8 Finance Lessons that Changed my Life

1. Income is not everything

Up to a certain level, it does not matter how much money you make. Obviously, you need money to cover your basic needs and you need enough money aside to build a good savings account.

However, if you do not reduce your unnecessary expenses you will not improve your finances, due to a thing called lifestyle creep (when your salary goes up and the previous luxuries become current needs).

There is a tendency as one’s income increases and one’s expenses to follow a new way of life.

While many people make good wages, they end up living on a meager income every month. No matter how much money you make, you need to be self-sufficient and limit your expenses to what is important to you.

This is a big trap. To deal with this problem you can set a fixed savings target of 10–20% of the money you make each month.

2. Expand your income

Use your skills to generate extra income. This is the right time to work as a freelancer, start a business or make an extra income doing the things you love.

You can find many examples of people working in different fields. We all have a skill that brings value to others whether it is writing, music or a foreign language.

If you think you do not have the skills to make money, this leads me to the next tip.

3. Invest in your personal and professional development

Even if it seems contradictory, you need to invest money to make money. Today there are countless sources of information from books, videos, podcasts, etc.

You can learn literally any skill and thus increase your value to potential employers and clients. When you give your money to the right educational tools they will reciprocate this investment.

4. Say yes to everything

As time goes on we become more selective in the things we tolerate or want to do. But if you are starting a business now, this is not the time to be picky.

They all start somewhere low. With the money you make you will be able to repay your debts, save them or reinvest them in you.

5. Move to your parents

Staying with your parents or living with a friend is a great idea to reduce one of your biggest monthly expenses, your rent.

Since 1960 the percentage of people living with their parents is increasing. This is obviously not a coincidence, as property prices are rising.

If you are lucky enough to still have your parents, it may be one of the best ways to reduce your debt or save more money.

6. Do not buy unnecessary things

I have mentioned it a lot, but one more reminder does not hurt. Stop spending all your money on trivial purchases.

Think about your last expensive purchase. Did it solve all your problems? Do you still feel the same excitement after a while?

Now think how excited you would be if you used this money to pay off debts and save more money on the sidelines.

7. Watch the flow of your money

Create a simple excel to calculate your income, expenses, and needs each month.

If you do not want to bother creating such a document, then you can use a related application.

This way you will more easily track the goals you set and where you spend your money.

8. Read 1 finance book every year

This is not just to get new information, but also a reminder to keep going.

By reading stories of other people who have achieved their financial independence and the ways in which they have succeeded, you can set a better example and get motivated.

Some of my favorite finance books are:

• Rich Dad Poor Dad
• Money — Master The Game
• The Millionaire Fastlane
• I Will Teach You to Be Rich
• The Total Money Make Over

The truth is that becoming financially free is a very slow and difficult process. But, the result is worth the effort. Imagine being able to stop a job that does not satisfy you. Imagine a life without stress for money. For all these reasons it is worth being patient. I hope you achieve all your financial goals!