Money is not everything but without money, our life will be a disaster. If you need a not-struggled life, you need to have personal financial skills. If you wish to live a healthy, happy and secured life, you need to master the financial skills, whether you like it or not. It is not a choice but a MUST.
Personal financial skills are the skills on budgeting, saving, debt and investing. Budgeting skill means the ability to allocate money for different needs and expenses. Saving skill means the ability to have positive monthly cash flow every month. Debt skill means the ability to control the debt level and not over-leveraging. Now, it also includes the ability to use debt to grow wealth. Investment skill means the ability to select and monitor the investment to meet our financial goals.
First reason why we need to have the skills is that the current world requires money for everything. We need money for our food, clothes and shelter for surviving. These are the basic living needs. There is no chance for us to say “I don’t have money, can you give me free house to stay?” With our children, our financial burden is even higher. Children education fee is increasing every year. Hence, we have no choice but need to have better ability to earn money and save money.
Second reason is personal finance is not a subject taught in school. This is the reason why many graduates are having huge student loans once they leave school. If the skill is not mastered, many will be stuck in the debt, using one debt to cover another debt. Budgeting skill is important to make sure we do know more on what we need.
Third reason is for our retirement. In general, we have only 657,000 hours in life, assuming our life span is 75 years. By the time we leave school, almost one third of time is gone. In the remaining 2/3 of our hours, do we want to spend on finding money to fund our retirement or we spend on enjoying our life? If we need early or on time retirement, we need to master our skill on saving and investment to grow our wealth so that we are able to fund our retirement even though we are not working. We need to master our skill on managing our debts so we do not need to work our life just to pay debts.
Fourth reason is for our emotional and physical health. Researches have shown that lack of money or increase of debt can increase our stress level. Stress is the number one killer to our health. If we are able to manage our personal finance better, definitely, it is very effective to maintain our health.
Fifth reason is to have more people to help you achieve what you want to achieve. If you are having better personal finance, you will have better credit score. Banks like people who have good credit score. With good credit score, it is likely to get bank loans to fund your favourite homes or businesses. The key is to be able to manage debts better, the better you manage your debts, the more money you can borrow but because of your personal finance skill, you will have more monies and not stuck in debts. I hope the above will motivate you to learn more about personal financial skill. You are the one who can control your wealth destiny, no one else!
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