Today, I will provide you with 7 reasons, why you should care about your personal finances and how they will help you to have less stress, make more money and become successful.
As already mentioned in my previous blogs, financial illiteracy is a big issue even in developed countries. About 2/3 of the participants in different surveys assessing the level of financial literacy do not have sufficient knowledge about personal finances (tendency is decreasing!). The reasons are wide-ranging. And in my previous blog about “The Confidence Dilemma” I took a closer look at the main reasons for this issue of our society. Here are the 7 reasons, why you should care about four personal financials:
1. E-Commerce makes spending easier. Nowadays, you can order online 24/7 and many people lose control over their financials because spending money is so easy! Especially by using credit cards, you will have to pay later and therefore, they expenses do not appear immediately. This can lead to surprises at the end of the month if you do not have enough money to pay for your rent, because an expensive online bill kicked in. If you monitor your finances carefully, you know how much money you can spend and you can avoid negative surprises.
2. College tuitions are expensive. The average student takes on more than $37,172 in student loans and pays them back for 40 years. If you understand how financing works, you can make better decisions and avoid lifelong repayment of debts.
3. You do not need financial advisors anymore. Everybody has heard stories about shady financial advisors and bad experiences with them. However, many people still seek their advices, because they have lack of knowledge and especially lack of confidence in themselves. The best thing you can do, is managing your own financials by assuming full responsibility. This will help you to make the right decisions, from which you will benefit the most!
4. Hope for the best, plan for the worst. Taking care of your own financials will help you to prepare for crisis. You will never know what will happen in the future. During the financial crisis in 2008, many people lost their jobs and had to sell their houses because they did not have enough savings to cover their expenses. If you take care of you financials by building savings and plan for worst-case scenarios, you will be able “survive” such a crisis.
5. You can have financial freedom in the future. But you have to start now! Unfortunately, just a small portion of our society is able to become millionaires. However, you can also have financial freedom by caring about your savings, investments and retirement plans. Starting at an early age will help you to build continuously savings for the time you retire. You will have less stress and more money, just by planning for your future. That’s what we all want, right?
6. Every successful business person must have an understanding of finances. In my last blog, I introduced 6 success stories of famous investors. They all have started off small and became successful by acquiring knowledge and improving themselves over time. So you can do it to. Without having financial knowledge, it is way harder to become successful.
7. Sharing is caring. Having a basic understanding of your personal finances will help you to support family, friends and other people who might have financial troubles. You can become the financial advisor within your community and share you knowledge and best-practices with them to help them become successful.
Stay tuned for more blog posts about investments and personal finances in the near future.
I’d be very curious to hear your thoughts on this topic.