Money is an important topic, yet there are many money truths that adults do not tell you. Maybe your parents aren't comfortable discussing personal finances, or maybe this conversation simply slipped through the cracks. Whatever the reason, being familiar with awesome money truths can build your financial foundation. Here are seven awesome money truth adults do not tell you.
1. Don’t Go into Business with a Friend
You may think a friend is the perfect person to do business with, but things can get complicated when friendships and money mix. This is one of the best money truths for maintaining good relationships with friends, relatives or coworkers. You might trust the person, but if you're forced to take legal action after a fallout, this might destroy the relationship.
2. Save First, then Spend
Many people spend their money and save when it's convenient. But if saving isn’t a priority, you'll never build a sizable cash cushion. Understandably, saving doesn't come easy for everyone. You have to get into a habit, but it’ll eventually become second nature. From this day forward, save a percentage of each paycheck, preferably 10%.
3. Maximize Your Savings
Your parents may have preached the importance of saving money, but they might forgot to stress the importance of the maximizing your savings. A regular savings account is one option, yet these accounts don't earn a high interest rate. Other options include certificate of deposits, money market accounts and online high yield savings account. These accounts earn higher rates than a regular savings account, which can take your savings efforts to another level.
4. Debt Can Be the Kiss of Death
As long as you're paying your minimums, you may feel that debt isn’t so awful. However, too much debt can be a major obstacle when applying for loans, such as an auto loan or a mortgage loan. Lenders consider debt-to-income ratios when approving applications. And if you owe a lot of money, this can reduce purchasing power or result in a higher interest rate. As a rule of thumb, pay off credit cards in full and only apply for loans when necessary.
5. Enjoy Life – but Don't Go Broke
You work hard, and you should enjoy the fruits of your labor. With that said, it's okay to entertain and recreate with friends or family. But at the same time, you need to set limits. If not, you risk going broke and not having enough cash for bills. When determining your budget for the month, set aside a reasonable amount for entertainment or splurging.
6. Bad Spending Habits Are Contagious
If you want to improve your spending habits, you might need to change your association. Bad spending habits can be contagious. You might recognize a personal spending problem and resolve to do better. But if you're constantly shopping or hanging out with big spenders, it might be hard to break your habit. You’ll need to associate with those who are financially savvy.
7. Some People Will Dislike Your Success
It's not right or fair, and it might be hard to believe – but some people will be angry if you're successful. This can include relatives, friends, neighbors and other acquaintances. However, if you're down to earth, humble and grateful, don't let the Negative Nancys get you down. It’s their problem, not yours.
Being aware of different money truths can provide a firm foundation. Plus, the more you know, the easier it'll be to pass these truths onto your friends or children. What are other awesome money truths adults don't tell you?