The personal finance merit badge that boy scouts can earn is something that everyone can apply to their lives as the requirements for the badge will teach you some of the most valuable financial skills that will remain with you throughout life.
We’re not all good savers, and unfortunately, many of us have developed a culture of living on credit. We just seem to be getting poorer as we seem to spend our salary paying back all our lenders.
There’s plenty of information available to use on how to deal with our personal finances and reap lifelong benefits, even when we don’t have a lot of money. Even kids are learning how to manage their finances and boy scouts can earn a personal finance merit badge when they’ve learned how to manage the money they earn.
Kids Copy Their Parent’s Financial Behavior
Children emulate their parent’s financial behavior so it is important to provide them with personal finance education so that they can benefit throughout their lives. Maybe you can even offer them a type of personal finance merit badge for showing wisdom in handling their finances.
A sudden loss of income can be scary. The idea is to aim to always have enough money saved to cover your expenses for three whole months. This will at least give you peace of mind and a bit of breathing space to recover from a loss of income. It is exactly why the boy scouts movement is such a good one.
Apart from helping them to appreciate the outdoors, they also earn badges for personal achievements in life. One of these is the personal finance merit badge. The boys earn this merit badge even when it is one of the more difficult badges to earn. After completing the personal finance merit badge, they will be more inclined to succeed financially.
So important is good financial planning that even some credit unions and financial institutions have decided to partner with local scouts groups to encourage young people to take charge of their financial future. Because earning a personal finance merit badge can be so involved, in Austin, Texas, the Boy Scouts group requested A+ to create a program to help scouts earn this personal finance management badge. The credit union has helped many young boys earn their merit badges.
What Is Personal Finance?
You may wonder what is personal finance? You could say that personal finance is putting aside money that you earn in order to build up a nice sum for use in the future. The financial institution pays you interest, in the form of a percentage of your investment. Just say that the financial institution agrees to 3% interest, it means that for every hundred dollars you deposit you will earn that 3% interest.
It’s why people shop around for the best deal and the best interest rate. You can earn a personal finance merit badge just for making sure your saved money is earning interest. The amount of interest you earn depends on other factors such as the place where you are investing, the type of account you have, and the amount of money in your account.
The more money there is in your account, the more interest you earn. These days the banks charge so much for using their services, it becomes important to make sure that the interest you earn on your savings is more than the bank charges you have,
Certainly, if your bank charges are more than the interest you’re earning, then you’ll want to change accounts. It’s not just about saving and investing, but it also includes things such as budgeting to make your money go further, banking money, paying for your home and your rent, insurances, paying taxes, and retirement planning.
Certainly, when you ask the question ‘what is personal finance’, it is about establishing a culture of saving so as to make the most of our money. If you were a boy scout or girl guide you could earn your personal finance merit badge by saving. If you earn a small salary, it may deny you one or two pleasures, but ultimately it is to provide us with security and peace of mind.
Saving your money is all about putting aside some money each time you are paid so that you can use it in the future. When you save your money, you want to leave it in a safe, risk-free place for a long period of time. Investing in money like this is important for being able to generate more money in time. Investing is for the long term such as 5 years or longer.
The Personal Finance Statement
If you need to see what your financial position looks like, a personal finance statement refers to a document that outlines your financial position. The statement includes a breakdown of your assets and liabilities and it’s meant to help a person keep track of their financial goals. People also use these personal financial statements when they apply for credit as it shows them their overall financial position.
This personal finance statement can also be a valuable tool for the planning of your finances. You could possibly earn a personal finance merit badge just for reaching your financial goals. It is particularly useful for people starting to work for the first time and it can be used to add entries and you can make changes as your finances change.
A personal financial statement shows an individual’s net worth. If liabilities are greater than their assets, the financial statement will show negative net worth. More assets than liabilities show positive net worth.
It’s a good idea to keep this personal financial statement up to date because then you keep tabs on how your finances are improving or worsening over time. If you were applying for credit, you’d know whether it’s worthwhile handing in your statement or not. No point in handing in a statement that depicts a poor financial standing.
Why Is Personal Finance Important?
Many people ask why is personal finance important? Personal finance is important because it gives you a good idea about what you can spend. Most expenses that we have are regular such as the groceries you buy each month, your mortgage or your rent, your transport, and fuel.
Wealthier individuals can add in things such as medical aid and insurance. A good goal is to save enough money throughout the year so that you can pay cash wherever possible. That will save you the extra cost of buying them on credit, with interest being added on.
Just like a personal finance merit badge is so important for boy scouts, it is of vital importance for everyone because no matter how well you plan your budget, there are always going to be those expenses that come out of the blue. You just have to put money aside every month in an emergency fund so that you don’t have to feverishly scramble around for money you don’t have when faced with some emergency. Now you may have some understanding of why is personal finance important?
If you are thinking of buying a large item that is considered a major expense, you want to draw up a plan that gives you an idea of how you are going to save for the item.
Certainly, you will have to do comparison shopping for the item and find out where you can get the item for the best price without compromising on quality. Draw up a kind of a budget where you put down what your income is and look at your expected income as compared to your expected expenses.
Five Foundations Of Personal Finance
1. Get On Top Of Your Debt
This is the first of the five foundations of personal finance. Spending too much and allowing your debt to spiral out of control can be a nightmare you long to get out of. Maybe you don’t have a good head for figures or budgeting and you find it more difficult than others to keep your debt manageable.
Sometimes circumstances beyond your control send you plummeting into the red, giving you lots of unexpected expenses that can cause havoc with your budget. One way to bring some kind of relief is to put yourself into a financial expert’s hands. Yes, it can be a bit expensive at first but the expert can offer your financial advice and help you build financial freedom for yourself.
2. Start An Emergency Fund
Second of the five foundations of personal finance – An emergency fund is such an important part of not fretting about something happening. You would definitely earn a personal finance merit badge if you were a boy scout and you learned how to run an emergency fund.
With an emergency fund in place, you can breathe easy knowing that when your car packs up alongside the road, there is a way to pay your way out of your predicament. With covid-19, you have to face the reality that you might lose your job. If you lost your income source, will you be able to stay afloat for a few months while you sort something out?
3. Re-Evaluate Your Finances
A good idea is to always start the new year by reflecting on the year gone by’s financial mistakes, but also the successes you had. With the new year starting, you want to work out what it is you want to achieve. Are you saving towards something big? Then draw up a budget with your goals for the year. Use last year’s failures to guide your spending decisions.
4. Shop Smart
When you go shopping, make sure with small items that you have a list and that you stick to it. When you shop with an empty stomach, you tend to fill your trolley with lots of snacks that may be delicious but which are costly and unnecessary.
If you’ve saved money for a good second-hand car, stick to that and don’t splash out on a brand new car that someone coerced you into buying and which will put you into debt. Stick to your original plans.
5. Set Up Automated Bill Pay
Some people don’t like the idea of a debit order going off every month, but at least if you earn a regular income, it can ensure that you stay on top of paying your bills as it goes off automatically for you.
Late- and missed bills can have you paying far more money on interest and put you into deeper trouble. This negativity can also have a horrible impact on your credit score and stop you from being able to apply for credit later on.
Rather set up automatic billing to avoid any financial problems and before you know it your bills will be paid and you can wave your debit order goodbye.
Personal Management Merit Badge Requirements
Talking about personal management merit badge requirements, the personal finance merit badge is one of the hardest to get for a boy scout out of the 135 merit badges they can earn. When you look at the requirements, do you think that you will be able to earn the personal finance merit badge?
Some of the personal management merit badge requirements include –
- Choosing an item that you want to buy and which is a major expense.
- Writing a plan that describes how you intend to save money.
- Prepare a budget with your earnings and your expenses. Track your savings for 13 weeks.
- Discuss important concepts about earning money and your thoughts when you buy something new.
- Consider the differences between investing and saving and the different kinds of interest earned and paid.
- Choose 5 publicly traded stocks and think about their price, and how prices change rapidly. Think about the importance of things such as mutual funds, common stocks, and life insurance.
- Think about loans and the different ways there are to borrow money.
Saving money when you only earn a little is super hard, but there are some useful tips that can help you save if you’re battling to get it right.
Maybe there are just some areas of your life where you are overspending and by changing a few, you just might be able to save and stick to your budget. The boy scouts have given us plenty of ideas of what we can be doing with our money to make it work for us.