10 Money Lessons I Wish I Knew About Earlier

As of 2020, the average salary in the US was $51,168 per year.

This amount of money can make for very different situations, depending on how people live their lives. Those who are good with money can make this go so much further than others.

If you want to make the most out of your money there are several things you need to understand.

For 10 of the most important money lessons to know about early on, keep reading.

1. Inflation

Inflation is something that governments generally have a target for, meaning they plan for inflation. Every year the value of the dollar (or any other currency) goes down, while the price of products and services goes up.

Because of this, any money you have sitting in the bank decreases in value with time, meaning you are essentially losing money.

This is one of the most important money lessons there is, as it shows that in order to maintain a certain amount of wealth, you actually have to generate more money with time.

2. Money Mindset

Having a mindset of “I can’t do that” or “they have that because they’re right” is a major way to unnecessarily limit yourself. If you set barriers like this in your mind it will stop you from getting past them.

Understand that you, like anyone else, are not limited in terms of the wealth you can attain. You can always achieve more, but first, you need to tell yourself that you can.

3. Invest Early

When thinking about how to manage your money, one of the best things to think about early on is investing. The earlier you invest, the more time that money has to grow.

Understanding compound interest and the stock market properly can help you invest money well and grow your worth. Even with a small amount, the earlier you start investing, the more it will produce.

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4. Ask Questions

Don’t be afraid to ask others about money – it’s the best way to learn. Some people often consider talking about money taboo, but it isn’t.

You could receive some incredible money management advice from people that you would never hear if you didn’t ask them. Knowledge is power, and when people share what they know everyone can benefit.

Just bear in mind the best information is usually going to come from those who have proven they know what they are talking about. If you have a friend who has spent a lot of time making money from investments, for example, they would be the perfect person to talk to.

5. Think Long-Term

When you make a bit of money you will probably be tempted to start spending it straight away. You might want to treat yourself to a few lifestyle upgrades such as new clothes or expensive restaurants, but you’ll be better off if you plan for further down the road.

Think about what you might be better off spending the money on. Your job? A course to upskill? Long-term investments?

It might be a bit less fun, but the results, in the end, will be worth it.

6. Buy Second Hand

Sometimes the cost of a product will drop dramatically just because someone else has owned it. You can often find things that are almost unused and are good as new for a much lower price.

You can also make some extra cash by selling things that you no longer want or need. Not only will doing this help you financially, but it is also environmentally friendly to recycle and reuse things rather than buying brand new products and throwing out perfectly good things that someone else could use.

7. Plan for Retirement

Planning long term is always a good idea, but planning for retirement is somewhat different. Once you’ve retired, you won’t be receiving income in the same way that you have while working.

This is one of the most important money lessons for young people. Retirement may seem like a lifetime away, but getting a good IRA early on is something you’ll be very thankful for one day.

The more money you save throughout life, the more comfortable your retirement will be. You’ll also want to take inflation into account, and looking into methods of passive income is also a great idea.

8. Understand and Use a Credit Card

Many people wait to open a credit card, but it’s actually better to get one sooner rather than later. If you regularly use a credit card and make sure it is paid off in full it will improve your credit score. 

You can simply use the credit card, and pay it off monthly with your debit card. This way you can improve your credit score without increasing your spending.

9. Cryptocurrency

One of the most modern lessons about money you can learn is to get an understanding of cryptocurrency. Most people have heard of it, but few truly know how it works.

What are the different types of crypto? How does the blockchain work? It can be quite difficult to get your head around, but those who already have a grasp of it are convinced that it is the future of money.

Getting ahead of the game could help you capitalize on the crypto movement and set you up for a much better future, so the sooner you can start looking into it, the better.

10. Passive Income

Passive income involves making money, with little to no input. You can be earning money without needing to sacrifice your time.

You will rely less on your standard income from a job and have more financial freedom. This extra income can be further invested to make more money, and even help towards early retirement.

You can also spend more time doing things you enjoy rather than having to worry about working all the time.

Taking These Money Lessons Further

If you’re looking to increase your income and set yourself up for the future, these money lessons are very important, but they are not all you need to know. There is a lot to learn about investments, retirement, credit, cryptocurrencies, and more.

The team at CashFlow Tribe is always happy to offer help and guidance, so feel free to click here and contact us today.

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