There was a time when I placed too much reliance on my income for my financial freedom. I thought once I was making money, I wouldn't have any issues with the financial side of life. I mean, money solves all things, doesn't it?
I thought making money is all it takes to be rich. There is some element of truth in that, but experience made it fairly obvious that approaching finances like that would be a mistake.
If it's just about making money, so many companies wouldn't go bankrupt and so many households wouldn't have to deal with financial crises. Even on the interpersonal level, when you work and earn your wages or salary, that doesn't guarantee that you are financially okay.
Some think once they win the lottery, they will have no financial burden anymore. Well, check those that have been lucky on that front before. Those of them who used it to thrive and elevate their financial status did something different. They didn't just sit back to live in the dream world of a lottery winner.
This goes without saying that elevating your financial status is not strictly based on your earnings. There is more to it and that's what we will try to dig into.
How good is your knowledge of personal finance?
Back in the day things related to Finance were always left to the "experts". They calculate your tax for you, take your money as a deposit and use it to run their money business, handle your investment portfolio for you and whatnot. At the moment, the playground is changing and anyone can easily be in charge of his finances and use it however he wants. You don't need a broker to get the shares of any company.
People can now learn about several layers of finance; Investment, Budgeting, Savings, Debt Management, Financial Planning, Financial Review and whatnot. Information about these is out there and Financial Education is getting fitted into several academic disciplines.
While you gain knowledge of finance, do you put them into practice?
While having solid theoretical knowledge of Finance is important, failure to get into the practical side of it when you intend to improve your finances would be similar to barking up the wrong tree. You'd be surprised by how often people study Finance without practising whatever they are learning.
It's hypocritical in some sense to see this, but it's worse when you consider the fact that this isn't just a personal finance issue. Do you know that some businesses do not have an updated financial record? Some countries are running a deficit budget every quarter of each year because they overlook the basics of macroeconomics.
Whatever is happening on the macro level of the economy is obviously beyond our control, but we can try to get it right in our personal Finance. Get into the habit of Saving and Investing. Pay your debt as soon as possible and try to avoid getting in the debt book of anyone, if possible. Be mindful of your expenses and try to improve your earnings.
When you get into the practicals, you will be faced with a huge test of discipline.
I just had to slot this in because it's a very important part of the puzzle. It takes a great discipline to start digging around for relevant financial information and the same applies when you want to put these into practice.
Imagine not earning enough money and you still have to take out some percentage from that to save or invest. Haha. That's not an easy sacrifice to make, but when you do it right, you will notice that it's a worthy sacrifice. This is why there is nothing trivial about building your Savings and Investments. It is a display of discipline.
Thanks For Not Missing Any Full-stop Or Comma.
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First Posted Using InLeo Alpha