It does not matter if when you were little or young nobody educated you financially, the important thing is that today you are the one responsible for learning and mastering the subject .
Discover some signs of a lack of financial education that can be losing you money and opportunities on a daily basis.
Sign # 1: No Budgets
Not knowing exactly how much the monthly expenses are, how much you are going to spend on a vacation, how much you are going to spend on a certain amount of products or desires that are not really necessary in the year.
Really, people who have more financial intelligence project their year of costs and expenses knowing exactly what they can achieve, projecting for example, their savings, their income and if they stayed the same saving for an emergency fund (as we will see later), and generally taking into account exactly what your possibilities are and really understanding roughly how your personal finances work.
Sign # 2: Complaining About Financial Problems
Instead of getting a different job, they complain about the current one, they complain about their boss, they complain about their colleagues, they complain about the situation, they complain about the government instead of creating their own business …
They complain about how difficult it is to earn money in their country, instead of simply starting an idea, studying, reading a book, searching the Internet, analyzing the different possibilities they have at that time to get out of the situation in which they find each other.
What they do and think is partly a solution and they feel good about doing it but it is not, is talking to other people , talking to other people who feel just as bad and simply commiserating with each other, talking about the government mainly, about what came out in the news, about the last politician who was scammer, about the last bad decision that such a person made, how bad my boss is, how difficult the situation is in my country, the crisis, this, what another and the other …
So these people don’t really think that just as they are living a bad situation, other people are not living a bad situation at that very moment.
Not because others are thieves and then with the money that they steal they can be happy and enjoy, but because there are people who have a more open mind to what are the different, practically thousands of possibilities, to generate income honestly, generate income with things that are not even a job, to generate income with not so traditional businesses or with traditional businesses, to take advantage of the opportunities that the times give me.
For example in Colombia, in Latin America, one could say that there are not as many opportunities as in the US or as in Europe, but the truth is that the situation we are in, although it may be difficult for some, is a great opportunity others.
When the dollar goes up and things get more expensive, if you were earning in dollars then you would be earning much more money and benefiting while others are in trouble.
So it is a matter of taking advantage of all these things and not necessarily letting yourself be sunk by bad thoughts, by the negativism of simply being in a bad situation, because always remember that having little money does not necessarily mean being poor .
Sign # 3 Wanting to Live Above Possibilities
To think that I will probably die tomorrow and nothing took me to my grave, then I must enjoy my life today.
Getting into debt with credit cards to pay for a vacation so I can’t even pay off those debts with my income later and (worse still) I’ll be paying interest and additional costs, buying the last $ 400 phone or shoes or « the best clothes ”(in quotes when we talk about super expensive clothes).
Simply because I feel that I deserve it, or even worse when a person has simply been making a certain amount of money and it turns out that they had a raise, change of employment or graduated, they have a new university degree and then they can earn a little more, automatically with earn double, spend double .
All your income once again is not enough for what that person wants to do, practically for more money we give to this person or even if the lottery is won, it will not be enough.
This is a clear sign of a lack of financial education, because it is called ” Lifestyle inflation ” and it is a thing that never ends regardless of whether you have enough money to buy a soda, or you have enough money to buy a private island.
No matter how high you are, lifestyle inflation is an enemy of your personal finances and needs to be controlled right now, no matter where you are in financial terms.
Sign # 4: Don’t Save
Many people say, ” no, but I can’t save because I earn very little and I spend it all .”
These people could do an analysis (as we saw in the first step) of what their expenses are, where they are buying, where it could be cheaper, how to improve their income even, simply if they do not have enough to save they should earn more money, and it’s very easy to think of it that way (I know, just make more money) …
… but that is the harsh reality: If you are not enough for what you have or it is just enough, how much more time is going to happen like this ? emergency?
And speaking of saving, better still than saving, which is basically taking your money and saving it, losing value due to the country’s inflation, especially in some Latin American countries where this problem is so critical, it is even better to invest it .
Now many people will say ” no, but I can hardly afford what I buy monthly, now to think about investing, impossible “.
And How Much Money Do You Need To Start Investing?
Did you know that some mutual funds allow you to invest from $ 10, $ 5, $ 100 depending on the amount of money you have?
You can simply start now, the difference between saving and investing is the level of risk.
For example, a low and conservative level of risk is simply that your money begins to generate profitability, even if it is little but it increases at least to compensate for inflation and in the best case, to rise one or two points above it and make it grow more and more.
Not that if you have $ 1,000 saved this year, for next year they will probably be worth $ 990, or $ 980, or $ 970 depending on the country, but that for next year you have $ 1,020, $ 1,050, or $ 1,100 depending on the level of investment you make. .
Sign # 5: Not Having an Emergency Fund
- What happens if you lose your job?
- What happens if your business stops working?
- What if sales go down?
- What if there is a super critical crisis in your country?
- What happens if for some reason a war starts, or a trade war (as has happened between the US and China), or worse, a global pandemic?
- What happens if the dollar goes up a lot, if the peso goes down a lot?
- Or if any other circumstance arises, even if you or a family member have an accident?
- Where are we going to get the money from?
- Are we going to go into debt for it?
- Will we get it from some source that actually leaves us in worse financial trouble later?
Each person, regardless of their situation, has to commit to themselves, to save some part of their income for an emergency fund .
And it is that an emergency fund is not ready in a month, not even in a year, it can take several years to have saved what you need to survive for about 6 months without any money entering your pockets . But you have to start FROM NOW with what you can, because it will not be created overnight.
Sign # 6: Not Having Specific Financial Goals
Financially intelligent people know exactly what they want to achieve in the year, in the semester and probably in the month, with which they know what they are going to do each week and then they are clear about the objectives of each day.
The truth is, you don’t have to be so strict that you know what you’re going to do 200 days from now at 8 a.m., but you do have to be clear .
I have to take into account how much I want to earn this year; If it is double what I earned last year, then I know that certain things must change and improve, obtain extra income beyond what I already have, or stop doing certain things that are costing me a lot of effort and a lot of time, they are not making me money, among other things.
Without being clear about my goals, even if we do not know how to achieve them, it is difficult and practically impossible to improve financially.
I must first start by thinking about what I want to achieve financially.
From there I start to investigate ways, look for ways, see who is already achieving the things I want and how they are doing it, search the internet, read books, analyze other companies, do what is necessary to try to achieve those goals, but first I must have my goals clear.
As I begin to achieve those goals and increasingly reach those goals that I set for myself, I become better at knowing how to set myself according to the times.
Sign # 7: Feeling Bad Every Time A Bill Arrives
It is as if in principle we did not expect it, although we ourselves were the ones who agreed to pay that monthly for a long time . It’s like when we sign a contract and I am surprised when I have to fulfill it.
The truth is that when I have a monthly bill for a service, I am enjoying something that a company is providing me, if at least the internet bill arrives and I am never using the internet, instead of feeling bad what I have what to do is cancel it ; But if this is a service that I enjoy every day and I am constantly connected, if it generates money for me because I do business there or it is simply part of my enjoyment and entertainment, how am I going to feel bad?
We feel bad because it seems that all the money is going one way and the other, like water in our hands.
This is also the result of the first signal, which is not being clear about the monthly budget.
When the money is running out and a bill arrives, that is where we feel bad, it seems that it will not even last for the month. That is not a problem of earning little money, it is of not planning your money correctly .
Probably they compromised with things that they should not, they acquired debts, they bought things beyond their possibility or they are simply paying utility bills that they should not, need to reduce or completely eliminate; but don’t feel bad because this doesn’t solve anything.
They are going through a vicious cycle of feeling bad about money related issues. The truth is that spending money can turn into something very positive, if I am aware of it. I know how I distribute it and how, strategically, I invest it in what interests me.