5 Must-Know Money Rules for the New Generation
These things only come up when we're heading for a recession.
If you don’t have money, you die.
We need it for rent, food, and a bunch of other essential things in life.
Money has become so important in our lives and especially now with inflation skyrocketing to around 8–9%, it’s essential to know how to manage your money and what you can do to secure your assets.
It’s definitely not by keeping it in your bank account.
Here are 5 must-know rules about money for the new generation.
1. Keep a ledger to track earnings and expenses
Before, I didn’t keep a ledger to tack my fiances.
It was a total mess, allowing me to get in dept and having arrears multiple times. If you don’t know what’s coming in and what’s going out, you will end up having financial problems.
Using simple tools like Excel and creating your own digital ledger can prevent many problems — but there are also many ‘ready-to-use’ solutions that you can download straight away from the app store.
You often can link those to your bank account and they will categorize your income and expenses into something like:
Salary (+)
Groceries (-)
Rent (-)
Medical care (-)
Tech subscriptions (-)
and you get a very easy-to-read report on what you spend and what you earn.
2. The world is in debt, don’t be afraid of it
Money = debt.
Basically, all money is debt that we created to fix previous financial crises — obviously, that’s not how it works and it doesn’t really fix anything.
Currently, the national debt of the U.S. is $24.19 trillion.
That’s a lot of money that isn’t going to be paid off anytime soon. Definitely not after Joe Biden announced the relief of student loans. But that’s not the only thing going on regarding debt.
Most people are buying houses using a mortgage. These are huge debts and with increased house prices they will need higher mortgages since wages have remained the same.
It’s terrifying if you look at it just like this.
But on the other hand, the whole world is in debt. We’re all in problems that we made up by telling each other that “money is worth something” and by, of course, the collapse of the Bretton Woods system in 1971.
3. We’ve got our own asset class
Now let’s get a little bit more positive about everything.
Despite the fact that we’ve basically missed the opportunity to make a lot of money and save our money investing in real estate and stocks, we still got a chance to do so.
We’ve got our own asset class: crypto.
Don’t turn away from this article now because you’re skeptical. Hear me out about this.
Yes, the markets are all down.
Bitcoin is at a very low rate of $19.439, but it’s likely to go up again in the near future. — and especially in the long run, it might be a good investment.
We’ve seen what it can do, so it’s likely that it will do it again.
The need for a decentralized way of financial transactions is higher than ever and I think the amount of people wanting to change from classical banking to Blockchain transactions is going to be huge.
It’s as good as gold.
There is a limited amount of 21 million Bitcoins. That’s like with gold, we can’t print more of them. If we take a look at other crypto coins like Ethereum and Cardano, that is possible.
Do your own research before you invest but if you’d want an alternative for Gold or Silver, I would say Bitcoin.
4. Diversify your sources of income
The previous generation often has one main job. That’s their source of income: working 40 hours/week to make ends meet.
But sometimes that’s not enough.
What if you suddenly get fired because of some incident at work? How would you earn your money then?
You’d have to find a new job, not always as easy as that might sound.
I’d recommend you solidify your financial base and diversify your sources of income, meaning to get more ways of earning money. They don’t have to be equally sufficient, but together they make life comfortable.
Currently, I have 5 sources of income that help to keep going.
If one source was shut down, I’d still have to make sure to fix that but at least I’ve got some extra cash to spend when I’m trying to find a new job or getting new clients.
A good way to make a bit of extra money is by writing online. It’s an investment in yourself because you won’t be able to make a full-time income straight away but:
It gives you a little extra cash.
It builds a portfolio that you could use to earn more money.
5. Earn more than you spend
This one might be a little obvious, but as long as you stick to this rule, everything’s going to be alright.
You can’t go broke when you spend less than you earn.
The remainder of your money each money could be used to invest in stocks, crypto, gold, silver, etc… But also to fill up your amount of money in the months that you know you won’t earn more than you spend.
That’s the cool thing about money. You need to play the game really well to be successful.
The summer months aren’t good for me so I make sure that in the other months, I try to make a little extra money to serve as a safety net for these months.
Final takeaways
You shouldn’t waste your money either.
I used to buy $3 coffee every day at college and sometimes even multiple times a day.
Now I drink a lot more water.
It would save me around $1300 per year. By only not buying that $3 coffee every single day.