Being educated on money, investing, saving, and spending can help you develop a healthy financial lifestyle. And there are always new things to learn about money. While that might feel overwhelming, you can start your financial literacy journey by learning some of the most important money truths.

What is a money truth? It’s a fact about money that almost all of the experts—from financial influencers to bank managers—generally agree on.

Learning these truths can help you improve your financial well-being, whether you want to save more, start investing, or cut back on spending.

Let’s start with 9 of the most essential money truths you need to know and take a look at why they’re helpful for financial novices and experts alike.

1. Expensive doesn’t mean valuable

Now, just because something is expensive doesn’t mean it’s high quality. There are many products that use brand names, social influence, and the appearance of luxury to charge higher prices—even though the product is low quality or low value.

Luxury cars are one of the best examples of the money truths between frugality, quality, and price. A brand-new luxury car usually comes with a hefty price tag. Thanks to depreciation, however, that expensive car loses significant value the second it leaves the dealer’s lot.

If you have some money to spend and are looking for an investment, instead, look at the long-term returns of your purchase.

For example, buying a house or getting a higher education are often considered high-quality, high-return investments. They’re expensive, but in the long run, they could help you improve your wealth rather than lose money.

2. Patience is a virtue—even with money

That old saying, “Patience is a virtue,” is usually used to help kids learn to slow down and wait. Maybe you heard it from your mom when you were little to try to get you to stop asking when dinner would be ready.

But the advice works really well for money, too.

Building wealth takes time

Building real wealth often isn’t quick. In many cases, money takes time to grow.

For example, earning portfolio income from dividends or savings interest might take years to see large returns.

However, if you stay patient, you’ll likely enjoy compounding interest and big returns in the future.

On the other hand, moving too fast with your money can hurt your chances of building wealth.

When the market drops, for example, some investors quickly sell off their stocks for fear of losing any more money. Unfortunately, this could leave you with a loss on your investment, only for the stock prices to rise back up in a few years.

Like the Director of the SEC’s Office of Investor Education and Advocacy Department, Lori Schock, says, “Don’t panic, plan it!”

3. Budgets really work, one of the key money truths

One of the often-overlooked truths about money: budgets work. Really.

A budget is one of the most useful financial tools you have at your disposal. The key is to change your mindset on budgets.

A budget is not a rigid rulebook you have to follow. It doesn’t tell you when you can and can’t use your money.

Reach goals and monitor spending

Instead, the purpose of a budget is to help you track your earning, saving, and spending. It’s an easy way to see if you’re spending more than you make each month.

You might also use a budget to help you plan and reach your financial goals.

Let’s say you want to save $500 in the next three months. A budget gives you a starting point to see how much money you bring in and how much you spend in a normal month.

From there, it’s easy to see what you need to change to reach your goal.

Maybe it’s as simple as canceling a few subscription services you don’t use. Or, maybe you’ll need to cut out all unnecessary spending to reach your goal.

Either way, a budget makes it possible to quickly assess your financial situation.

4. You have to set financial goals to reach them

Imagine you have an extra $1,000 lying around. Do you know what you’d do with that money?

If not, it might be time to set your financial goals.

Earning, saving, and spending money without both short-term and long-term financial goals could be hurting your overall financial health.

Saving, or spending, money without a goal or direction can lead to overspending, missing out on investment earnings, and missed opportunities.

Setting SMART financial goals

Financial goals can be as simple or complex as you like. The key is to create goals that you can reach, measure, and give yourself the time to complete them.

For example, you might have the short-term goal of building a rainy-day fund for emergency expenses. You decide to save up $5,000 in a savings account dedicated to emergency needs within 6 months.

This goal is measurable and has a timeline, which are key elements of SMART goals:

• S: specific
• M: measurable
• A: attainable
• R: relevant
• T: timebound

Need help setting SMART financial goals? The Consumer Financial Protection Bureau offers a handy worksheet to help you get started.

Use both short-term and long-term money goals

It’s important that you don’t focus too much on the here and now or the far future when setting financial goals. Financially healthy people use a mix of short and long-term goals for a well-rounded financial outlook.

Short-term goals help you stay motivated. You’ll reach short-term financial goals quicker, so you’ll get a burst of excitement every couple of months.

Long-term goals, on the other hand, are important for wealth building, obtaining assets, and maintaining good financial health for the long haul.

5. You can build generational wealth

Generational wealth is money and assets that are passed from one generation to the next. Basically, generational wealth is how much of an inheritance you’ll give to your heirs. Then, they use that inheritance to continue growing the family’s wealth to pass on to their heirs.

You could probably guess that building generational wealth takes time.

However, it’s a very important thing you can do for your future children, grandchildren, and beyond. The sooner you start, the more wealth you can build for your future family.

Of course, generational wealth isn’t just money sitting in a savings account.

In fact, it’s often much more than that. Common assets that add to generational wealth include:

How to start growing your money

Remember, money takes time to grow. Starting with a small amount of money is better than not starting at all.

If you’re looking to build generational wealth for your children and beyond, consider starting an investment account, purchasing a life insurance plan, and saving for a down payment on a home. As you reach each goal, you’ll set your children up for more financial success in the future.

Generational wealth and the racial wealth gap

One of the difficult money truths is not everyone has had fair access to building generational wealth.

Systematic racism and unjust laws and practices have made building wealth difficult for people of color, especially Black Americans.

White families have been able to own property, invest their money, and grow their wealth. Black families, on the other hand, faced roadblocks to wealth building from slavery to redlining. Over several generations, these roadblocks have created a striking racial wealth gap.

The US Department of the Treasury reports the median white family has $184,000 in wealth. The median Black family has only $23,000 in wealth.

That means the median white family has over $160,000 more than the median Black family to invest in generational wealth.

Fighting the racial wealth gap

While it’s not easy to overcome such a large gap, there are things individuals can do to help close their personal wealth gaps, such as:

• Educate and empower yourself and your community with financial education
• Make a financial plan, such as a debt repayment plan or a savings plan for a down payment
• Make a point to educate your children on topics of financial health
• Look for minority-owned organizations and businesses to support
• Vote for policies and candidates that address these issues
• Donate time or money to organizations working to eliminate the gap

6. Pay yourself first

It’s easy to forget to save when you’ve got bills to pay. Maybe you pay all of your bills, spend a little money for fun, and get to the end of the month only to realize you didn’t put any money into savings.

Luckily, there’s an easy way to fix that problem by remembering money truths like paying yourself first.

Paying yourself first is a financial strategy that forces you to save for the future. Whether that’s building an emergency fund or saving for a house, you commit to saving when you pay yourself first.

It works by simply putting money towards savings first—before paying bills, buying something new, or going out.

An easy way to start paying yourself first is to make an automatic transfer from your checking to your savings account.

Create a system to help pay yourself first

Of course, all of those savings you earn from paying yourself first won’t help if you fall behind on bills. You still want to pay all of your bills on time.

That means you’ll first want to create a system for your money so you know how much you can afford to put toward savings.

Say you make $3,000 per month and are paid monthly on the first. Your monthly expenses total $2,500, so you have $500 to put into savings each month.

You make an automatic transfer from your checking or direct deposit account to your savings on the second of every month.

Each month, your paycheck comes in, and your $500 savings moves out of your checking account before you have a chance to spend it.

7. Investing can be simple

A lot of people think of mega-rich people like Warren Buffet when they hear the term “investing.” But the good news (and one of the truths about money) is anyone can get started investing, even if they don’t have a lot of money to invest.

And although it might seem intimidating, investing is surprisingly simple to do. Two things make it easier than ever to start investing:

• A rise in technology
• Access to information

Use technology to invest

Technology like robo-advisors lets you open an investment account and start investing almost immediately. A robo-advisor is a computer system that uses your risk tolerance level, or how comfortable you are with market fluctuations, to create a customized investment portfolio.

Most major brokerage platforms have robo-advisor options, with little to no fees to open and manage your account.

You might even have an investment account waiting through your employer. Many employers offer retirement savings accounts like a 401(k), but only about 43% of women have a retirement account.

Many employer-sponsored plans come with limited investment options. For seasoned investors, this could be a disadvantage.

However, if you’re just starting out or are unsure of how to invest, a target retirement fund (which uses your anticipated retirement year to invest) could be a great way to start.

Learn more about investing

When you’re ready to learn more about investing, the internet has plenty of resources. One of the best parts of the internet is the access it gives you to information on just about anything.

You can use free online courses and other tools to help you learn more about investing and finances in general.

8. In money truths, frugal doesn’t mean cheap

Spending less money is one of the easiest and fastest ways to save more.

That being said, there’s a difference between being frugal and being cheap. And it’s definitely better to be frugal.

Being cheap means, you’re buying low-quality products, cutting costs where you shouldn’t, or even relying on others to pay for you in the interest of “saving money.” When you save money this way, you might ruin friendships or end up spending more in the long term.

For example, you can save a lot of money by skipping regular maintenance on your car, like oil changes. Or, you can skip regular dental cleanings to address that aching tooth.

However, these cheap methods of saving money will likely cost you more later.

Skipping car maintenance could lead to catastrophic failure. Now you need a new car, which costs a lot more than a couple of oil changes a year.

Likewise, putting off healthcare could mean you’re ignoring health issues that will only get worse. That aching tooth might turn into a serious infection and a trip to the emergency room.

Frugality, on the other hand, is all about living below your means comfortably. A frugal person recognizes the value of investing in quality without overspending.

Frugal vs. cheap example

Let’s say your winter boots are on their last leg, and you need a new pair. You could go the cheap route and buy the cheapest pair you can find, which are:

• Uncomfortable
• Not warm enough
• Not waterproof
• Last only a few months
• But cheap!

A more expensive pair, however, might be made of higher-quality materials. The cost upfront is more, but you’ll get shoes that are:

• Comfortable to wear
• Warm
• Waterproof
• Last for years
• An investment

Frugal people don’t save money by only buying the cheapest option. They save money by making a plan for their finances, which includes room for high-quality items and the occasional frivolous purchase.

9. Small changes can have big benefits

Financial goals, literacy, and money truths can only help you if you’re willing to prioritize good financial habits. This is usually easier said than done, but a little discipline can go a long way to improving your financial situation.

In fact, making small changes now is one of the best ways to make lasting changes long-term.

For example, if you find your little purchases throughout the week add up to overspending by a lot, consider cutting out shopping trips.

Instead of going to the grocery store whenever you need something, try meal planning and only going to the store once per week.

Save money by cutting back slowly

You can also use your budget to help you curb spending little by little.

Start by setting a limit on how much you want to spend on a particular activity or item. Slowly decrease your limit until you reach a level that’s comfortable and helps you save money.

For instance, you decide to only spend $500 a month on going out to eat. The next month, you can try to limit eating out to $475, decreasing the amount each month. These small changes will make big differences over time.

Round up purchases for slow but steady savings

Having trouble growing your savings each month? Try rounding up each of your purchases and saving the difference.

If you spend $50.75 at the grocery store, put $0.25 in savings. Over time, those little savings will start to add up. There are even mobile apps that do this automatically for you!

Improve your financial knowledge with these truths about money!

These nine money truths are important for anyone to know, but they’re only the beginning. You can use the knowledge from these money truths to help you start saving more, spending less, and building wealth for the future.

At the same time, savvy financial experts know the importance of always looking to improve their financial knowledge.

Consider investing time into money courses, watching financial education videos, or attending a community financial literacy class. You might be surprised by what you already know—and what you’ll learn in the process.