Three Basic Money Skills.
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I know you want to become rich, have a lot of money, and be able to afford everything you want! You’ve got dreams to achieve, places to visit, and some weird things you don’t even know exist at the moment.
Everyone does!
To take this from mere wishful thinking to reality, however, there are a few necessary skills you need to acquire.
Many people teach you to earn more money as a way to become rich but there is more to it than just earning and spending money.
To be rich, you need to understand money.
Today, I'll share three basic money skills you should have. They are ridiculously simple but very powerful concepts — the little things that change everything.
Assets and Liabilities.
Understanding the difference between assets and liabilities will serve as a foundation on which you can build the rest of your financial literacy.
Simply put, an asset puts money in your pocket, and a liability takes money out.
As simple as it sounds, most people get this wrong. Would you consider a car and house assets or liabilities?
They could be both. It all depends on the answer to a simple question — "does it put money in your pocket?"
Keeping Money.
There’s almost nothing you can do without money. It is important to find a source of income for yourself.
However, it doesn't matter how much money you make. It is vital to ensure that you do not spend more than you earn.
Until you are able to learn to set some money aside, you will continue to live from paycheck to paycheck.
The act of setting money aside is known as “saving”.
But saving alone isn't enough.
Make Money Work.
Once you've put some money aside from your income, it is time to put the money to work.
Having a lot of money sitting in your bank account is useless to a certain degree.
Asides from making you feel good about yourself, your money is better off outside of your bank account, working for you.
Money is a tool, and tools are to be used.
You make money work for you by buying assets - things that put money in your pocket.
There are people who either spend their money on liabilities or save all they can and never spend on assets. The middle of this spectrum is where you want to be — saving money to spend on assets.
In summary, do not spend all you earn. It is essential to save money, but that alone won't get you to your desired goal. You need to put your money to work so that it can earn you more.
It is the combination of all these steps that get you to the rich life you desire.
Funbi.
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