I have a bad relationship with money.
It never wants to stick around very long.
You might laugh but I’m just telling you the truth so we start this friendship off on the right foot.
For the longest time, I thought that I was allergic to money. I couldn’t understand why everyone else was so much better at it than me.
People knew how to budget, save, and control all of their temptations.
Me? I used to joke that I was just doing my part in fueling the economy. It was my sad way of recognizing that I had no idea what I was doing when it came to money.
Growing up money was sort of a taboo topic. You never spoke about it because supposedly it was never available. Everything was too expensive and we were always broke. At least that’s what I was told.
It wasn’t until I discovered these money truths that I realized that I wasn’t going to have a good relationship with money until I changed how I viewed money.
7 Money Lessons You Didn’t Learn Growing Up
Some of these lessons might be common sense to you and if that’s the case then congratulations. You’re already ahead of the game.
Or you might be like me and each one is a complete punch to the gut. It’s like hearing a hard truth that you’ve been denying for so long.
1. Your Money Mindset
Until I read T. Harv Eker’s classic book Secrets of the Millionaire Mind I had no idea that there was even such a thing called the money mindset.
The theory is that each of us have a specific money blueprint and it’s how we approach money.
Your money mindset can be positive or it can be negative.
For example, if you feel shameful, then you spend money to overcome the pain that you feel because you feel that you aren’t good enough for it. By feeling less than you spend more than.
It’s some pretty heavy stuff and I recommend you check the book out to get proper perspective on what your mindset might be.
Essentially you want to create a positive money blueprint for yourself.
2. You Can’t Save Effectively Without Goals
It’s hard to attain something if you don’t know what you are trying to attain. Saving to always just made me think I’m keeping my money for no purpose.
What’s the point in working my butt off if I am not going to spend the money?
It wasn’t until I started to set goals (pay off student loans, take my wife on vacation, etc.) that I started to see a purpose for saving money.
This helped me to see saving as a game. Each goal conquered was like reaching the next level. Every time I was falling short of a goal it would spur me on to find out what I was doing wrong and how I could quickly catch up.
Understanding your net worth helps to keep a picture of your overall financial health in perspective.
This post goes into more detail on how I set my financial goals.
3. Your Net Worth Is Everything
I used to think that Net Worth only applied to rich people. It wasn’t until later that only rich people talked about their net work because they were the only ones that understood its importance.
Your net worth is your assets minus your liabilities. Essentially this means that if you have $500 in the bank you can be happy that you have money for food, but in the bigger scheme things you are in the hole with $40,000 of debt.
You can’t have true financial freedom until you have a positive net worth. To get a better understanding of your finances and net worth check out this guide to organizing your finances.
4. If You Don’t Know Your Budget, You Don’t Know Your Money
I always hated the word budget because I heard it so much when I was little. It wasn’t until I was in my 30s and I was married that I understood the importance of having a budget.
Before a budget my philosophy was that I would always make up the money later. Let me tell you, this isn’t the best approach to money.
A budget doesn’t mean you can’t have fun. In fact, a budget makes it easier to have fun because you can plan out things that won’t stress you out later because you spent more than your budget allows.
If you only have $100 this month for fun activities then you have the opportunity to stretch that $100 out and really have a blast.
Want to know more about creating a budget? Check out 10 Steps to Starting a Budget Today.
5. You Aren’t Prepared Until You Have an Emergency Fund
Things happen. It’s inevitable.
There are people that are prepared for when things happen and then there is everybody else.
I used to be part of the everybody else category. When something bad happened and I need some cash I couldn’t turn to my savings account, I had to turn to credit cards which got me into more debt which ruined my budget and made me sad.
Now I make sure that I put money into my emergency fund just in case something happens.
If your dream is to finally start your own business then an emergency fund is going to be your saving grace.
The big question you might have though is how do you start an emergency fund if you are already living paycheck to paycheck.
Excellent question! Assuming you are already being as frugal as possible then it’s time to look into some side hustles. In fact, here are 6 side businesses you can start at home with no money.
Sometimes the answer to your money problems isn’t saving more money but making more money.
6. Debt Is a Ball and Chain That Follows You
When I was in college I took out a loan to buy two computers. Why? Because I could.
I ran up all of my credit cards and never paid them off. I ended up defaulting on each and every one of them.
I’ve had my car repo’d and my credit score was lower than starting SAT scores.
Once you have debt it doesn’t magically disappear. If you want true financial freedom then you need to attempt to become debt-free.
I’m not quite there yet but I can tell you that every piece of debt that gets paid off is another weight off the shoulders.
Debt isn’t a keepsake that you are meant to hold forever. Just because your friends and family have debts doesn’t mean you should as well.
7. Retirement Takes Planning
Retirement used to seem like something that just eventually happened. You got old and you retired but it’s expensive to retire, especially in today’s world.
Now that I run my own businesses I don’t know if I’ll ever actively be retired but I want to make sure I put myself in a situation where if I stop making money that me and my family will be okay.
If you’re currently working a 9-5 then hopefully your employer offers some type of 401k, IRA or Roth IRA plan. If you plan on working for yourself these things are still options for you.
I used to be very much a live in the moment type of person and for the most part I still am, but I’m also aware that I need to make sure my future self is taken care of. I don’t want that guy to hate me.
Money Is a Mindset
It’s important to understand that money is a mindset. I used to constantly stress about money and it would get me depressed but that’s because I never made it a priority.
When I finally sat down and looked at why money was always causing me problems and I set goals to fix those problems I became a much happier person.
Don’t continue to push money to the back burner. Take some time and establish where you are at with it and keep these lessons in mind.
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