Smart spending: Part 1
Brushing up on your money skills can help with family finances, both now and in the future.
Money and financial matters cover a wide range of topics. Smart spending takes practice and knowledge. Fall is “back-to-school time” for children and college students; maybe it is time to think about taking a class, or just learn on your own about smart spending.
There are many reasons to broaden your knowledge base in financial matters. You can learn ways to grow personal savings for unexpected expenses – these can include car repairs, appliance breakdowns or unplanned medical expenses. Having this type of personal savings can reduce stress and bring peace of mind. Another reason might be to learn about different sources of credit available for major purchases such as a car or children’s education. Retirement planning is also an important reason to learn about investments such as mutual funds and bonds.
Other possible benefits to learning more about finances include a worry-free retirement, education for your family, paying less for credit due to an increase in your credit score after following a spending plan and gaining more control of your financial life.
Another benefit of financial education is learning to communicate with others in your family about money decisions. Disagreements about how money is spent are common. Spending patterns in families vary depending on their culture, traditions, knowledge and interests. Communicating about money requires both talking and listening.
The first step in financial education is to learn how to set goals. Having goals for your finances will help you to focus on what you want to accomplish with your resources. Goal-setting includes taking the time to think about what is important to you. It is important to take time to get in touch with your values and to understand those of the people you live with.
An important tool in financial matters is a budget or a spending plan. Michigan State University Extension emphasizes that a budget will help you to gain control over your money. It is a plan on a paper which creates the opportunity to make sure you are spending your money on the items you truly want and need. A spending plan should be custom made for you. While it is okay to see how others are spending their money, what works for them should not dictate what works for you.
The next article in this series will highlight other financial topics to study and where to find unbiased, accurate financial education. For more information check out MI Money Health.
Other articles in this series: