THINGS ABOUT MONEY YOU SHOULD KNOW
Everyone in the world need money, right from the richest in the planet to the poorest, all are United by this desire for money. Those who are rich understand how money works and the poor don’t understand money. In a culture like India, it is quite comprehensible as to why the rich people are looked as if they are unscrupulous, money minded etc.,. I recently read in a news paper article that about 50% of world’s wealth is controlled by 500 billionaires. It can certainly be said that these 500 people have a slightest hint about how money worked. In this blog post, I am going to share with you some valuable lessons about money which is very useful.
1.Investing is the new saving:
We are living in a fast paced world where everything can be done instantaneously. In this pace, I almost forgot how valuable Rs. 100 was when I was younger. I can say with certainty that I could have obtained much more goods and services for the same money
The money kept safe in banks lost its value. Saving money did not give much returns, and I don’t think it is going to de different in the near future. Only way to negate this effect of money loosing its value is by investing it in returns generating assets. Many assets have given inflation beating returns, it may be equities or gold or real estate.
2) Don’t run after money, attract money:
Money can run faster than Usain bolt. Some people believe that we have to work hard to be rich. I know a lot of people who put in lots of human efforts and end up without making any money for themselves. The point here is you cannot chase money, you should learn to attract money. Imagine working hard all your days and letting your money sleep idle somewhere! (Money doesn’t sleep idle anywhere, people you entrust with safe keeping of your money, will earn more). For money begets money, learn how to put money into better use, which make double up as a second source of income as well as beat inflation. So no matter how much you earn, invest a part in income generating assets, as it makes your money grow. Remember warren Buffet’s quote, “If you don’t know to make money while you sleep, you will work for life”.
3) There is no such thing as good debt:
we all know that businesses cannot run without debt. It forms one part of the capital in businesses, even more so in capital intensive businesses. But on a personal or a family level, debt is something to be avoided. If you are under debt, you are working so hard so that someone else may prosper
If you observe closer, the lender has put his money to work and extracts better returns without he himself doing any work. In fact, this is some kind of financial slavery. If you are into any enterprise which can give you better returns, go for debt. But avoid these in your personal life. The rich are very careful to avoid these but the poor get trapped in this vicious cycle.
4) Differentiate between needs and indulgences:
There is a thing called revenge shopping in the vague now. It involves buying goods and services which you may not need so as to compensate for the lockdowns. These emotional decisions make a big hole in our wallets. The key driver behind these behavior is their indulgence mentality. They want to experience pleasure out of new products even without knowing if there is any use for the product. These are quick ways of burning your cash. Buy what is needed, but what has uses. Shy away form indulgences or imitation behavior
Follow these rules, make money work for you, know that money is a tool rather than the goal. Use it Prudentially.
Please do let us know your opinion in the comments section.