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Lessons About Money That You DON'T Want To Learn The Hard Way

Kelvin Graddick ·

No matter how much our families try to prepare us for the pitfalls of managing money during our youth, that doesn't prevent us from burning ourselves (and our wallets) from time to time. Young and old, we're all continuously learning lessons about our money. Here are a few that we’d rather learn beforehand.

You lose control of your money when you don’t actually track and budget.

Unless your a numerical genius, it’s unrealistic to think that we can keep track of every aspect of our money and the hundreds of other things we have to think about. There are times when we just swipe without out calculating; especially on those frequent purchases like gas and food. Numbers don’t lie; you could be surprised by how/where you spend your money if you begin to track it. Starting to calculate expenses by days, weeks, and months instead of just looking at the initial amounts can help put things into perspective for example. You can eventually realize after calculating the totals that some of those little things are just not worth it; you may find that you can make some nearly effortless improvements. Like “why do I spend $1000+ a year on cable when I usually only watch Netflix and Hulu”. 

Saving money prevents debt. Debt prevents saving money.

Not having any extra money saved up causes us to frequently use credit cards for emergencies and big buys. We end up spending years still paying for things that we had long been done with as a result. Really saving for the future and emergencies funds will keep you from using credit and keeps more money in your pocket. Be real with yourself when starting to save; even saving a dollar a day is better than saving nothing at all. Having substantial debt (especially revolving debt like credit cards) really hinders our ability to save. If you have a lot of debt, start by paying down the revolving debt with the highest interest rates first in order to save money on interest in the long run. Once you’ve freed up some income, start saving so that you won’t have to dig another debt hole for that surprise purchase.

Credit cards shouldn’t be used like ATMs

Many get their first credit card during their youth and think: it'll be easy to make the minimum payment and I will never get behind. A few short months later the account is maxed out, delinquent, and almost double the amount we actually spent. Most people that have credit cards are using them in a way that negatively affects their financial health. They spend money that they plan to have; not what they actually have. The few good uses for credit cards are:

1. To build credit by using the card and paying it off every month after they've reported the balance to the credit bureaus.

2. In case of an emergency where we absolutely have to make a big purchase and we don't have the buying power. This should be a last resort!

If we use a credit card for anything else then it's usually a very bad use of our money. If we are unable to save up and buy that "extra" thing that we want then we probably shouldn't buy it. Using a credit card could easily double/triple the price of something if we start missing payments, go over the max, or only pay the minimum payment every month. Remember, credit card companies exists to make money from you; not just to help you buy things!

Your credit score can be knocked down a lot faster than it can be picked back up.

Many destroy their credit score in their youth with too many credit inquiries, late payments, and delinquent accounts. We don’t think about how our credit score will affect what we want in the future; to secure low-interest loans and save money on financed purchases like cars and properties. It’s quick and easy to neglect your score and it will drop fast. It takes a substantial about of work to nurture and it rises slowly. 

Learning how to handle money well is a life long journey. 

I never stop learning about money. Even as I write this article I know that there are things that I could have wrong here, things that I am doing wrong now, and things I have yet to learn. We should continually look for advice from people who we admire and that we know (or assume) handle money well.

I would love to here what lessons you've learned about money; leave some comments!

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