Control Personal Finances

7 Practical Money Skills And How To Identify Them

by Vlastimil Cícha - Pat V.C.

April 21, 2021

Let’s face it… Before you reached twenty, did you identify what are practical money skills?

Why am I asking?

Because money skills help you establish a solid base for your financial future.

Would you agree?

Listen, in today’s world that is connected globally to the internet, you can learn deep information about money practically very fast. 

Also, money should be your daily topic to talk about if you want to climb up to prosperity. 

Now, strictly speaking… 

Not all of you understand the basic practical money skills until you are in your twenties or even later. 

Some of you don’t have financial literacy even in middle age.

Strange feeling, isn’t it?

For that reason,

let’s talk about how to identify 7 basic and practical money skills that I would teach my younger self before I am twenty.

1. Educate Yourself With The Basic Financial Terms

Educate Yourself With The Basic Financial Terms

The question is, why should you?

I’ll give you an answer.

“While developing your financial literacy, you will take financial responsibility for your personal finances.”

Also, you will become efficient in managing money and not easily caught in financial pitfalls

And when you early discover the financial world, you will encounter financial terms that will bring you confident money skills. 

For example, financial terms such as:

  • Income,
  • Checking or saving accounts,
  • Simple and compound interest,
  • Emergency fund,
  • Budgeting,
  • Assets, and so on. 
Practical Money Skills - income, checking or saving accounts, simple and compound interest

However, here’s the most important part:

I want you to pay huge attention to one of the most overlooked money skills which is Pay Yourself First

It means,

You must establish a habit of Pay Yourself First before you get your paycheck.

So, as soon as you educate yourself with basic financial terms,

you need to go to the market and start earning money. 

2. Keep Seeking Your Elite-Income Skills

Practical Money Skills - Keep Seeking Your Elite-Income Skills

Once you enter the marketplace, you will trade your time for money. 

While many of you might not enjoy your current job, I want you to continue what you do. 

And as you work, keep investing in yourself to find out what you really want to do in your life.

Look, a friend of mine was a medical doctor.

But then he realized this is not the right direction of his life.

So he developed elite-communication and speaking skills, joined a network marketing company, learned entrepreneurial skills, and ultimately, he ended up in the crypto industry.

If you think about it, it’s far from a doctor’s career.

These are marketable skills, and I call them Elite-Income skills.

“Elite-Income skills open the door to prosperity and to the wealthy elite.”

For example,

I’ve built my career on elite-SEO skills but shifting my attention to communication and sales skills.

That’s why a YouTube channel with a personal brand. 

Besides that, I’m mentored on business entrepreneurial skills and specific investment vehicles.

So what does all this mean for you?

It means I want you to invest in yourself and keep seeking your gem. 

But maybe you can find it in your current job position, and if so, I want you to focus on your next money skill…

3. Always Increase Your Value And Income

Always Increase Your Value And Income

In this step, you need to think about your elite-income skills and how to get the most out of them.

It means not just rely on your paycheck, but to add value and figure out how to increase your income. 

Look, I don’t want you to find a second or third job, because in this case you would trade your time for money again and you need to understand the value of your time.

So be agile and expand your view at your current job where you can add more value.

Maybe, if you work in marketing, you can join the sales department and start selling products or services. 

Or even better, you can start writing a blog, make videos, and leverage affiliate marketing

Perhaps, you may be great in real estate SEO strategies or copywriting, but you need to increase the conversion rate.

You see, you need to build yourself first

“It’s about investing your time in self-development, waking up with the sun, and having the strong self-discipline to show up every day.”

Can you do that?

And as soon as you start earning more, you will need to learn one of the most important practical money skills…

4. Maximize Your Savings Rate And Create a Secret Opportunity Bank Account

Maximize Your Savings Rate And Create a Secret Opportunity Bank Account

First,

you must learn money skills in…

  • budgeting,
  • creating at least a 3-6 month emergency fund,
  • and how to maximize your savings rate.

You may ask, what is the savings rate?

Let me give you a simplified example.

Let’s say,

  • Your Monthly Income = $5,000
  • Monthly Total Expenses = $2,000
  • Remain = $3,000

So you can save $3,000 per month.

And to know your savings rate, you need to divide your leftover $3,000 with a monthly income of $5,000 which is a 60% savings rate. 

Practical Money Skills - what is the savings rate

Remember, this is just a very simplified example to help you understand.

Second, 

the truth is…

“Saving money will never make you wealthy.”

But the more you save and prepare to invest, the sooner you can reach early retirement. 

As I mentioned before, use the Pay Yourself First money skill.

And as soon as you receive money, route it to your “secret” opportunity bank account.  

This money will be ready to invest and grow your wealth or business. 

And remember, you can never touch it until the time is right.

Another critical and practical money skill is…

5. Understand The Usefulness Of Credit Cards To Build Your Credit Score

Understand The Usefulness Of Credit Cards To Build Your Credit Score

Quick tip right off the bat. 

“Get your credit card as soon as possible and use it wisely.”

Besides, use a credit card every day.

It is a perfect way to keep the tracking of your expenses because every month you get a statement. 

I also recommend using tracking free tools such as Mint or Personal Capital. 

But always bear in mind to repay your credit on time to the bank. 

Because this way a bank sees you as a reliable adept who controls personal finances and they may lend you money in the future for your investment purposes. 

And along the way, you need to understand the key difference between assets vs liabilities.

Because only appreciating assets will grow your wealth.

I recommend watching the video 7 Outspoken Money Myths and 7 Outspoken Money Truths that will broaden this topic. 

Now, one of the most important practical money skills that you will need to identify is…

6. Ideally, Invest In Cash Flow Producing Assets

Invest In Cash Flow Producing Assets

The key to success with growth is maximizing the power of compounding

It means to get a solid return on your investment and do not touch it but reinvest it.  

I want you to remember the following saying. 

“It’s not how much money you make but how much money you keep and how you multiply it.”

Do you get it?

If not, glue it on the wall and read it every day.

Because when you figure out how to make money while you sleep, you are on the way to your early retirement. 

And there are many assets, but not all of them would suit your needs. 

For example,

if you invest in growth value stocks, they do not produce monthly cash flow.

But when you understand the industry and keep a certain amount of your portfolio in this vehicle, you may expect an unexpected windfall. 

Then take that pile of cash and invest in better alternatives, such as real estate that produces monthly cash flow. 

It is really about learning how to let your money grow.

And then it means you will need to protect it and optimize for taxes.

For that reason let’s talk about the last practical money skills that you need to identify…

7. Optimize Your Taxes

Practical Money Skills - Optimize Your Taxes

The most heavily taxed income is your earned income and you will find out when you get your paycheck.

But if you have other income flows, you need to learn how to optimize your taxes. 

Listen, I’m not a tax advisor, but in order to maximize your savings rate, I want you to pay attention to this money skill. 

Because when either you or your tax consultant know how to optimize taxes, you take that saved money and reinvest again.

Ideally…

  • in yourself first,
  • in your businesses,
  • and in investment vehicles that you understand.

Needless to say, taxes are very complicated, but you should at least understand the basics. 

Because tax planning is an essential money skill to develop within holistic wealth. 

I’d recommend buying some simple textbooks for dummies.

Today, the problem is, people are lazy to learn at least basic tax and practical money skills, but when you do so, it will pay off.

Even if you have just one flow of income, learn it earlier because you will be always one step ahead. 

So remember taxes affect your investment skills because of reducing expenses.

Now Is Your Turn To Identify Your Practical Money Skills

To conclude this blog post, 

basic and practical money skills management doesn’t need to be complicated. 

Ultimately, it’s about learning it as soon as possible and being self-disciplined.

Therefore, while you sail through your life, remember this.

“You’re a Doer and you can’t simply shrug off your responsibility for your personal finances. Because you want to make sure you stay financially healthy, which leads to holistic wealth.”

Would you agree?

Now tell us,

  • Will you implement at least one of these basic and practical money skills in your life?
  • Maybe you have your own strategy?

Leave us a comment below on what your thoughts are.

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I invite you to become a Doer. 

And I want you to build holistic wealth.

Thanks for reading or watching and I will see you next week. 

Vlastimil Cícha - Pat V.C. has been intensely mentored in digital investing within the larger financial service organization and investment bank while leading Elite-SEO strategies.
Besides that, he’s been obsessed with creating wealth-building and well-being strategies. And he found out that in our life there are only seven stages. He calls them the 7 Wealth Stages framework.
That’s the reason why he talks and writes about topics related to the 7 Wealth Stages that guide you toward Prosperity and Holistic Wealth. It is personal & professional development about a mindset, elite-income skills potential, personal finance, investment, personal growth, scalability, and abundant life. Vlastimil advocates the statement that elite-income skills are the entryway into financial abundance through well-organized wealth-building strategies.

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