Most of our deep-seated beliefs about money, which we may or may not be aware of, are formed during childhood. Or they’re cultural norms we’ve swallowed whole, without even realising we have. The truth is, money, on its own, isn’t good or bad, it’s what you do with it that matters.
Brad Klontz, a financial planner expert, said that how much money you earn doesn’t always correlate with how much you have. Sometimes people who earn lots of money also spend lots of money. As their salaries go up, so does their standard of living, what matters more is how you manage your money.
And, research shows, more money doesn’t necessarily equate to more happiness either. In fact, studies have shown that no matter how much you collect as salary, for most people, you can never be content; you feel like having more money. After you reach that amount, making more money won’t substantially improve your quality of life.
There is also research to show that what you spend on, specifically, influences your happiness, too. What should be your financial priority are your kids because as a parent, your first responsibility is to make sure your kids are clothed and fed and comfortable, but when it comes to bigger personal finance goals, like saving for your retirement versus their college education, the opposite is actually true.
Klontz also said that you have to take care of yourself first, so you’re able to take care of your kids. There are student loans to pay for college, but there are no loans for your retirement. If you fail to save enough to live on, you could be putting financial pressure on your kids to support you later.
The same logic applies if your kids want material things that you can’t afford, such as designer clothes or expensive birthday parties. Set boundaries when it comes to finances, so your kids will share your money values. Mind you anytime your child gets a monetary gift, require him or her to save some, give some away and spend some.
Sure, there are plenty of debts that are “bad.” Specifically, this is the money you borrow to pay for something other than an asset that’s likely to increase in value. Credit cards are the best example: If you don’t pay off your credit card each month, you can fall into a terrible trap,.
You also want to avoid being in debt to a friend or family member. “It’s dangerous and could potentially lead to relationship problems,” he says. A form of bad debt that most people find surprising? A car loan. After you buy it, a car’s value doesn’t appreciate. Instead, it’s value goes down. says Klontz.
But there is definitely good debt. This is the money you borrow to pay for something you expect to increase in value over time. “If you are paying student loans that enable you to get a good education and land a job you like that pays well, then it’s a worthwhile investment,” he said.
According to him Property is another example, if you hold onto it for long enough, your house will most likely sell for a higher price than the one at which you bought it. And, the profit you make by selling it should make the interest you paid on the loan worthwhile.
You may say, should i put off my life goals until I can afford them (having kids, going back to school, etc.).This really depends on your personal financial situation.
For instance, if you’re having trouble paying your rent, then it may be smart to hold off on having a child, But, generally speaking, you should be saving up for longer-term money goals so you can create the life you want, without the cost taking you by surprise. Start saving for an emergency fund today so you’re always covered, and also setting up separate savings accounts to fund your different goals.
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