Personal Finance

One of my main projects this year (2018, at the time of writing) is to learn more about personal finance. I had never really been interested in the big bad world of finance. It always seemed too complicated and somewhat overwhelming. But even just basic financial literacy is important if you want to become financially free. I have no plans to learn about finance in great depth- just general knowledge that would be beneficial for my future. That includes learning how to spend your money, where to put your money and how to build your money.

My goals require money 

I graduated this summer (July 2018). I have decided to take a gap year before I seriously start thinking about my career. There are so many things I want to do before I dedicate myself to heading towards a good career path. Namely, to live in Spain for a few months and learn Spanish.  Early September, it really hit me that I need to have a lot of money to be able to fund such goals.  While I’m living in Spain, I won’t have any income.  I worked out a very rough (and pessimistic) budget of around £6000 including flights, accommodation, the course, and living expenses. This is what I need to live comfortably for a few months without having to worry about getting a job.

The beautiful money jar one of my best friends (Eleanor) gave me for my 21st Birthday. Still has a lot of space!

Changing my materialistic habits

Although I miss living with my friends and living an independent life, I love living with my family and am so grateful that for now, I don’t have to pay for rent or food. But I also realised that I need to save a lot of my income and start changing my financial outlook if I am going to get anywhere near to saving that much. I used to spend a lot of money on clothes, food and going out.

Online shopping and shopping in general, would always (and still does) bring me so much happiness and stress-relief. I loved buying things, and it sounds bad but admittedly, I was very materialistic. If I saw something I liked and could afford, I would need to get it. I don’t regret the decisions I made on my purchases; I was working part-time and I had a student loan.

But after the summer I graduated, I realised that although I was on my gap year, I still had to change the way I thought about my finances. I could not be frivolous with my money anymore– especially if I wanted to go to South America, and possibly live in Spain after. I have big goals for myself next year regarding where I would want to ideally be. If I wanted to travel and live in a new country by myself, I knew I had to have a lot of money and my current materialistic mentality was going to make it very difficult for me.

Not just financially wealthy, but wealthy in the quality of life that not having to work for money offers: the freedom to pursue your passions and live on your own terms.

Jonathan Hobbs, Stop Saving, Start Investing.

Realising the importance of managing your expenses and diversifying your income 

So, as I often do when I need motivation and help, I went onto YouTube and started watching a lot of business, finance, and self-help videos. I knew that if I wanted to get more money, I needed to diversify my income so I specifically started watching videos on that. It was so inspiring to watch people talk about their financial journey and successes. It made me realise for the first time how important taking control of your spending is, and how important having multiple streams of income is. Saving money and increasing your income are both essential to becoming financially wealthy. And as Jonathan Hobbs quotes above, it is not about striving to have a lot of money in the future to be able to afford a luxurious and materialistic lifestyle. It is more about being financially free: not having to worry about debt, or being able to afford the necessities in life. With financial security comes a great sense of comfort and happiness that you can ‘pursue your passions and live on your own terms.’

I intend to write more about personal finance and go into more depth about some of the points I mentioned in this post. That is why I needed to outline the main reasons behind my interest in learning about it.

Sources

Jonathan Hobbs, Stop Saving, Start Investing, 2018, page 19.

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