Friday, February 12, 2021

Basic Money Skills


Basic Money Skills

In the olden days, the barter trade system was the only way people used to transact with each other for goods on a day to day basis. However, today the economy of our country has changed so much with the introduction of currency that today each one of us are somehow dependent on money as one of the most important tools required in human history. To some extent some people compare money to God as well and it is worshipped. We often think that to be rich means to have a good amount of money at the end of every month, however that is just the start of the journey. 

Before we consider becoming rich or have enough money to be financially independent, here are a few basic money skills I have learnt throughout my life and I would love to share the same with you in this blog.

Saving Money Does Not Make You Rich: If saving money would make us rich, we would be rich already. Our forefathers, our great grandparents, our grandparents and our parents, all of them have been of the same opinion that is to save money for our future, however has that made us rich today? Definitely not. This particular fact proves that it is not about just saving money that makes us rich. Saving money is important for two things:

  • Safety Net: With the current job market and unpredictable economy it is important to have a safety net (enough cash) for at least approximately 6 to 10 months in case of any job loss or emergencies.

  • Investment Opportunities: The more money we have in hard, the more opportunities we get at our disposal for investments. It is only wise and timely investments that help us to get richer than what we are today.

Earn More, Spend Less: Most of us who are having less income are under the impression that the more you earn, the richer you become. However, this is not exactly true. Earning more can also increase your expenses exponentially leading to less savings. Hence, as much as it is important to earn more, it is also vital to spend less to maintain the balance and have more savings for a secure life ahead.

Know Your Money Needs & Wants: All of us have a particular lifestyle and we work hard to maintain it on a daily basis. Hence, it is vital for each of us to first understand the difference between our needs and wants to ensure we save every penny we can for our future. The better we plan our needs and consider our wants, the earlier we shall be able to get financially independent. We all work hard and we do deserve a much needed spending spree after all what is the point of working all day when you can do nothing with that hard earned money. However, making the right decisions and wise choices is equally important especially when you have some serious money goals in your life.

Have A Retirement Plan: With the amount of stress each of us go through at work, we are always looking forward to the weekend to enjoy ourselves. Enjoying life comes at a cost and having that cost available when you wish to make the decision becomes even more important. Imagine your life full of weekends irrespective of which day it is. This decision calls for a retirement plan. The earlier you plan, the earlier you shall reap the benefits of your retirement plan. You may have to make a few sacrifices at the moment, however you can definitely enjoy the fruits of it sooner than others.

Safeguard Your Money: There is an old saying “Do not put all your eggs in the same basket” Many of us are into the habit of purchasing gold, art and property especially those who are in the higher income bracket. These investment values do not decrease often. The only things to be considered for these assets are theft and damage which make these assets eligible for the safest way to have your money secure. 

Make Money While You Sleep: Everyone earns their living during the day while you are awake, however it is only the money that you have earned while you rest that makes you financially independent. Making money throughout the day and night requires a specific skill set when it comes to investments. Those who are able to do it live a better life with less hard work and make more money sooner than others. Hence it is important that you calculate your income hourly rather than daily so that you know how much money you actually make throughout the day.

Monthly Income & Expense Planning: The basic formula for a better planning is 50% needs, 30% wants and 20% investments. This will help you retire financially independent at an early age. If you are able to further reduce your wants and increase your investments, it will only help you to get financially independent even earlier.

Don’t Make Money Your Life: As discussed earlier money is just a tool to help you live better and achieve your goals. Earning money is just a small part of our life and not vice versa. As much as it is important for us to earn money, it is equally important for us to enjoy life as well. We do not know when life may throw a curveball at us. Hence, it is important to enjoy the process, enjoy the fruits and use money wisely at the same time.

Money can buy you comfort, luxury and financial independence, however it can never bring happiness into a person’s life. If your goal in life is to be happy, do not misunderstand happiness with getting rich. There are way more poor people on this planet who are way happier than the richest ever. We have just one lifetime and we must make the best of it. No matter how much we earn we shall never be the richest person on the planet so be humble, be wise and lead a good old simple life.

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Written by Jaison Noronha
Idea Source : Personal Experiences & YouTube