Three things you should understand about money

Photo by Mathieu Stern on Unsplash

While we all might have covered some elementary business and economics topics during our school studies, when it comes to the nitty gritty of money management, people are generally left to their own devices. From understanding tax rates and returns to mastering mortgage applications, there are lots of important topics that don’t feature on the standard school curriculum.

As we grow up and start to take more responsibility for managing our money, education is key to feeling financially secure and opening up more opportunities in the future. Fortunately, you don’t have to be a business mogul or have earned a major in finance to get a head start on money matters.

Developing our financial literacy has the ability to positively impact our lives in so many ways. In this post, we explore three key things that everyone needs to know about their finances.

Starting early promotes healthy saving habits

Effective investment plays a key role in long-term wealth accumulation. However, going into it blindly can leave your finances in a far worse position than when you started, so it’s important to have a basic understanding of how to invest your money effectively.

For anyone who’s just starting out on their investment journey, there’s some important things to know to help your money go further. First of all, look to diversify your assets where possible. By spreading the risk in this way, you guard against bigger losses if one investment starts to yield negative results. It’s also important to remember that help is always available, so don’t feel like you have to guess and work things out on your own. Often, seeking professional advice is the best way to keep your money secure and build a more prosperous financial future.

There are more ways than one to build credit

We’re constantly reminded how important it is to build and maintain a healthy credit score. But often, people fall into the trap of thinking all they need to do is to take out a credit card and pay off the debt in full each month. While this will have a positive impact on your credit rating, there are lots of other important factors to take into account that you may be neglecting.

If you own a credit card, as well as paying off the debt, it’s important to keep your credit utilisation ratio low. This basically represents how close you get to your credit limit each month in terms of spending on your card. While there’s no hard and fast rule when it comes to your credit utilisation ratio, it’s generally recommended to spend no more than 30% of your credit limit each month. In addition, lenders will look favourably on your application if you have built up a long credit history (providing it’s in a healthy state). It’s never too late to start, but most people are able to start building credit when they turn 18.

Negotiating pays off

Being able to negotiate when it comes to money is an important skill to have. We aren’t necessarily just talking about negotiating the best price for an item at a market. On a larger scale, one of the most important ways in which this skill could benefit you both personally and professionally is when thinking about your salary.

Whenever you apply for a new job or are up for a promotion, chances are you’ll have the opportunity to discuss your remuneration. It can be an awkward thing to talk about, but being confident when negotiating will give your finances a boost and potentially further your career prospects. According to one study, 80% of graduates who asked for a higher salary were at least partially successful in their request, yet just 38% of millennials negotiate their first salary. Having a little extra cash in your pocket at the end of each month can give you more breathing space and helps to give your savings and emergency fund a boost.

Take control of your money

If you’re looking to take better control of your finances, start by implementing these three key points into your everyday life. Commit to developing your financial literacy on an ongoing basis to keep on top of your money now and in the future.


  • Christina Locke

    After earning her master’s in economics from a leading UK university, Christina has gone into the education sector and is passionate about preparing the next generation for financial success.

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