I don’t come from a financially literate family.
In fact, if I’d count all of my aunts, uncles, and cousins who live above their means I wouldn’t be able to fit them in both of my hands. On the outside, they look like average individuals who are living a decent life. After all, they have nice cars, watches, and have money saved in the bank.
I’m not here to criticize my family because I’m not perfect. In fact, I still carry a car loan which I think of as unnecessary debt. Believe me, I’m working on fixing this issue.
I don’t think that we need to be hard on ourselves for the bad financial choices we’ve made in the past, but we do need to become aware of our financial options. Some of us may have learned crazy mathematical equations, yet can’t manage our personal finances using simple math.
I personally think that this is a problem, but one that only we can solve ourselves.
The first step is to be brutally honest with ourselves on how financially literate we are. More often than not the answer will be that we can learn better money habits.
Cost Of Not Being Educated
You aren’t taking a crash course on how to pass the SATs.
You’re investing in yourself for a brighter future. The longer you wait to invest in yourself on how to make money work for you the scarier your financial future may be. The answer isn’t simply making more money.
I remember thinking to myself that by a certain age I wanted to make 6 figures. I felt like this would be the magic number to live a comfortable life. The reality was that If I couldn’t maximize my current income then making 6 figures wouldn’t be much different.
Sure, I would be able to purchase more expensive things, but I’d still carry bad money habits that would prevent me from reaching financial independence.
Not educating yourself with personal finance has several drawbacks. These drawbacks include:
1. Lower income potential
By only knowing how to work for money you’re at risk of relying on your employer for a higher income.
You can work your ass off for 5 years straight and never receive that promotion you’ve always wanted. The truth is that we don’t live in the perfect world. I’ve seen people climb up the corporate ladder who deserve it the least, and others who’ve truly have earned it.
However, when you start relying on your employer for a higher salary it’s out of your hands.
2. Higher Chances Of Debt
If you don’t learn the powerful concept of making money work for you then you’ll always be working for money.
Because of this, you’ll most likely view money growth in the short term lens. For example, the thought of investing your money in an index fund for 30 years doesn’t seem worthwhile. On the other hand, purchasing a new BMW that’s $50,000 seems like an investment to you because you can enjoy it today.
Perspective is everything. With the wrong mindset, you’re at risk of getting deeper into debt.
3. Unsecured Retirement
Following the simple formula of spending less than ones earn, and reinvesting their excess money is overseen.
Money gains should always be seen long term. If a 25-year old millennial invests $5,000 annually and maxes out their 401k, they’ll have roughly $375,000 by age 50!
Is that new whip, or $400 Ray Bans really worth becoming a slave to money?
This type of mentality won’t be possible if you aren’t educated in personal finance.
Personal Finance Dilemma
I wish I could’ve learned what I know about money today 10 years ago.
As a 25-year old millennial, I get mixed feelings when I hear about other successful millennials becoming millionaires simply because they began investing at an early age. However, after a few seconds, I realize it’s best not to dwell on this sad fact, simply because it’s better to start late than never.
In my opinion personal finance should be taught in school similarly as driver’s Ed. We take 1 written test, and one driving test to pass our driver’s license. Yet, we aren’t required to take any personal finance tests to better prepare ourselves to for our first mortgage purchase.
By the time we learn from our mistakes it’s already too late for some of us. If you’re starting late in your personal finance journey don’t worry you’re not alone J
There is really no excuse to not start educating yourself with personal finance.
The only thing stopping you from upping your personal finance skills is yourself. Nowadays, we are surrounded by a wealth of information that makes it difficult to not find what we’re looking for if you look hard enough.
You can start taking personal finance courses for free! Check out this list from Yahoo that I’ve found here. Some paid options include Udemy and Lynda. I didn’t include any specific courses here, but with some basic research, I’m sure you’ll find plenty.
Start upping your finance game even further by reading personal finance books. One book that I’d recommend to start shifting your mindset about money is “Rich Dad, Poor Dad”, by Robert Kiyosaki.
I’ve personally only consumed books and audio to educate myself about personal finance, but I will start taking courses also.
Path To Freedom
Personal finance is a subject that’s more important than we may think.
Having a wealth of personal finance knowledge, or even slightly more than average could make all the difference for our retirement. As a millennial, it’s an exciting time to start learning about personal finance simply because time is in our favor whether we feel that way or not.
If you’ve been making bad financial decisions, then there’s not a better time to start educating yourself on the subject than today. Ever since I’ve learned the power of money I became hooked. Not solely on earning a high income, but creating the freedom to do the things I love.
It’s unfortunate that we weren’t able to learn about personal finance in school. Some of us may have been lucky enough to have had family teach us great money habits from the start. However, you still have a shot at creating the future you desire.
Start by taking some of the free courses available, and work yourself up to reading some personal finance books. Don’t focus too much on how many books you’ll need to read or courses to take to see dramatic results. After taking a course or reading a book immediately apply some of the strategies you’ve learned.
You won’t get an “A”, or be quizzed on anything you learn down the road. However, the knowledge you decide to take action on will have a positive compounding effect.
Is working for the rest of your life worth not becoming a master of your personal finances?
I know you’ll make the right choice.