21 May Must-Have Money Skills Made Simple
The future will not be moneyless. Society demands it. Governments have promised it. We believe it.
In our last blog “Fight NOW for Your Financial Wellbeing”, we took a quick trip back into the pre-pandemic past to peek beneath the country’s finances at the issues lurking there.
We talked about hidden debt and its link to mental health. We discussed the state of the nation’s financial capabilities (or lack thereof). And, we also touched upon the importance of using this time to take an objective look at your finances and to make an honest assessment of your current money skills.
Quick Summary of Findings: Must do better.
So, how can we do better? Well, let’s start with the foundations of financial fitness. Let’s begin with your money skills.
Finding your Money Muscles
Earning – “All that EFFORT for how much REWARD?”.
Earning? That’s a skill? Yeah right!
You might think (and we wouldn’t blame you at the moment) that what you earn is entirely out of your control.
It isn’t. Not normally. Earning is about working hard to make money to buy what you want. But, it’s also about making the money you earn work hard for you too.
For younger children, earning money could mean doing chores, selling unwanted toys, or for random acts of helping out around the home. For older children, it could mean money earned doing a part-time job.
For adults, it could mean finding new or better ways to maximise income, savings or investments. If you consider it in those terms, earning is a skill. And, it’s a skill you can study, practice and try to improve at any time.
Saving – For that Brainy Day
Smart saving is about putting the right amount of money into the right places for the right time.
Smarter saving is about accommodating the known and trying to anticipate the unknown. It’s about piggy banks, emergency funds, the magic of compound interest and the mechanics of tax and inflation.
The Smartest saving, at present, is whatever you can manage.
On paper, saving sounds easy. In practice, as our last blog pointed out, it’s not. It’s tough. Setting realistic and attainable savings goals can be challenging. Meeting those goals, even more so.
Planning & Budgeting – Work it out. Write it out. Stick it out.
Making and keeping to a budget is a great skill to learn at any time. Right now, it’s essential.
Locking down your spending over the long term can lead to real financial freedom. But don’t forget, budgets are also about balance.
Be organised. Be strict. But factor in some fun too.
Spending – Hey BIG Spender!
Are you “needy”, or are you “wanty”? Do you even know the difference? Some people can easily ignore the persistent whisper of an unnecessary purchase. Others?
Mmm…that cake looks good! Ker..ching!
Taking a “money personality” test can reveal exactly what type of spender you are. And knowing that can be (financially) very rewarding. We’ll tackle this fascinating subject in more detail soon.
Numeracy / Literacy – For when it finally adds up!
As we also said in our last blog, a significant percentage of UK adults regularly overestimate their ability to use numbers when it comes to making decisions about their money.
And, yet, finance-related maths skills can be quickly and easily improved. There are plenty of free resources online that make learning about “money maths” fun and educational at the same time.
Note to self: When your maths muscles get stronger, so can your finances.
A word of warning, though. This skill often relies on our ability to understand what we’re working out in the first place.
Unfortunately, meaningless jargon and dense, impenetrable text seem to be the norm in financial literature.
It’s important, therefore, to find a resource that teaches you the language of everyday finance in a simple way.
Learn to speak that language, and then your money really will talk.
Charity – Soft skills for hard times
Volunteering. Fundraising. Donating. Supporting. Giving.
If you doubt just how important these are, take a look around right now.
The “real” value of something is more easily understood when you see how it can directly benefit others.
If you have more of something than you need (be it time, money or material goods), giving it to those who have less of it can make a real difference.
Charity is an important skill to teach. Sometimes, though, it’s an even more important one to be taught.
So, there you have it. Must-have money skills made simple.
And now we’ve broken them down for you, keep an eye out for our next blog where we’ll show you exactly where you can build those money skills right back up again.