Financial responsibility is not something innate but rather a skill that is learned with time and knowledge. Managing your income along with other financial assets in the best interest of you and your loved ones is a task that is sometimes easier said than done.
Practicing the following measures sooner rather than later can help you to establish a sound financial present and future.
Learn the Difference between Needs and Wants
Successfully making the distinction between what is a true need such as basic food, clothing and shelter and what are wants i.e. the latest Smartphone, designer jeans or a three star Michelin rated restaurant, is essential in achieving financial responsibility and growth.
The focus should always be to first take care of the more important purchases that relate to your needs before spending a reasonable percentage of your after tax income on goods and services.
The idea of buying goods that are purely wants is not inherently bad. In fact, you are encouraged to savor experiences and things that not only are enjoyable but that add significant value to your life. The problem arises once you decide to spend your income primarily on wants, live above your means, live paycheck to paycheck and incur debt in the process.
Once you determine that you have money left over after dealing with necessary purchases, saving and investing some of your disposable income becomes a priority. Not only should you be concerned about your financial security in the short term but securing your retirement needs largely befalls to you.
Educate Yourself about Financial Products
Fiscal responsibility is also about how you manage the money that you earn and save. Implementing and adhering to a budget using software such as Mint, YNAB or an Excel sheet can help you determine how you want to allocate, spend and save your money.
Finding the right banking and financial products that address your particular needs will not only aid you to save on potential fees but you can profit from interest on your money and earn rewards based on your purchases.
As a current or former college student, you may have been presented with several credit card applications on campus in order to get approved for a student credit card. You may not have immediately understood the benefits of student credit cards yet once used responsibly, it can help you to build and maintain a positive credit score, and use credit to your advantage when it comes to purchasing power, purchase protection and earning rewards.
The key to properly using credit is to pay your statement in full each month and avoid spending more simply because it's being done with credit. Reading the fine print on credit card agreements along with any forms of credit is a must in order to protect you from predatory lending practices. If you know that you tend to overspend when using a credit card or line of credit, then it's in your best to refrain from using it until you gain more control over your spending habits.
Financial responsibility is born of financial awareness. Take the time to research all available options when it concerns your finances in order to make a well informed decision.