For most people, dealing with money is a very complicated challenge. Some even have the will to educate themselves financially, but fail to execute and do not make good decisions. One of the main reasons for this is the lack of discussions on the subject when we are still in school, which ends up perpetuating for the rest of our lives.
In fact, changing your concept of money is not a simple task. It will require a lot of willpower and discipline in your personal finances. The good news is that the sooner people seek to re-educate themselves financially, the better their future will be. In these situations, students can explore the power of compound interest and have an important variable in their favor: time.
What is Financial Reeducation?
In general, we can define financial reeducation as a change in habits whose objective is to ensure more tranquility in people’s lives. Thus, its concept is to change habits and review attitudes that may be harming your household budget.
A few years ago, financial education was hardly known in our country. We are short-sighted by nature and, therefore, we end up making mistakes in everyday life, which can lead to indebtedness.
In order to solve this problem, we decided to write this article so that even students can re-educate themselves financially and change the way they handle money.
STEP 1: Review your consumption habits
Perhaps this is the most crucial step in the financial education process. Reviewing consumption habits, evaluating purchases made in the month and unnecessary expenses are very important steps in this challenge.
Impulse purchases are quite common among students and can hurt the household budget. Most of the time, they make purchases of products that would not be needed and are little used in everyday life. Such behavior tends to perpetuate itself and harm its personal and independent life.
Becoming aware of the fact that we are short-sighted and impulsive is the first step in changing our behavior.
STEP 2: Change your concept of money
Changing our concept of money is fundamental for financial education, especially when dealing with people in debt. That’s because, in most cases, they end up having a wrong view of money.
It is common for the most indebted people to see money as a bad thing. It’s in their subconscious, and for that reason, they do everything they can to get rid of it when it gets to them.
Thus, it is necessary to change this concept of wealth. Possessing money is not an evil, but a resource to achieve freedom.
STEP 3: Create habits to control expenses
It may be that many students do not need such a resource momentarily, but the sooner they get used to such habits, the better. Personal financial control is essential to improve and optimize our spending.
Many already work, while others receive help from their parents. In both cases, using mobile applications or Excel spreadsheets will be of great value. Financial control consists of documenting all income and expenses, classifying them as fixed and variable.
This will make it easier to understand where our money is going. It is therefore easier to identify the wrong purchases of the month and cut them from the budget.
STEP 4: Make a plan with goals and objectives
The fifth step to obtaining a good financial education is to adopt the habit of planning and setting goals. That is, when you want something, you have to plan ahead.
What are your goals? Living alone, traveling, buying a car? There are countless possibilities that will require good planning and focus. Reserve part of your income for these purposes, set deadlines and be aware.
STEP 5: Start investing
The last step is the one that will take the most time. Starting to invest is a relatively simple task, but it will require a lot of study and dedication.
Investing is a tool that allows the money deposited each month to earn more and, with that, you will have more resources in the future. This reflects on your financial, professional and personal life. Students have time on their side, so they should explore the power of compound interest.
