Basic money management skills every adult should have
Basic money management skills are key to a financially successful life. Conversely, if you don’t learn the basics of your finances, you can end up in serious debt and struggle to make ends meet.
Basic management skills
As an adult, you should be able to manage your money, including income coming in and bills and purchases going out. This is not to limit yourself but rather to free yourself, enabling you to spend realistically based on how much money you actually have, so as to avoid going into debt.
According to Jesse Campbell in a May 2015 article in Money Management, a financial counseling and education service provider, one of the foremost skills every person should have is how to maintain a budget. Campbell suggests starting simple and making a plan for your income based on your bills, spending needs and savings. As budgeting tends to become more complicated with age (adding in mortgages, retirement accounts and even college savings plans), it’s crucial to know how to budget and stick to a plan.
A February 2016 article in The Balance written by contributor Miriam Caldwell adds that understanding how to set financial goals, including how to break them down and actually meet them in a realistic amount of time, is essential to planning for long-term savings and spending needs, like emergencies or even retirement. This will further help you budget as you set aside money for different spending goals.
Caldwell also reports that with the digital age and the advent of online banking, many people have forgotten or no longer practice the skill of balancing a checkbook. This basic skill is a must for all adults. Computers can still make mistakes and it’s important to still know how to check your spending each month to ensure your accounts reflect the correct balance. Clerical errors or fraud can go unnoticed and hurt you in the long term if not taken care of immediately.
Understanding credit and financial agreements
Even in the digital age, you should be able to know how to read a bank or credit card statement.
Whether your financial statements are printed out or available online, understanding them and the information provided is imperative to managing your money and maintaining organization. You should also get in the habit of reviewing your statements on a regular basis, whether daily, weekly or monthly, Campbell reports.
When opening a new credit card or debit card, or applying for a loan, you should be able to read through and understand the terms of your loan or line of credit, including interest rates and fees, Campbell adds. An offer that looks great on paper may end up sinking your budget if you overlook or don’t know the conditions and terms of your agreement.
Furthermore, every adult should know how to build good credit and understand the benefits of good credit history. Caldwell notes that it’s especially important to know how to manage your credit cards and pay your bills on time to keep your debt low and help build good credit.
Although it’s tempting to avoid using credit altogether, doing so is essentially the same as creating a bad credit history, Campbell adds. In the long term, it will only hurt your ability to get credit when you need it later, like for a mortgage, a car or another major expense.
Should you have concerns about your financial life, don’t shy away from consulting a financial adviser of other resource.Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.