The following is a guest post from Wayne at Young Family Finance. He writes to help young families tackle many of life’s financial challenges, like retirement planning for young families.

If I were to ask you what makes someone financially well off, I am sure the first thing that would come to mind is that they have a lot of money. Regardless of their age or any other indicator, the common understanding of financial success is having lots of money. Yet, have you ever wondered why the wealthy can blow all of their money away?

Like many of my peers, recently out of college, I don’t make a lot of money. In fact, between my wife and I both working, we are hardly able to make ends meet. Now, I should clarify that we don’t eat beans and rice every day and my wife did just get a promotion, but up until recently, if we had an emergency or unanticipated expense of more than a couple hundred dollars, we would be in the red each month. Even though things were tight, we found a way to survive… and we’re better for it.

Why Financial Difficulty Can be a Good Thing

No one ever dreams of just breaking even with their finances. In fact, I am sure that everyone wishes they had a nice cushion to give them a sigh of relief. No one enjoys the stress of having to transfer money from one account to the other in order to pay all of their bills and no one likes living paycheck to paycheck. Yet, being strapped for cash isn’t entirely a bad thing. In fact, I am beginning to believe that people are more responsible with their finances because of financial hardship. Here are some of the many reasons that being poor can actually help you get a grip on your finances.

• Fast Learning Curve: When you have your back up against the wall, you are forced to learn quickly. If you don’t learn the many in’s and out’s, it will cost you big time. When you are living with little financial cushion, a huge mistake isn’t just a few less numbers in your bank account, but it makes a huge impact on your life. A mistake could equate to going without electricity, walking to work, eating rice and beans every meal, or dare I say it, moving in with your parents. These sort of things motivate you.
• Learn to live frugally: While it may seem obvious, having little money teaches you to live a frugal lifestyle. Many children grow up in a family where their parents are in the prime of their careers (and a competitive salary). As a result, they enter adulthood not knowing what it means to clip coupons or having to find the best deals even though they struggle financially. By not having the financial cushion that mom and dad once provided them, they are forced to learn these things (and learn them fast too). Not having a lot of extra money to splurge on things teaches you to be disciplined.
• Get Creative: Sometimes, when the bills come due or the worst happens, you are forced to get creative with what you have. In pressure situations like these, you can often come up with something creative that you would not have thought of otherwise. Like when you are forced to pay two bills with the same money and learning to transfer money from one account to the other until the next paycheck comes in. Juggling your expenses like this is definitely not the recommended practice, but there are many things that you would not realize if you weren’t pressured.
• Appreciate every penny: Because you don’t have extra money to throw around, you learn to appreciate every penny that you do have. You not only develop an appreciation for the things you do have, but you recognize that finances is more than just numbers. It is an important element in your life that has real consequences.

Because I have been forced to live on the edge of not being able to pay my bills, I know understand the importance of an emergency fund. I also understand that if I don’t pay my bills on time, I am practically throwing away money when you consider the extra fees that accompany this bad practice. Many of these important elements of financial responsibility were forced upon me because I am not made of money. I have had my struggles just like many others, and am better for it. Financial responsibility doesn’t end with getting a promotion, but it often starts before that.

Have you gone through an experience of being strapped for excess money? What did that teach you about financial responsibility?

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