Do you consider yourself smart when it comes to money? Yes, of course.
The more important question is if you are successful when it comes with money, and that is a totally different skew than being smart or what your opinion of the matter is.
Those who are successful with money, quite frankly, have it. But “having it” doesn’t just mean making good money or being able to finance a couch or a trip to Florida when you want to without worrying about applying for credit or spending money on a flight.
“Having it” means that you make good decisions, long term, about money.
The first question you have to ask yourself: Do you have a built up emergency fund?
And if you don’t, when do you plan on starting one?
An emergency fund is having money set aside for just what it says: if something happens unexpectedly as a result of anything from fault plumbing or carpentry in your house to those braces for your kids that you hadn’t planned on as early as last week.
Being successful with your money also means you realize that just because you have it doesn’t mean you have to spend it: all of it, that is.
Those who have a budget and stick to it are the ones that are able to put money aside, build that fund but also have the peace of mind that they don’t live paycheck to paycheck. In short, they live below their means and don’t push their income threshold to the point where their expenses butt right up against it. If you make $5,000 per month, that doesn’t mean you have to have a mortgage that is $4,000. Living below your means doesn’t mean you can’t have or buy things for yourself, but more along the lines of using the 50 to 50 rule. If you make $5,000, your expenses should be about half of that. You have to remember that those who are successful with money are the ones that have the leftover capital to not only save money but to think about things like upping your retirement contribution or having a plan if that monthly income suddenly gets cut in half. Losing a job or having wages cut is a harsh reality that exists and can happen in an instant.
But, will you be ready? You will and can answer that with an affirmative “yes” if you have budgeted accordingly and lived below or well within your means.
Those who are smart or successful with money know one thing: money is only as good as the person who is managing it. You can gauge your own definition of “successful” but those who have already shown they can be dubbed that will tell you that the term centers on saving, budgeting and having a lifestyle that is conducive what you earn.