Starting a family is one of the best decisions that any person can ever make, but it doesn’t necessarily mean that everything is going to be a bed of roses. In fact, a lot of young couples don’t realize the importance of managing personal finances. As a result, they end up either unable to buy things for themselves, or drowning in a sea of debt.
Why Do Young Families Struggle with Finances?
The truth is that many of us buy things that we really don’t need. You may have read stories of some individuals who became bankrupt after uncontrollable spending on unnecessary things.
Consequently, being unable to have self-control may somehow be linked to a psychological disturbance, which in reality may turn people into shopping addicts. Buying unnecessary things without careful planning may become for them a way of diverting their negative emotions into something that can mask these thoughts and make them do something that would make them feel good about themselves.
As for others, they simply don’t have enough knowledge to understand the concepts of wise purchasing, depreciating value, and correct investments.
Learning from Business Finance
While managing personal finances may not be as complicated as that of managing a business, you can actually learn a lot from business financial advice. After all, it’s important to know how to properly manage the money that comes in every month.
Some of the things that young families – and any other person for that matter – should learn from businesses include the following:
Risk Management and Assessment
No matter how big or small business has been established, company owners should know how to identify, measure and control the existing risks, the possibility of their occurrence, and their economic impact.
On their part, young families need to implement actions to manage the causes and effects of risks. Such an assessment should be done especially when greater uncertainties are anticipated, wherein there is a need to enhance risk management.
Business owners need to determine the company’s financial capacity and to know how efficiently its resources are being utilized. By knowing these things, they can generate additional income for future investments. The same is true with private individuals and families.
Ratio of Profitability
This refers to the operational efficiency of a business. This information helps businesses identify inefficient areas that may require modification, and helps in measuring the profit relationships with sales, total assets, and net worth. In a family perspective, we need to know how to grow our money by spending it in value-adding products and services.
Best Books on Personal Finance and Money, for Young Families
Managing your finances and be able to know how to control unnecessary expenditure can be made easier and more effectively by receiving advice on financial management. Additionally, there are various books that talk about financial growth and control, which you can use as great sources of information and inspiration.
Listed below are some of the best books to understand finance that can help young families in managing and controlling their finances.
“I Will Teach You To Be Rich” by Ramit Sethi
This book encourages its readers to follow a 6-week personal financial program utilizing a practical approach that is based on effective banking, saving, budgeting and investing.
“Rich Habits: The Daily Success Habits Of Wealthy Individuals” by Thomas Corley
This amazing resource has taken its author five years to study what both rich and poor people do. What Corley found out is that starting a good habit at a young age can make a striking difference in the lives of people in the future. Starting young means having to embrace several opportunities that can distinguish persevering individuals from those who just want overnight success.
“The Millionaire Next Door” by Thomas J. Stanley and William D. Danko
This incredible book teaches you how to spend less than you actually earn, avoid spending on unimportant things, and maximize and diversify your investments. It’s a truly must-read book that can put anyone financially independent and free.
“You’re So Money: Live Rich Even When You’re Not” by Farnoosh Torabi
Anyone can live within their means and be happy and fulfilled. You only need to learn how to prioritize expenses, know when and what to splurge on, and realize the things that you can save up for.
The author originally intended this book to teach his own children about how to better manage their money. But eventually, he was able to come up with a lot of sound advice that would encourage more people in enhancing their financial management skills.
“Financially Fearless: The LearnVest Program For Taking Control Of Your Money” by Alexa Von Tobel
The LearnVest Program teaches people in the workforce how to properly budget the monthly salary in order to fulfill all obligations and still have some money left to splurge on something that brings them happiness. The tips in the book also talk about how to save a little more money for future use.
This book is not your conventional financial management book that focuses on a lot of financial or technical jargon. The witty author wrote this book in a way that would highly encourage young individuals to start early and start right.
“Thinking, Fast and Slow” by Daniel Kahneman
When we talk about managing our finances, this involves a number of decisions that need to be made. This book allows readers to understand what drives them to arrive at a particular decision.
These books can already do wonders to inspire young individuals on how they can properly manage their finances and become worry-free of getting stuck in debt, particularly when individuals may face uncertainties such as changing careers or welcoming more children in the family. Nevertheless, being able to gain financial control allows you to avoid further financial losses which could tremendously affect your quality of life.
By following the tips above and reading up on these finance books, you may discover new and highly effective strategies to properly budget the money that you have.
Kajol is a Latin American crypto enthusiast. She is a specialist on management and strategic planning for over 11 years. Thompson has worked as a legal and corporate consultant. She writes about her interests like blockchain, cryptocurrency trading and market analysis.