In her book, Rachel Cruze teaches readers how to identify the ways in which they need money and give them the knowledge necessary for their journey. What does it mean to learn about yourself? This question is one that many people struggle with because most of society tends to tell us what we should think or feel at any given time. The author argues that there are valuable lessons from self-awareness, but not everyone can do this on their own. Even if you have a team around you who help guide your decisions, it doesn’t hurt to consult these experts as well!
Know Yourself, Know Your Money is a book written by Rachel Cruze. This book is about how to spend money wisely and live your best life. The author of this book believes that the key to living a happy life is knowing yourself and what you want out of life. Read more in detail here: know yourself, know your money pdf.
Are you seeking for a summary of Rachel Cruze’s book Know Yourself, Know Your Money? You’ve arrived to the correct location.
After reading Rachel Cruze’s book, I scribbled down a few significant takeaways.
If you don’t have time, you don’t have to read the whole book. This book synopsis gives you a quick rundown of all you can take away from it.
Let’s get this party started right now.
I’ll go through the following points in this Book Summary: Know Yourself, Know Your Money:
What is the purpose of Know Yourself, Know Your Money?
Know Yourself, Know Your Money is a book that offers a new approach to personal finance. Rather than just teaching you how to construct a budget or telling you to save more each month, the book delves into the psychology of decision-making.
Understanding why you make errors can assist you in improving your financial situation. You will be able to develop a better future once you take control of your money perspective.
Who wrote Know Yourself, Know Your Money and who is the author?
Author of Love Your Life, Not Theirs and Smart Money, Smart Kids, Rachel Cruze is a financial guru.
She also broadcasts the Rachel Cruze Show vlog on YouTube and Facebook, in addition to the Rachel Cruze Show podcast.
What is the purpose of Know Yourself, Know Your Money?
It is not for everyone to read Know Yourself, Know Your Money. If you are one of the following folks, you may like the book:
- Those who are very frugal and those who spend lavishly
- Savings aficionados in need of inspiration
- Parents who want to educate their children about money may do so by using the following resources.
Book Summary: Know Yourself, Know Your Money
Introduction
Money isn’t the most essential thing in the world, according to American motivational speaker Zig Ziglar, but it’s right up there with air.
To put it another way, if money doesn’t make you happy, being poor will undoubtedly make you unhappy.
Although it may seem simple in principle to maintain excellent financial practices, it is all too easy to fall back into old behaviors.
What is the rationale for this? Perhaps you’re not paying attention to why you spend money in the manner you do. Reflecting on your behavior, attitudes, and connection with money can make getting a grasp on your finances lot simpler.
Lesson 1: How you see money as a youngster is shaped by what you learn as a child.
Rachel Cruze’s friend Amanda Cruze enjoys shopping. To her, shopping is more than just about finding good bargains; it’s a sport.
It evolved into something more than that over time. Despite having a well-paying career, she often spent more than she earned. Her spouse had become more unhappy with her financial conduct as she approached her late forties, and their marriage was in peril. They didn’t have any other option.
Amanda discovered her habit was the consequence of growing up with incredibly thrifty parents – the sort that stockpile cereal boxes for “just in case” – after visiting a counselor.
Amanda overspent as a kind of defiance against her frugal nature. Almost everyone has had a childhood event that has influenced their attitude toward money.
It’s not a one-way path when it comes to making financial choices. Your salary, for example, is an apparent consideration. Other aspects are less visible, yet they are equally significant.
“How you manage money has everything to do with how you are bonded together,” says Henry Cloud, a psychologist and famous book. You need to understand why you manage money the way you do if you want to better your personal finances.
This is where the idea of a money classroom comes into play. That’s when you first start learning about personal money.
Children are taught about money using two basic approaches. The first way is to communicate with your parents. The second option is emotional communication.
Different sorts of houses generate various types of schools. Parents don’t always speak about money with their children; some never do. As a result, the classroom is verbally closed. Some parents are honest with their children about money and investing over dinner.
Emotional communication may be positive or bad. In some houses, youngsters are calm when money matters are mentioned. Money is a source of worry and stress in other homes.
You may acquire insight into how you connect to money now by reflecting about your early experiences in this manner. But how do you do it? Let’s look at three different sorts of classrooms and the issues they provide.
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Lesson 2: An nervous classroom is characterized by fear and discomfort.
Cruze’s childhood was once related to her by a friend.
He used to go food shopping with his mother when he was a kid. His mother insisted on buying day-old bread. He didn’t think about it until he went to the shop with the mother of a buddy. She took her bread from a different shelf and carefully examined each loaf. She seemed to be doing an unusual act. She said that she was looking for the freshest bread.
When he wondered why they didn’t do it as well, his mother’s face lit up with worry. The outdated bread is half the price, and it’s gone in a flash. Furthermore, every penny saved at the end of the month contributes to the payment of expenses.
His initial awareness was that his parents were always concerned about money.
Criuze’s classmate grew up in a tense school.
This class doesn’t spend much time talking about money. While money may not provoke loud disputes, it can elicit a powerful emotional response, which children pick up on.
If you grew up in this kind of environment, you’re going to confront one main issue in life: talking about money. This comes as no surprise. What would compel you to talk about something that has caused so much anguish to the people you care about?
Consider how you feel about money. Is your boyfriend or closest friend aware of how difficult it is for you to get by? Do you fear that you will be unable to retire comfortably? If the answer is no, changes must be done.
If you find it difficult, begin cautiously. You must inform someone that you have difficulty discussing money and that you want to improve this. You might begin by just saying them aloud. When you’re more at ease with the subject, explain what you find difficult about it.
At least at initially, there will be some uneasiness. Always keep in mind that darkness breeds dread. As you pull it into the light, you will lose greater control over it.
Lesson 3: Unstable classrooms might result in boredom.
Some families may not discuss money as much as they should. Other people’s houses are rather noisy.
That isn’t necessarily a good thing, however. Discussing money issues openly might be beneficial. A child’s connection with money might be harmed by continual fighting.
When parents publicly vent their frustrations about their home finances, children are particularly susceptible to unpleasant emotions and helpless to improve their condition.
What is the outcome? In the midst of instability and disorder, an overpowering sensation of powerlessness.
It’s been dubbed the “unstable classroom.” Adults never seem to have their finances under control, but they are always talking about – or shouting about – money. There are many issues, but few solutions.
One of the author’s acquaintances, for example, grew up in this setting.
Her parents were constantly concerned about money, and they didn’t hold back in informing their children about the family’s financial difficulties. They were irritable and argued regularly when things became rough. When one of the children requested a certain brand of cereal or a new pair of shoes, they were informed furiously that such indulgences were not authorized.
Her parents, on the other hand, were anything from thrifty, even in good times. Everyone was suddenly in a good mood, and there was money to spend on snacks and shopping sprees. Cruze’s companion compared the reversals to whiplash. The choices her parents made had no rhyme or rationale.
Looking back, she recognizes that they did not spend their money “deliberately.” It was like the weather: it was bright at times and rainy at others. Neither circumstance was within my control. The only difference was that rain didn’t make her parents quarrel like money was running out.
Students who leave unsafe classes are more likely to be unconcerned about money. They prefer to shun it entirely since they have been taught that it generates conflict as well as arriving and leaving randomly.
You could wonder, “What’s the purpose of trying?” in a classroom like this. It’ll just result in a brawl. You don’t have to accept the existing quo, no matter how reasonable these emotions are. As we’ll see later, taking charge can make a huge difference!
Lesson 4: You can’t comprehend money until you understand how it works.
One source of tense and unsettled classrooms is a shortage of money, but having enough money – or at least the perception that there is enough money – may also be an issue.
As a consequence, the uninformed classroom has emerged. If you grew up in this classroom, you probably didn’t have to worry about money. It’s unlikely that it ever occurred to you. You didn’t appear concerned about money, which is understandable considering your parents’ lack of care.
Ignorance is bliss in most cases, but not in this one. At some time, you must take charge of your money. It will be tough unless you have been taught how.
There are two key reasons why children grow up in a school where they are clueless.
The first is self-evident: certain families are wealthy. If money was never a concern for your parents, it won’t be for you until they make an effort to teach you about personal finance. It’s likely that if they hadn’t done that, you might have grown up without understanding how things function.
Parents fought to safeguard their children as other individuals battled to make ends meet. When given the option of burdening their children with adult concerns or keeping them in the dark, they picked the latter.
Parents in both instances attempt to do the best they can for their children, but their tactics sometimes backfire. What is the most prevalent issue? Many individuals believe they have been deceived. Some folks are perplexed as to why their parents did not instill this life skill in them. Others are enraged because their parents lied and claimed that everything was perfect when it wasn’t.
The absence of financial knowledge has real-world consequences. Adults suddenly learn how significant something they didn’t comprehend as a youngster is.
We don’t know what we don’t know, to put it frankly. If you’ve never been taught about budgeting, it’s difficult to appreciate the importance of budgets or how they connect to your life objectives if you’ve never been educated about them.
In the parts that follow, we’ll look at several strategies for putting your finances in order, so don’t be alarmed if they seem familiar.
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Lesson 5: The easiest method to control your money anxieties is to start with a $1,000 emergency fund.
Fear is our bodies’ method of alerting us to danger, and it is a universal feeling.
When your brain produces hormones in reaction to fear, it sharpens your perception and makes you more capable of responding to dangers. This biological reaction results in fighting or escaping.
Fear, on the other hand, has a price. When lions are on the hunt, one’s focus narrows, and one doesn’t spend much time pondering about the purpose of life.
Worst of all, fear has the ability to immobilize us. When there’s no visible route out of a hazardous circumstance, undirected dread keeps you fixed to the place.
The danger of wild creatures isn’t as big these days, but when your survival is threatened, a programmed reaction comes in. As a result, it’s no surprise that so many individuals are afraid about running out of money!
People are more concerned than anything else about not having enough money in a pinch.
What if my supervisor calls and tells me I have to leave tomorrow? What will I do if my kid falls sick and I am suddenly confronted with a mountain of medical bills? Is it possible that the economy would continue to shut down if there are further pandemics? How will I go to work if my vehicle won’t start? Will I have to pay someone to repair it?
Millions of Americans are tormented by these types of frightening questions every night. There’s a reason behind this. According to a 2017 poll by CareerBuilder, 78 percent of Americans live paycheck to paycheck.
According to the Federal Reserve, little over 40% of Americans can cover a $400 emergency with cash. A string of poor luck may put four out of ten Americans on the verge of financial catastrophe.
How do you cope with those “what ifs” if you’re also up at night fretting about them? Create an emergency savings account.
You will almost always need cash to bail yourself out in life. Life is unpredictably unpredictable, but there is one constant. Setting aside $1,000 as a starting point is an excellent option, since it’s a number that’s both reasonable and substantial enough to handle a variety of unexpected needs, such as a vehicle repair or a modest medical bill.
Lesson 6: Concentrating on the low-hanging fruit will assist you in paying off debt more quickly.
Cruze had a guy who owed him $40,000 at one point. Elizabeth was a teacher who had a small income and paid her bills on time, but she couldn’t get out of debt. It was really making things worse because of the attention. In a frantic effort to dig herself out of this hole, Elizabeth turned to Cruze.
What is Cruze’s recommendation? Increase your earnings. To boost her teaching salary, Elizabeth started doing odd jobs. She babysat, worked weekends at a local bakery, and looked after people’s homes while they were away in addition to walking dogs. With her new income, she was able to pay off her obligations.
She didn’t simply throw money at the issue, however; she used the tried-and-true snowball method.
The simplest approach to get out of debt is to use the snowball technique. Allow me to explain.
The first step is to make an inventory of your debts. Who do you owe money to? Sort your debts from least to greatest in terms of interest rate. You’re now ready to get started.
From now on, your primary aim is to pay off your lowest obligation as quickly as possible while making minimum payments on all other bills.
What? It depends on what you’re dealing with. Small financial changes, such as buying takeout once instead of twice a month, may help you save money. If you don’t have this type of flexibility, you’ll need a side hustle. Take whatever actions are necessary.
After you’ve paid off your first loan, you may start paying off your second. After that is completed, you will go on to the next step and repeat the procedure.
You will no longer be paying minimum payments on the second-smallest debt once you move on to the third-smallest loan. You won’t have to worry about budget constraints in the future since the money has already been accounted for.
This debt-reduction strategy, like a snowball rolling down a slope, is all about gaining momentum. The more you do it, the easier it becomes. It will not only help your financial condition, but it will also offer you piece of mind.
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Lesson 7: To conserve money, buy just what you need.
The New York Times interviewed newlyweds as part of its 2019 honeymoon series. They were curious as to why so many couples had negative honeymoon experiences.
A couple who spent a lot of money on a vacation to the beautiful Caribbean island of Aruba shared their experience.
The groom recalled the sunsets the most. The couple’s most stunning feature wasn’t their attractiveness, but the amount of time his wife spent shooting them on social media. Dinners in posh establishments were hardly an exception. The bride ordered delicacies that looked beautiful on Instagram rather than ones she liked.
Their honeymoon was so expensive that it nearly cost them their marriage. What went wrong for them? It costs a lot of money to impress people. You’ll most likely be unhappy as well.
It’s easy to be fooled by appearances. As we’ve seen, almost 40% of Americans have problems coming up with $400 in an emergency. Because credit is so simple to get, this truth is hidden.
Households with credit card debt owe an average of $14,500. Borrowing money isn’t simply for addressing unforeseen costs; it’s also for funding lifestyles that these families can’t afford. Despite the brand new SUV in his driveway, statistics indicate that he is most likely living paycheck to paycheck and is in debt to the tune of thousands of dollars.
That’s why basing your financial choices on what others have is a bad idea. Assume you purchase a new automobile for your driveway. What you’re actually doing is comparing yourself to someone who is broke. Aspiring to be like those who are bankrupt is a horrible financial plan!
We must contemplate in order to break free from this snare. Consider your options carefully before making a purchase. Ask yourself a few questions before making a purchase. What if your coworkers took the train to work, or you missed out on showing off your vacation photos? Would you still want to go to Aruba or drive a high-end European car? Second, consider if this purchase will make you happy.
You’re undoubtedly spending money to impress people in either situation. That’s a solid cause to reconsider your purchase at a later date when you’re in a better mood.
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Lesson 8: Finding the appropriate balance between saving and spending is possible.
Money blunders are unavoidable, and everyone makes them at some point. However, not all errors are created equal.
When you make poor judgments, such as using your credit card to schedule a trip you can’t afford, you risk damaging your financial health.
Making poor judgments, such as disobeying an unspoken agreement to split a bill with friends and insisting on paying just for what you eat, might lose you relationships.
What is the answer? You must strike a balance between these two extremes.
Big spenders are very forgiving. Bills go unpaid, late fines mount, and they shrug it off. Fees start stacking up, and they don’t have enough money to buy food, so they grab for their credit card, shrugging it off as “Oh well, it happens.”
It happens on sometimes. Never-ending excuses, on the other hand, sustain a self-destructive loop. You’re not developing wealth if you rack up debt because you “deserve” a pleasure or splurge because you’re not good at budgeting.
You’ll be trapped in a life you don’t enjoy until you make a change. Even though it seems harsh, there’s no way around it: if this characterizes your relationship with money, you need to be tighter with yourself.
On the opposite end of the spectrum are penny-pinchers who are excessively strict. Take, for example, the author’s acquaintance. When he went home, two tiny things were missing from the takeout order he had picked up for his family. Everyone was happy, and there was plenty of food, but he couldn’t leave it like that.
He had to contact the restaurant, drive back, and explain the problem, which took him an hour. By the time he came home, he had received his $8 return, but he was furious. Those eight bucks were inadequate to finance a far more expensive family supper.
You may utilize the five-year rule in the future if you find yourself in a similar circumstance. Consider the situation’s long-term repercussions. Do you agree with me? Take a deep breath and move on.
Lesson 9: When you reconnect with your dreams, saving becomes simpler.
Saving is often seen as a kind of self-sacrifice. Your choices in the present are limited if you save money for the future.
You can’t think about it that way, however. Saving is a source of delight rather than a burden. Perhaps you’ve forgotten the link between saving and dreaming.
If you haven’t already, now is the time to start saving money. Not only are life’s inevitable crises and emergencies reasons to be prepared. When it comes to saving, you need also pay attention to your aspirations.
For some individuals, saving is a way of life. They are motivated by a desire to save. It’s an odd mental condition. Most of the time, we desire something more important. That’s when dreams enter the picture.
Nothing will be able to stop you from working and saving in order to realize your ambition. If you have your ideal retirement planned out, saving 15% of your salary is simple. The same may be said for various life objectives. When you’re passionate about alleviating poverty in your neighborhood, you’ll minimize costs to allow you to contribute more.
What is the explanation behind this? Saving is a sort of self-determination. It enables you to attain your desired outcomes.
However, what is a reasonable amount to save? Breaking down your ambition into doable stages is the greatest approach to attain it. Assume you’ve decided to relocate to a new city. What would it cost you each step and how long will it take you to get there? The first step is to change occupations. Moving homes and relocating costs money.
Although finding a job takes more time than money, you may want to put aside $500 for lunch for those who assist you in your hunt or for a competent résumé writer. The home itself will cost you $30,000 in down payment and closing charges. You could have to spend an extra $6,000 for relocation services, however.
If you total up all of your costs, this is your savings goal. After that, decide on a reasonable time limit for reaching your objective. You now have a strategy in place. You’ll succeed if you stick to it.
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Final Thoughts
Early financial experiences shape how you think about money — and how you spend it later in life. Families with open accounts communicate freely; those with locked accounts do not.
Others were exceedingly frugal, while others squandered their money. In later life, the many money classes provide distinct obstacles. Regardless of your anxieties or concerns, you can begin taking charge of your own money. Where do you start?
Get in touch with your aspirations, set up money for an emergency, and consider why you purchase the things you do.
Additional Reading
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