One reader shares how learning good spending habits can make even the smallest incomes go farther

I’ve been an investment analyst and financial planner for more than a decade. I’ve talked with people making less than $25,000 and others making more than $250,000 a year.

One thing I’ve learned is that it’s not how much you make but how you spend it. No matter how much you make, your spending habits will mean the difference between living well and barely livin’.

Today’s scholarship essay is by Shelby Norris, a student at the University of Alabama. She shares how her parents taught her powerful money lessons and how good spending habits can make any income go farther.

Check out Shelby’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win one of our two $500 personal finance scholarships, announced August 31st!

managing money bookNot sure how to teach your kids money tricks or good financial habits? You’re not alone. It’s not something that’s taught in schools and few of us were ever taught by our parents.

Check out Dave Ramsey’s Total Money Makeover: A Proven Plan for Financial Fitness. A New York Times best-seller with more than four million copies sold.

It’s Not What You Make But How You Spend It

Charles A. Jaffe once said, “It’s not your salary that makes you rich, it’s your spending habits”. Mr. Jaffe had an excellent point that many fail to remember- many times it is people’s spending habits that get them in to trouble over anything else.

Knowing this, my parents always made the effort to educate me on what it meant and what it took to be financially responsible when I was growing up.

My parents have been teaching me small techniques here and there to be financially successful over the course of many years. For as long as I can remember, my parents would have me place half of any birthday or holiday money I received as a gift from relatives into a savings account they had opened up for me at the bank.

By the time I went to college for undergrad at the University of Alabama, I had saved up $9,000 to help fund the expenses. Having that extra $9,000 to help pay for food, rent, and textbooks was a huge financial weight being lifted off of my parents’ shoulders and it filled me with such pride to know that I was able to provide them with that peace of mind.

The Importance of an Emergency Fund

Another technique my parents taught me to maintain financial responsibility was to always leave a financial cushion in the bank account and pretend as though it is not there.

For example, after graduating undergrad from Alabama and accepting a full-time position at PepsiCo, my parents recommended that I keep my signing bonus I received for accepting the position in my checking account and pretend that it’s not there. Most 22-year olds would have chosen to take that extra cash and buy something fun or go on a trip, but I knew that the responsible choice was to follow my parents’ guidance and put that money into my checking account and ignore it.

The pros in engaging in this practice is that if an emergency arises and you need to pay for something quickly, you will have the funds to do so without having to take out a loan or go in to debt.

Taking My Financial Lessons Back to School

Making the decision to quit working for one of the largest fortune 500 companies where I had a salary, great health insurance, and paid vacation days to go back to school to receive my Masters Degree in School Counseling was a very difficult choice.

Having always practiced financially responsible decisions, it was going against my nature to go back to school where I knew I would have to pay for the entire education myself. However, I also knew that I had to follow my heart and pursue a career that I found truly fulfilling.

I am so excited to be following my dreams and taking the leap to make those dreams happen. The unknown can be very intimidating, however with the lessons my parents have taught me along the way I know that I will come out stronger and be a better person from this life-changing decision.

I want to thank Shelby for her story about how her parents taught her good spending habits and other money lessons. Be sure to support Shelby by sharing the article through social media and check in August for the winner of the personal finance scholarship.

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