Financial freedom, spending wisely, personal finance — these things are popular buzzwords nowadays. Everyone talks about its importance, but teaching how to handle money better can be difficult. Many misconceptions are going around, so we made this list to clarify what spending wisely means and what it doesn’t.
It Means Tracking Your Finances
For the most part, financial responsibility includes being on top of your cash flow. Understanding how you treat your money is crucial to this; you might think you know how you spend, but until you’ve seen a log of your expenses, you can’t be too sure. Use expense tracking apps and monitor your daily expenses. You’ll soon realize that there are some aspects that you can save out on, and you’ll also discover which small but accumulated transactions you do make a dent in your finances.
It Doesn’t Mean Skimping on Everything
Whenever we talk about being financially responsible, it often entails not purchasing or spending too much. While this is definitely true, there’s more to it than simply not spending. It’s not wise to absolutely skimp on yourself and purchase the cheapest available option. Remember, when buying something cheap, the quality might be questionable. Which might mean it breaks soon, requiring you to make another purchase. Being responsible with your money means using it on items and purchases of quality, which won’t cause you to put out more money.
It Means Investing in Yourself
Spending wisely includes knowing where to put your money, which also includes yourself. Use what you can spend to invest in yourself. This means purchasing items that bring you happiness (genuine happiness, not just because it’s trendy right now) or something that has value in the future. You might want to buy that new phone, but think about whether it’s really an investment for yourself. Spend it on education and courses such as coaching and leadership training, learn more, and add to your current skills. The skills and knowledge you gain from these will benefit you in the long run.
It Doesn’t Mean Obsessing over Money
Despite all the money talk, wisely managing your finances doesn’t mean you’re obsessed with money. It simply means you understand and respect the importance of finances enough to know you can’t be too careless with it. Always remember that the goal of financial responsibility is not a monetary obsession but education. It should allow you to learn more to make better financial decisions.
It Means Learning More About Personal Finance
Like with many things, being smart with your money is a skill that takes patience, practice, and studying. You don’t just wake up one day, deciding to be more financially responsible and end up being a miser. Study personal finance, as it includes almost all the things you need to be aware of. Things like investments, insurance, savings, stocks, and many more are under the “personal finance” umbrella, making studying it very important. Personal finance isn’t usually taught in most schools, making it all the more vital that you put the conscious effort into studying it yourself.
It Doesn’t Mean Financial Freedom Is Guaranteed
One thing to keep in mind is that doing all of this — studying personal finance, saving money, spending wisely — does not guarantee financial freedom. It simply increases your chances, but ultimately, you have to do a lot of legwork to accomplish it. There are many factors at play here, from the world economy to your country’s economy to your current life situation. What’s important is you’re armed with the knowledge to tackle any obstacles that come your way.
It Means a Better Shot at the Future
As mentioned in the last point, spending wisely and learning about personal finance doesn’t exactly guarantee financial freedom. It means having a better shot at a better life in the future. By knowing and understanding finances, you’ll be prepared for any emergencies that might come your way. You won’t be caught in a bad position by sudden events, and you’ll always have the finances ready to cover for you and your family. When you absolutely need insurance or money to pay for hospital bills, you don’t want to be empty-handed.
It Doesn’t Mean Immediate Results
It is equally important to understand that spending wisely and being smart about money will not make you rich overnight. This is a process that might take years or more. Keep in mind that you need to actively continue a lifestyle like this, bringing your financial awareness with you everywhere you go. Only then will you have definitive results.