5 Financial Skills They Didn’t Teach You in School.
#1. Personal Cash flow. Personal Cash flow is the total amount of money you make per month minus the total amount of money you spend each month. This number should be positive!
#2. Discretionary vs non-Discretionary. Discretionary spending is money that you decide to spend. It is a WANT. It is something you have control over; for example, going out to the movies, eating dinner, going to a bar. These are all wants. Non-discretionary spending is money that needs to be spent regardless, for example, rent/mortgage payment, utility bills and insurance etc…
#3. Understanding the difference between Assets and Liabilities. Assets are anything of value that adds to your net worth. e.g. your house, stocks, bonds, businesses and collectibles. Liabilities are the opposite; anything that takes away from your net worth. The biggest example of this is a car or boat.
#4. Tax Refunds are bad. I know we are going to get controversy on this one. Let me just say this, when was the last time you were happy to overpay? Then, let’s say you finally found out you overpaid for something and a year later, they are going to reimburse you. Would you still be happy that you got paid back your own money, a year later? This is exactly what a tax return is! You overpaid the government and basically, gave it an interest free loan for a full year.
#5. Savers are losers. Well, almost. Saving is the first half of financial freedom. You can’t invest without being disciplined and learning how to save first. If all you do is put your money into a high interest savings account (which you probably aren’t); you will lose money to inflation year after year.
Again watch this video by Ryan Scribner and your future self will thank you…
