Unfortunately for today’s youth personal finance is not a required course in secondary school or university. Young people around the world never learn proper money management skills. Often living their lives paycheck-to-paycheck, a healthy relationship with money is not formed: what it represents, how to use it, how to manage it, how to invest it, and how to save it. Who can blame them? If it is not taught in the schools then in the home would be the next best option to learn about money management skills. However, parents and guardians usually do not do too well in this category themselves for one reason or another (maybe they were never taught) therefore they cannot teach what they do not know. Not surprisingly if the topic is never discussed then young adults will most likely not seek to self educate themselves.
Money simply put in its universal definition is a medium of exchange. It is what we use to pay for goods and services. People’s outlook on money vary greatly, some see it as a means to pay bills and purchasing the necessities in life and they hold that value of money above any other. Others see it primarily as a means to enjoy life via purchasing material goods for enjoyment, they place more value on wants. If I had to choose which value should supersede the other I would say the former, however, in order to get the full potential out of money there needs to be proper balance of both. Though it is important to keep up to date with bill payments it is also necessary to consciously put money aside to do/purchase something you enjoy ( take a trip, go to the movies, treat yourself to some ice cream, buy an article of clothing). If you are able to afford it all then do it all, but the truth of the matter is that many of us can’t. In order to enjoy our money so we won’t lean to either side of investing in all needs or all wants we must know how to manage our money.
One of the most essential questions you must ask yourself is , “Where is my money going?”. Sit down with a piece of paper and write down what you have done with your money in the last three months. Where did you spend your money the most? Were your choices wise? Did you do anything that made you happy? Did you overspend in any area? After you have done this start a financial journal and track your money from hence forth.
You just got paid, what to do? Make a plan for your money. This is where you are going to have to act like a ‘big kid’, discipline yourself and decide how you want your money to work for you. Decide what you need to do with your money and then what you want to do with your money. However, first things first! Designate a percentage of each pay to be saved (I would say a minimum of 3 percent, but 5 percent is ideal). Depending on your expenses you may not be able to wing the 3 percent every pay period, but even if it is just $5.00, save it !
Get another piece of paper and write down all the bills you need to take care of. If you are behind then it is time for you to make some phone calls and/or visits to those institutions and set up a payment plan, if they don’t offer such services let them know that you aware that you are overdue with payments and have them make a note that you will will be able to pay a certain amount monthly, bi-weekly, etc. Make sure that it is an amount that you are able to manage, do not over exert yourself. By all means necessary stick to these commitments. Here is where the wants and non-necessities come in. In order to meet your commitments you must know how to say “No!” to things that you do not need.
Here in the Caribbean we have a lot of fetes (parties) and some of us have adopted the mentality that we must attend every fete with a new outfit. Neither the former or latter is true. You don’t need to purchase a ticket for and attend every fete and not going to every fete will reduce the necessity of having to purchase clothes to go to them. Many Caribbean countries have a carnival season which consist of fetes and many young people’s wages are invested in the festivities without thinking of the repercussions, being broke. Choose a couple of fetes to go to and stick to that decision. Quite a few young people live with their parents or relatives and don’t have to worry too much about paying house rent so they have extra money to spare so they fall into the spending trap, if this is you, don’t be fooled. You still need to know how to manage money so you can gain your own assets (having assets increase your probability of getting loans, visas to other countries when you are ready to travel, etc.) which prove to your financial institution and to the world that you are financially responsible individual.
It may not be something you will consider now, but research investment opportunities in you country and/or region. Investing simply means putting your money into a an area (business, stock, property, etc.) with an expected return (gain on the money you invested). Investing is another way of making your money work for you. It is risky however because you may loose some or all your money if the venture does not go as expected. However, way your options and make smart investments. Never invest all of your money and seek the council of a financial adviser if this opportunity comes up.
In conclusion, remember that is absolutely essential to have a good relationship with money and attaining this means creating balance. Practice proper money management, save, take care of your responsibilities, treat yourself, and plan for the future.
Claytine Nisbett is a community advocate with a special interest in gender and youth development. She holds a BA in Sociology and is Certified in Non-Profit Management. She has spent close to 15 years contributing to the Non-Profit field ranging from board member to secretary. She manages Ujima Solutions and all interested blog contributors can contact her at firstname.lastname@example.org