Paying attention to history helps people avoid the mistakes of the past. Luckily, when it comes to finances, there are many past examples of how not to use your money. 

You Should Maintain an Emergency Fund 

The Great Depression taught Americans the importance of having an emergency fund. The country was unprepared for the stock market crash. 

Close to 15 million Americans became unemployed almost overnight. Over 5,000 banks closed. The stock market crash was completely unexpected and led to major economic fallout that lasted close to a decade. This shows the importance of emergency savings.

Having an emergency fund prepares you for the unexpected. The typical recommendation is to build an emergency fund to cover expenses for at least three to six months. 

Buy What You Need Instead of What You Want

Marie Antoinette was famous for her spending, which led to her beheading. The Queen of France spent lavishly on all types of unnecessary items. The public blamed her for the country’s financial mess and eventually overthrew the monarchy.

The lesson from Marie Antoinette is to only buy what you need. If you spend too much on what you want, you have less money for the things that you truly need.

Live Within Your Means to Avoid Adding More Debt

King John of England is another monarch who was known for major spending. He spent heavily on himself and various wars. To cover his spending, King John raised taxes. 

The various lords and noblemen of the time eventually stripped King John of many of his powers, as he could not control his spending. This is another example of the importance of focusing on what you need instead of what you want.

Living within your means helps you avoid taking on more debt. Debt from credit cards, medical bills, and mortgages limits your disposable cash flow and makes it more difficult to save. 

You Can Always Turn Your Finances Around

History, or legends, also teach us that you can rebuild from nothing. In the 5th or 6th century, King Arthur and his chosen knights helped turn Britain into a thriving empire. The country was in ruins before King Arthur took control. It is never too late to improve your finances.