Vital Money Lessons You Should Have Been Taught in School – Part 1
posted on Aug 24, 2021 | 1092 likes
Important Money Lessons
For many of us, school involved too many quadratic equations and close to nothing about personal finance.
And now that we are faced with the real world, personal finance seems to be the most important economic and arithmetic skill to have. No one is talking about quadratic equations.
With today's young people facing a tough economic climate, a tricky mortgage market, rising cost of goods and services, increasing need for personal loans to sort the basic needs of survival, it’s more important than ever to learn about money.
With that said, let’s go straight to the 10 money lessons you should have learnt in school.
1. How To Make Money Last
If you're having trouble making ends meet, it effectively boils down to earning more or spending less.
However, tempting it is to go on a massive shopping spree as soon as your salary drop, it's crucial that you work out your disposable income first. Paying the rent and setting aside cash for bills doesn't take long, and once that's sorted, you'll have a much clearer idea of what's available to spend.
Try to avoid any impulse purchases, be aware of the tricks used by supermarkets to make you spend more cash and take time to consider (and save towards) exciting big-ticket purchases, such as a new laptop or a summer holiday.
There's no clear-cut answer to how much money you need to live off – the cash you need to get by in Lagos will be very different from the amount you'd need in Abuja. Hence why it is your duty to resolve on what works for you.
2. How to Haggle
There's no shame in haggling to get the best deal when you're buying something. But, unless you've got years of experience as a market trader, you probably weren't taught how to barter in school.
While you should always ask for a discount (even if it's not advertised), the opportunities for a bit of bargaining are endless. For example, head to a local market towards the end of the day and take home some gourmet stock for less than you'd pay inside the well-dressed malls.
3. How to Improve Your Credit Score
When you apply for most financial products (things like loans and bank overdrafts), lenders will run a credit check on you to calculate their risk.
Credit checks are done based on reports of your borrowing history, managed by credit referencing agencies known as credit bureaus in Nigeria.
From your credit score, lenders will decide the likelihood that you'll be able to repay what you borrow.
A poor credit score can affect your chances of getting a loan. Every time you get declined for something because of your bad credit, it will remain as a 'black mark' on your report years.
That is why people should have been thought in schools to think twice before applying for financial products, to apply only when it is absolutely necessary, and to always make your repayments on time.
4. How Interest Rates Work
The Central Bank of Nigeria and the other financial institutions set the interest rate on financial products in the country. With the former setting the 'base rate' and the latter adding more depending on the service offered and how generous they're feeling.
As an example of how interest rates can work; someone with N10,000,000 of savings or fixed deposit might earn 2% interest on a loan they take out, while a shopaholic and constant account sweeper could be paying 20% interest on the money they've borrowed.
Some financial services companies often advertise low-interest rates, but there's no guarantee you'll get these deals. That's because the best rates are usually reserved for people with the highest credit scores.
A lot of customers always want to know what their interest rate on loan will be, but we try to explain this concept that your rate is a function of your credit past.
5. What To Look Out For In Bank Statements
As painful as this may be, it's important you get into the habit of checking your bank statements regularly if you want to avoid unexpected charges, wasting money or being fleeced.
This includes your commercial bank accounts as well as your accounts with other financial institutions. With the recent digitization of the financial services industry, keeping an eye on your money is as easy as surfing the bank’s site or opening an app.
You've heard this all before, but we'll say it again: it's totally crucial to keep on top of debts.
Going beyond your 0% overdraft limit or delaying a loan repayment (without communication with the lender) can lead to nasty charges (and a knock to your credit rating).
Regular check-ins are vital to keep tabs on any payments you're expected to make (and penalties for missing them), any interest you're earning, and for weeding out Direct Debits or subscriptions you can ditch.
And, if you spot any charges for things that you don't remember buying yourself, get on to the bank pronto!
Keeping an eye on statements also shows you month-on-month whether you're balancing your books effectively or heading in a dangerous direction.
If you're nudging the red more often than you'd like, this is where you can see where you're overspending and take steps to rein it in.
Most people come out of school to struggle with how to manage the day-to-day financial stress.
People run into long time debts and mar their credit score simply because they didn’t have the right education on the right decision to make.
While it may not be your fault that you weren’t taught in school, what you do now that the financial reality is upon you is completely your making.
We expect that you will take advantage of the rich information we share on our blog to sharpen your personal finance life.
If you to speak with us one-on-one, you can speak to a financial expert at Page for free by calling 017007243 or sending an email to firstname.lastname@example.org
Visit our blog at https://pagefinancials.com/blog for more inspirations on how to take charge of your financial life.