Understanding Money
Zig Zeigler commented, “Money won’t make you happy, but everyone wants to find out for themselves.” While money won’t make you happy, having a basic understanding of how money works can certainly open doors for you. Despite its importance in helping us achieve our long-term goals and aspirations, knowing how money works is often ignored.
When you understand money, you realize it is important to “accumulate it”, “preserve it”, and “transfer it” to your heirs or interests. A sense of financial stability occurs when you manage your cash flow, avoid high-interest debt, build an emergency fund, and make smart investments. It’s important to create a plan so your money to work for you, rather than simply working for the money.
Accumulation of money is about how will you earn it. Will you be an employee, a business person, an entrepreneur, an investor, or a combination of all of these? Preserving money requires you to invest your money in viable ways which could include the stock market, your own and other businesses, crypto currency, or real estate. Remember, with inflation your money is not stagnant, it is actually losing ground, so preserving requires more than just burying your money in a box or a low-interest savings account. Finally transferring your wealth, be that to family, friends, or a cause you believe in, requires you to be thoughtful and plan-ahead.
We make decisions about money all the time, yet many of us really don’t understand how money works. You need to make intentional decisions about credit cards, investments, loans, and savings. You need to understand where the leverage points are so you can avoid the pitfalls. More informed decision making occurs when you have a working knowledge of the how money works.
Understanding money and how it works can lead to increased earning potential. You can learn how to negotiate better pay, bonuses, and other benefits which support a standard of living you want to enjoy. Understanding money can empower you to take care of your own financial well-being. It can help you find balance and harmony in your spending, saving, and investing. Improving your financial literacy will pay benefits throughout your life.