Eli’s Mind

Personal finance is not the hardest subject to learn, but the hardest to implement in life. Americans all over the US struggle to keep their purses and wallets bulging with money due to many bad, incontrollable habits. Personal finance has many aspects and methods to learn and adapt into one’s schedule, but there are three that stand out from the crowd and statistically prove to work, changing people’s and families’ lives.

Firstly, creating a detailed budget is the number one tool and method to implement if one is trying to save money and build capitol. A budget is a financial plan that lists expected expenses and income during a particular period. One might impose such a plan to monitor one’s spending and prevent impulse buying. According to an article, What Are the 5 Purposes of Budgeting? by Amy Bell posted on January 14,2024 on Investopedia.com, “A budget helps you figure out your long-term goals and work toward them. If you just drift aimlessly through life, tossing your money at every shiny, new object that happens to catch your eye, how will you ever save up enough money to buy a car or put adown payment on a house?” This shows that a budget truly is effective, of course, if it is taken seriously. This is important because the act of setting limitations on one’s expenditures truly can make huge financial changes. In the end, a budget is an efficient and truly cardinal method for one who is motivated in saving money for the future.

Secondly, the second most important habit one should implement into daily life is prioritize spending. Prioritize spending is determining and valuing your needs over your wants, like essential expenses such as housing, utilities, groceries, and transportation. Once one learns to prioritize vital expenses and control the excitement of spending tens, maybe hundred of dollars on in-the-moment-wants, not only will the person allow their purses to bulge with money, but will also leave the closet lacking of unnecessary clothing which will not see the light of day. Another article from Investopedia.com titled, What Is Personal Finance and Why Is It Important, written by Will Kenton, defines spending as, “an outflow of cash and typically where the bulk of income goes. Spending is whatever an individual uses their income to buy. This includes rent, mortgage, groceries, hobbies, eating out, home furnishings, home repairs, travel, and entertainment.” It also states the benefits of being able to control one’s spending, “Being able to manage spending is a critical aspect of personal finance. Individuals must ensure their spending is less than their income; otherwise, they won’t have enough money to cover their expenses or will fall into debt. Debt can be devastating financially, particularly with the high-interest rates credit cards charge.” This shows that high amounts of useless spending can lead to haunting and daunting debts which one will work countless hours to pay off. This is important because this is the number 1 problem facing US citizens today-large amounts of debts allocated that are required to be payed off. Thus, prioritize spending is a crucial and required practice which every citizen must incorporate into their every day lives.

Lastly, is the famous line everyone hears their mother yell, “We have food at home!” Eating out and going to restaurants is one of the most wallet-draining activities. According to an article published on The Ascent (Fool.com) written by Natasha Etzel, published on March 10, 2022, “The average household spends $198 monthly or $2,375 annually on food prepared away from home. This total includes restaurant dining and takeout expenses.” This shows the average amount of money spent monthly and annually on take out, and dine in. Although $198 isn’t a shocking sum of money, in the long run it all adds up, leading to a loss of money and opportunity. “As for other food-related average monthly expenses, Americans spend $412 per month on groceries. That adds up to an average spend of $4,942 annually.” Although on the surface, seems to outplay dining out by more than double, groceries, if bought and used effectively, will last you longer then a single meal from a restaurant which will leave you hungry in half an hour to an hour. This is important because by only cooking one’s own meals by using produce in the fridge and completely isolating dining out from the equation, one could save up to $2,375 a year.

Finally, out of the broad and difficult topic that is personal finance, there are three key methods and habits every citizen should learn and practice if one is aiming for financial freedom and the extra 10% that is saved from one’s income. All of these fabulous teachings have been proven to work, but I myself would love to put my input in relation to the prompt. While saving and thinking about one’s future is an admirable trait, money does not come to penny-pinchers, and money hoarders. Never fear to spend money on loved one’s, friends, and family in a realistic manner.