Taking control of your personal finance is something that you should learn how to do before you become an adult. By taking control of your finances early on you with be able to lead a more happy, stress free life. When you turn 18, you are given the opportunity to build credit, your credit worthiness is all determined by the loans you take out. Paying off your loans on time will build your credit and make future purchases easier. Another way to build credit is to use a credit card(s).
When you use a credit card, you are basically borrowing money from the credit card company and in return they expect you to pay it back with interest. To pay off your debt that you attained by using loans or credit cards, creating a budget will be extremely helpful. When you are debt free, it would be a great idea to begin investing into a savings account. Another popular way of investing for your retirement is by buying stock.
When creating a budget to save for something or to pay of debt, you need to put together a list of your wants and your needs. Wants are the things that you can live without on a daily basis like a tattoo for example or jewelry. Needs are things like a roof above your head, transportation like a car, and food etc. Opportunity cost plays a role in your wants, generally when you buy jewelry or something that you don’t need, it isn’t benefiting you in any way other than your satisfaction and that means that it will cost you your money. Scarcity plays a big role in the things you need, generally, the things you need are going to be more expensive, when scarcity is high, your prices for important things are going to be a lot higher as well. For example, gas prices, when the United States as a slow flow of oil into the country gas is going to be more expensive because it isn’t as available.
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When there is a high flow of oil into the United States, gas prices are going to be a lot cheaper because there is more than enough oil. Economics is the knowledge concerned with production, consumption, and transfer of wealth throughout a nation. If you understand economics, it will make your life a little bit easier. Another way it will help you is by showing and teaching you how to make and manage your money will still living the life you want to live. As long as you understand the basic principles of economics you should do well in your life. Pay off all your debt and you will be able to live a nice happy wealthy life. If you need more help understanding finance, watch Dave Ramsey and read his book, The Total Money Makeover.
