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Money Management Skills For Adults and Kids
Money management skills for adults help provide us the security for most of our life activities.
My ninth-grade social studies teacher gave our class an assignment that stayed with me since. We listed categories of life that each civilization needed. They included housing, trade, communication, and a few others. I remember a list of about 9 factors. One of them was the food source.
We talked about the various civilizations and made a chart of the factor for each. Then came the assignment. Identify which factor, when changed, causes all the others to change. He really made us all think!
I pondered this throughout the weekend. I’d plug in various items to a category to see what happened. By Monday morning, I was ready with my answer.
“Food Source”, I announced. I was shy, but everyone knew me as one of the geeks of my time. I usually got the answers right. This time, I was the only one with a response and I don’t think anyone believed me.
But the teacher smiled. He asked me to explain why I thought that. I remember scrambling a bit with the wording. I knew I was right but explaining it took a bit more verbage. Still, the teacher congratulated me and we went on with the lesson.
So how does this relate to money management skills for adults?
Money is merely our currency. With it, we purchase necessities and either save or spend the rest. In a way, it helps define our food source.
In impoverished communities, people often need to scavenge for food. Our homeless may ask for handouts or even find leftovers. In rural areas, people might grow a portion of their food. In fact, in some areas of the world, people hunt and gather, much as they did centuries ago.
In much of the developed world, people buy most or all of their food. That means that their money determines the food they have. Tighter budgets buy different food than those of more spendable money. Certainly, those living on minimum wage have less money to spend on food than those with net earnings in the millions.
Interestingly, some studies show that the lower the income, the higher the percentage of the income is spent on food and necessities. But a higher percentage is not a higher amount.
In a nutshell, for most of us, the amount of money we earn determines our culinary choices and defines much of our lifestyle. Learning good money management skills makes a difference in your entire lifestyle.
What Money Management Skills for Adults Do You Need?
1. Planning and Maintaining a Budget
The ability to budget and be financially responsible is a vital life skill. Whether you’re just starting to get a handle on your finances or you’re an experienced, coupon-clipping, money-saving guru, understanding your budget marks the first step to achieving financial security and the peace that comes with it.
It’s a skill we need to learn and can learn from a very young age. We should build on this throughout our lives. Too often, people find themselves out of money before they are out of days in the month. Pawnshops and centers for pay-day loans pop up everywhere because people want them.
How many people seek bankruptcy protection each year? And what about the number of people defaulting on loans and mortgages? Could proper budgeting have prevented those costly mistakes?
Need help getting started? Many people have found Dave Ramsey’s Financial Peace University to be helpful in their budgeting and money concerns.
2. How to Avoid or Get Out of Debt
Debt, that financial bind we often find ourselves in. We talk a lot about financial peace and about getting out of debt. Being debt-free feels like true freedom like none other. But it takes a lot of work to get there, once you have debt built up.
Learning to live within your means might prove to be one of the most important life skill. Learning to overcome your debt is about keeping your spending in check. It also involves creating and managing a plan to pay off your debt quickly and efficiently.
Some consider it like a war, They find that tackling and fighting debt is truly challenging. But with a plan in place (see #1 above) and management, it’s a war you will win.
3. When You Make a Major Purchase
Maybe you’re about to buy a home or a car. Or perhaps you need a new washing machine. Whatever it is, you should learn to compare prices. Today’s internet makes research and comparison shopping much easier than just a couple of decades ago.
While researching the product and comparing prices, features, and quality, you also need to consider the best way to pay. By saving to buy for cash, you save a lot of money in interest costs over time. Today, it’s difficult for people to save that much to buy a home while still making rent payments. But the more you have as a downpayment, the more likely you can negotiate the purchase price and interest rate.
Another way to save it by building good credit over time. The higher your credit rating shows, the more buying and borrowing power you have.
4. Balancing your bank account
This one seems almost silly, doesn’t it? But then, think about it. How many people just use their debit card without writing items and amounts down? Do you pay bills online or have them set up to automatically be debited from our accounts and, if you do, are you surprised when they show up on your bank statements?
It’s important to remember to record your expenses as they happen. This skill keeps you on top of your finances. You know exactly how much you are spending and on what. It keeps you immediately accountable for all of your spending.
If you need to get a handle on balancing your finances, try writing things down for a month. You will notice a difference in your spending patterns.
5. Use Coupons Wisely
Coupons help save money. Developing a skill often seems daunting. But the real challenge is to get and stay organized.
Most stores now offer e-coupons that you can clip right on your phone, saving paper, time clipping, and that mess of coupons that used to accumulate. Then, just have them scanned once you are at the register. Check with each store for their policies.
With a little organization and some practice, you’ll become a couponing expert and rarely pay full price for anything.
HOWEVER, when I began clipping coupons many years ago, I noticed a little trick. These coupons will always save you money IF you use them for items you need or had already planned to buy.
That may seem obvious to you, but here’s where comparison shopping comes into play. Often, seeing a coupon available entices a person to make an impromptu purchase. Or perhaps to buy a specific brand without comparing.
With each coupon, ask yourself if you would buy that product if you didn’t have a coupon. In many cases, those coupons actually cause you to spend money that you don’t need or even want to spend. That crazy meme caption of “But it was on sale!” may seem funny in a meme. But it looks sad when the money comes out of your bank account.
Make a decision to only use coupons for items you honestly need and then only if you will actually use the item. Compare prices. Often a different brand is cheaper, even when you take the coupon into account.
6. How to Organize Financial Records
Many people just toss receipts and forget about them, But good record keeping provides a key component to being able to save, spend less, and be fiscally savvy. This includes tracking your expenses and writing them into your budget. At any given time, you should be able to quickly note where you are within your budget, what you have in your accounts, how much you owe, and your credit score.
It will help you be honest with yourself about where you with regards to your finances. And that is a key component.
7. Money Management Skills for adults include Investing
Once you have your debt paid off, understanding how to invest your money wisely is another component to learn. Even some people who have money to spare find it difficult to understand and deal with investments that will increase their money.
To be clear, there are very few ways to “get rich quick,” short of winning the lottery. In fact, most investing and money management attempts need careful research before investing. If in doubt, enlist the services of a professional who understands your willingness and risk aversion so they can guide you to the best investments. And just like with investments themselves, research the reputation of the professional.
8. How to Select a Tax Professional
We all think about getting a great tax refund each Spring. Or we worry about what we might owe come tax time. While saving on taxes by doing them on your own can seem like a good idea, there are times you need a tax professional.
These people go to school to study tax law. They keep updated on the latest IRS changes and therefore have the knowledge to help you make the right choices. And that can save you a lot of money and frustration with the IRS.
Find a proven professional by looking for an Endorsed Local Provider. This will ensure you find someone who is screened and comes highly recommended.
However, if your taxes are truly simple, consider using tax software and save the money spent on a professional. With today’s computer access, people with less complex taxes can often save this cost.
9. Effective Negotiation: Money management skills for adults
Bargaining, bartering, and negotiating skills frighten many people. But they can provide a route to better money management skills for adults and kids overall.
By knowing how to trade, make an offer, and be comfortable with asking for a better deal you save money. The same skills enable you to ask for a raise or negotiate a salary with a new company.
Of course, you don’t want to take advantage of the other person or business. Always be fair.
But never shy away from making a bargain. Challenge yourself and practice whenever possible.
Sometimes a simple, “Is that the best you can offer?” will save you quite a bit on a large purchase. Even small savings add up over time.
10. Know How to Calculate a Tip
Many service industry workers depend on tips to make a livable wage. Often, their salary is set below a minimum with the guarantee of being brought to a minimum if their tips don’t prove enough.
While most of us want to be generous tippers, especially for good service, sometimes doing a quick calculation can be embarrassing, especially when it takes more than a few moments to calculate.
Plus, there’s always that question of, “How much do I tip?” for things like the valet, at the hair salon, or in the hotel room. Understanding tipping customs (hint- some countries consider it an insult if you tip, others expect it) and learning easy ways to calculate a tip are simple life skills to learn. Yet they make all the difference in assuring you’re reflecting the right appreciation and showing acknowledgment for a job well done.
Plan and Perfect Your Money Management Skills for adults and kids
When you make plans and follow through using the 10 steps I’ve mentioned, you find that budgeting and saving become much simpler. In fact, you build the important habit of managing your finances, rather than letting them dictate to you.