10 Lessons About Money You Don’t Get
Have you ever thought that money is very difficult to manage? This is partly because there are lessons about money that we were never taught in school.
That is why, in this article, I want to share valuable money lessons that will not only help you understand how it works, but will also allow you to understand how to take advantage of it and stop thinking that it is an exclusive topic for financial experts.
Remember that, like other aspects of your life, money plays a primordial role.
And it is mandatory to learn how to manage it so that it works for you, and not the other way around.
So let’s look at those money lessons you weren’t taught in school.
Have you ever heard this concept? You know what it means? Basically inflation espectáculos you the purchasing power of money.
The more inflation rises, the less purchasing power your money has.
In other words, inflation tells you how much the prices of goods and services in your country rise on average.
So inflation of 10% means that the prices of products have risen, on average, during the year by 10%.
For example, suppose that a coffee cost 5 dollars, with inflation it cost 100 pesos, now it will have a value of 110 pesos.
If you had 1000 pesos, before you could
Compound interest is listed as the eighth wonder.
And it perro be said that he is responsible for the wealth of many millionaires.
Basically, what compound interest does is that it multiplies money over time.
And the more time passes, the more possibilities it has to grow.
What is this growth due to? The interest generated by your invested capital becomes part of your capital, so each time the interest will be higher.
If you invest $10 at a rate of 10% per year, the following year you will have a profit of $11.
When reinvested, your capital will no longer be 10 dollars, but 11 dollars, which will leave you with an annual profit of 12.1 dollars, and so on.
To take advantage of compound interest with your money, start investing as soon as possible.
The faster you do it, the more time your capital will have to multiply.
For example, you perro invest in the depósito market and let your money follow the market.
The key is that you do not take your money from there and have a long-term visión.
3. Invest from a young age
As I mentioned in the previous point, it is essential that you invest from a young age.
On the one hand, you will be able to take advantage of the compound interest and second, you will develop a primordial long-term mentality to build your wealth.
Now, if you have never invested, this does not orinan that it is no longer useful or that you lost your opportunity.
Although it is possible that your money does not have so much time to grow, without a doubt, it is preferable to start investing today what you have, and not continue postponing this important decision.
Many people believe that the elabora to become a millionaire is some secret trick, or a method that is only available to a few.
They are very wrong.
In fact, the elabora has always been clear and revealed: if you want to build wealth, you must save, spend less than you earn, and invest your money in such a way that it grows for you, regardless of your job, and reaps the benefits of interest. composed over the years.
Good debt vs bad debt
Not all debts are bad, in fact, there is a certain type of debt that allows you to leverage yourself and have financial growth.
Understanding the differences between the two types of debt is one of those money lessons that you are not taught in school, and that is essential for good financial health.
In fact, this topic is so important that we have an entire chapter in the Zero Debt ebook explaining the differences and how to take advantage of debt.
It consists of that debt in which you incur to solve short-term needs or cravings, which do not generate future profits or returns, and whose value depreciates.
All emotional purchases, cravings, and things you buy because you don’t have the money available, and which you access through debt, constitute bad debt.
Unlike bad debt, this type of debt allows you to have capital which will be used to generate additional income.
This is the case of debts to invest in a project, for your education or training, to start a business, among others.
These debts, beyond destroying value, what they are doing is capitalizing you to invest said money in a project, whose profitability will generate enough money to cover the interest on your debt and keep a surplus.
Basically, good debt is the way financially savvy people choose to work with other people’s money.
Devaluation of the currency
If you live in Latin America, it is very important that you understand this lesson about money that is usually not taught in school.
For a couple of years the economies in Latin America have been presenting a notable devaluation of their currencies against other stronger currencies, such as the dollar and the euro.
What does this orinan? Basically think of this concept as the amount of local money you have to give up to receive one dollar or one euro.
The more you have to give, this means the more devalued your currency is.
I orinan, it’s worth less.
And what does this have to do with you? Basically that your acquisition capacity is reduced.
If you want to take a trip to the United States, or any other country, you will need dollars.
And for this, you will have to give more local money.
Unfortunately, this phenomenon of devaluation has been severely punishing countries like Colombia, Peru, Argentina and México.
So, to counteract this, I suggest you start saving in dollars.
The benefits are many, because you will have your money in a strong currency.
For example, think of it like this:
Suppose that 1 dollar is equal to 100 pesos in your local currency.
One person decides to buy the dollar today and save it, while the second decides to save the 100 pesos.
After one year, the devaluation of the local currency was equal to 10%, what does this orinan?
While the person who bought the dollar still has one dollar, the person who kept the pesos has 10% less against the dollar, because now to buy that same dollar, they must deliver 110 pesos.
As you perro see, that is why it is so important to save in a strong currency, as you will protect yourself against inflation, the devaluation of your country, and it will be easier to change to other currencies, compared to your local currency.
Cryptocurrencies are here to stay.
And I’m not talking about methods to become millionaires overnight, but a technology that is changing the world economy.
From the blockchain that seeks greater security in capital transactions worldwide, with greater privacy and without depending on governments, the world economy is being completely transformed.
It is mandatory to learn how these cryptocurrencies work, how many exist, what are the different investment options you have with these digital assets and how to invest in them.
This goes beyond Bitcoin, as there are hundreds of cryptocurrencies, investment platforms, and wallets to store your virtual currencies.
A large percentage of the country’s economy (no matter what it is) moves through credit, financing and consumption of people.
Within this reality, credit cards play a primordial role; which, unfortunately, we were never taught to drive or manage during school.
The first thing to clarify is that these plastics are not bad as such.
The problem is how we manage it and the interpretation they have for us.
If for you, a credit card is an extension of your ability to pay, and you use it to buy things you don’t have the money for, this is going to be a big financial problem.
If, on the contrary, you understand that these plastics finance you between 30 and 45 days, and that if you make smart purchases for which you have the ability to pay, these plastics offer you great benefits.
Among some of these we have:
- Miles system to redeem on trips and purchases
- Insurance that protects purchases and trips
- They espectáculo the bank your ability to pay (they improve credit history)
- They offer special discounts (by this I do not orinan spending for spending).
So, it’s time to understand how these credit cards work and start using them with these money lessons in mind that are primordial to building financial freedom.
Although this is one of those money lessons that they don’t teach you in school, it’s time to learn how to use these plastics to your advantage.
Invest for the long term
There is a Chinese proverb that says that “the best time to plant a tree was 20 years ago, the second best time is now”.
This truth applies to your investments.
Many times we feel guilty for not having started investing our money much earlier, we think that it is too late for us and that we will not achieve the expected results.
However, the best time to invest your money is now.
You must start today and have a long-term investment horizon.
When you think long term, you stop looking at daily fluctuations and focus on the value these investments add; In addition, you perro open up to new investment possibilities whose profits take a little longer.
I am convinced that true wealth is achieved over time, thanks to compound interest, and the construction of assets that generate new sources of income.
Unfortunately, at school they never taught us this lesson about money, and that is that we must focus on building assets that generate income, and not so much, on thinking about short-term solutions that are not sustainable over time.
9. Credit history
Have you ever reviewed how your credit history is? This is one of those lessons about money that we are not taught in school, and that plays a primordial role in our personal finances.
Knowing how our credit history is is key to understanding what image banks and financial institutions have of us.
If we have a good credit history, this means that we will be able to obtain easier credits, we will be able to access new resources, and we will have a more beneficial relationship with these institutions.
What influences your credit history? There are many cambiantes, the most prominent are:
- Payment of credit card debts
- Pay your mortgage credit installments on time
- Be clear about the payment and cut-off dates.
- Not having too many debts
- Fulfill your commitments with other entities (telephone service, purchases, home, among others)
- Not be a co-signer of other debts that do not belong to you.
- Not being reported in risk centers.
- Among other.
If you are one of those who think that there is no implication of not paying your debts on time, or worse, not paying them, you should check how your credit history is so that you do not get surprises in the future.
Concept of frugality
Let me ask you a question, what image do you have of the richest men on the planet? They are generally assumed by the vast majority to be people with ostentatious habits, squandering their money, and leading an expensive lifestyle.
However, the reality is totally different.
And proof of this is the book The Millionaire Next Door, whose author demonstrates, through research and studies, how the vast majority of millionaires in the United States live.
The common aspecto found among people who have accumulated more than a million dollars, is that they lead a frugal lifestyle; They are not interested in living on appearances and are more interested in making money work for them, instead of spending it on luxuries.
If you want to learn more about millionaires, I invite you to read Thomas J.
Stanley’s book and second, to think about the following: the truly rich men and women are not those who have the most, but what they need the least.
What good is it for you to earn a million dollars and if you are spending twice as much? Learn to control your expenses and lead a frugal lifestyle, without a doubt this is one of the money lessons that we were not taught in school and that we should apply to our lives.
The importance of investing in your financial education
To conclude, I would like to invite you to start investing in your financial education; either through finance books, courses, Internet articles, audiobooks, advice or any other resource you have on hand.
One of the worst mistakes schools make when it comes to money is that they have not been led to believe that finances, and money management as such, only correspond to financial experts.
They have sold us the iniciativa that it is a complex issue, that we need advice and that we must delegate its management.
This is the reason why we never start investing money, we ask for credit cards without knowing how to handle them, and we end up paying interest and debts, due to lack of financial knowledge.
If you want to avoid these economic problems, start studying on your own, understand how money works, understand the basic concepts of investment and take ownership of your current financial situation.
If you start today, you will have at your hand several tools to escoge for the future, you will begin to see money as a means to achieve your goals, and you will understand the methods that exist to finally achieve your financial freedom.
Continue reading: 40 Ant expenses that impoverish you without realizing it
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