Financial education is one thing that a lot of people don't have and this has been proven in the life of so many people who earn a lot. So many sport athletes have proven that it doesn't matter how much you make but how much you utilize whatever you make. A very good example of such was Mike Tyson who filed for bankruptcy after getting into debt which was approximated to $23M, although he had an income of over $300M in his career. Earning money and managing money are two different things which a lot of people know how to work on the first while the other is an unsolved puzzle.
80% of the worlds' population live paycheck to paycheck and so many get into debt before the next paycheck, living on credit card debts, mortgage debt, loans and many more debts. Virtually everyone carries debt around and although it is invisible, a lot of people carry this burden everywhere they go.
Making money is one thing, understanding money is another thing. Is money just a thing that breeze in and out of your life because you have a lot of responsibility which no one else have or do you find a way to make it work and remain with you?
Money is value, it is a medium of exchange, worth for worth. It is used to facilitate the trade between parties provided they all agree on the same worth. getting money isn't about taking advantage or making one person lose while the other gain, it is about value, trading something for something. Money is meant to be earned and spent, that is where the value comes in. Money comes in when a person produces a good, service or any other form of value to a person and it will leave when the person that earns it want to exchange it for another value, good, or service which is deemed fit and worth.
If you were to look at the entire money that has passed through your hands both income and expenses, which of these have been used to invest, purchase something either for immediate consumption or for long time use and so on. One thing I have realized is that a lot of us want to improve on our income and how much we make, but we do not improve on our expenses and how money goes out. A lot of people have their expenses fixed before they get their income and also as the income increases so thus the expenses increase. Well, it is no crime to have an increased expenses but is the expense of value or not. No matter how much you earn, your finance is nothing when you have a problem with how to spend it.
This is when you keep the same speed and same distance on your finance. With the rat race, your financial life is at stake, your job is now a necessity and with the rat race, you are a paycheck from being broke and if you miss that paycheck, you are going to file for brokeruptcy.
With the rat race, working is no longer an option and if you have any form of situation which would affect the flow of the income, you go broke. Situation such as being sacked, an accident or any other thing that could stop the flow of money.
First you need to understand the difference between assets and liabilities, then draw out an expense plan, the next thing is to have a fixed amount on necessary liabilities, then have a saving for emergencies which would help survive till you are strong to stand financially. start keeping money to invest and then invest in things that you are familiar with, never invest in what you do not know. Investing is a daily thing and wealth building is not a days' job.
