
  • Invest to build wealth

So that you continue to do whatever you want to. And never have any budget constraints on buying books & courses xD

All the best and thanks for stopping by!!

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That is my plan. Currently only Hive is doing it for me but it will get better

All the best. You are going to crush it. Just keep writing. xD

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The rewards earned on this comment will go directly to the people( @finguru ) sharing the post on Twitter as long as they are registered with @poshtoken. Sign up at https://hiveposh.com.

Go Debt Free Before Financially Free

Good thing my debts are from relatives and they don't charge fees. LOL. I cant imagine the compounding interest of debts. Thus, it is indeed far better to settle them first before getting into investing.

Emergency Fund

I learned many times the crisis as a result of not having any emergency fund. I don't want it again to happen so I am now starting to save for it. :)

What kind of rewards are you going to give yourself?

A one day break sounds find to me if I've been working hard for extended number of hours. However, the most important reward I can give to myself is to lessen my workload.

Lack Of Money Is Lack Of Financial Literacy

Dang! I'm hit right where it hurts. I really need to analyze my financial position and consider how to "make" money. Good thing you are constantly sharing some of this free but priceless lessons. :)

What do you think of this reflections of mine? :)

!1UP


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If you have a number of debts (loans, medical, car repair, credit card, etc.), prioritize the largest debt first even while paying down the others. Once the largest debt is gone, what had been the 2nd largest debt becomes the largest debt; this one gets prioritized.

It becomes easier to pay down debts this way, and then what money had been going to pay down debt can be diverted toward investment (including HIVE & LEO).

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Yes Magna. That's the best way to go. Hit the biggest one first to release the pressure on yourself.

I won't follow this as a hard rule though. Everyone's situation is different but yours is the most apt way to do it. 🔥

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There are debts which take higher priority than those with large amounts. This is how I handled mine in the past:

Failure to pay...leads to...
taxesjail
renthomelessness
big-ticket merchandisereposession
the restbad credit

Even this can vary from person to person, but within a category of debt, pay down the largest first.

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I always love your headers brother. I have been meaning to ask maybe I should take a personal class from you on how to make attractive thumbnails.

Reading this too, would be great if I take you as my finance coach and advisor. Someone who I can easily run to 🥺🥺.

For me, I run from taking loans. I don’t really like it but somehow it is tempting so I take little loans that I know that is very easy for me to pay back.

Haha. You can run to me anytime brother. And I know I can do the same to you. Infact I have done it several times in the past and you never said "no" to me. Ever! My doors are always open for you. 🫡

Regarding taking loans, if you understand how much you can afford to take, what's interest rate and if you have to plan to payback then go ahead. But it's great that you avoid them as much as possible.

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Financial prudence has always been my achilles heels. I hope to set things in motion to track my spending and stay within the confines of my budget. I noticed real growth when I tried it last month, but reverted back to bad ways this month🤦‍♂️

Thank you for this!

I know it's tough but you can use an app to budget and track your expenses or use the classic excel sheet xD They work for me!

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Okay.. What other app would you suggest?

Don't Forget To Reward Yourself

This is very important and it's something I have been neglecting. It is easy to tell ourselves that we are on a budget or saving our money for some big purchase, but it's a great idea to also take some of that money and buy something nice for yourself once in a while, it doesn't have to be something expensive or ridiculous, just a little something to give yourself a pat on the back and say "I am on the right track" Just don't get carried away with the rewards 😆

LMAO. That's an important thing to note here. Most people do get carried away with the rewards. They overdo it and get burned to ZERO xD Don't do it.

I love taking out my profits time to time. I have some goals to achieve but I am not too hard on them. 🔥 It's about the journey, not the goal.

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Having a budget and being an organized person both in the personal side as well as in the office is important, it basically divides those who are successful and those who aren't. No matter how intelligent you are, if you are not organized and follow a budget odds are you will always be in money troubles.


Great post and congrats on getting a decentralized curation vote this past week, keep this kind of posts coming!

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