According to a 2017 Consumer Financial Literacy Survey by the National Foundation for Credit Counseling, there is an increase in the credit card debt of Americans. The study also found a decrease in non-retirement savings. A 2016 PWC report shows that millennials have a better financial education than their predecessors.
Working more is Not the Answer
You do not have to work for money. Instead, money should work for you. The 1% of individuals who are billionaires have many passive income sources. The rich do not only make money when they are working. They even make money when they are asleep. Their money and investments are working round the clock. That is why it is usually said that the rich will continue increasing their wealth.
Some people think that working more will result in more money. That is not the case. If you want more money, you need to learn specific skills and concepts that will make you to handle money differently.
There is a limited amount of money that you can make by working. You need to have passive income sources. Passive income is the best income source.
Do You Know How to Be Rich?
By default, we are taught to work, save money, and always increase our skills as workers, but we are not taught how to be rich. Financial education is important. It is what will make you to be rich. The rich have information that the rest of the population does not have.
Change Your Financial Destiny
Are you bogged down with debt? Do you have money issues? Millions of Americans have money problems because they lack financial education.
Financial education will make you to understand how money works. It will change your financial destiny.
Financial Education Concepts
Financial Education involves concepts like assets, liabilities, balance sheet, financial statement, and investments.
• Assets are the things that you own. Your assets include your car, house, bank balance, stocks, and cash. To be rich, you need to invest in the right assets. There are assets that generate money and those that do not. A car will not generate money if you use it for only personal purposes. A car can end up being a liability because it needs fuel and regular maintenance. However, a motor vehicle makes life to be more convenient and that can make you to generate more money.
• Liabilities are your debts. The debts that you owe financial institutions and other people. Debt is bad. You need to avoid debt. You should only take debt if you will use it to finance a solid business idea. You should not use debt to finance personal expense.
• If you want to be rich, you need to maximize your assets and minimize your liabilities. Rich people have very few debts and a lot of investments.
• A balance sheet is a statement of your assets and liabilities. On one side of the balance sheet, you will list all your assets. On the other side, you list liabilities and capital. To be financially healthy, the asset side should exceed the liabilities.
• The right education will make you to know how to identify a good investment. When investing, you need to diversify. You should not put all your eggs in one basket. You need to have a portfolio of investments. You should invest in financial market instruments such as stocks, bonds, and ETFs. Since the Great Depression, the stock market has always outperformed the property market. Investing in properties is also a good idea.
Knowledge is Power
The difference between rich and poor people is knowledge. Successful people have high-quality information. That is because they read good books. Often times, those who succeed have the best information. All the secrets of the world are hidden in books. You should not only read newspapers. You also need to read books.
Many books have been written on this topic. Among others, Robert T. Kiyosaki is one of the most active authors teaching people how to change their financial destiny through a different kind of education: Financial Education. His table game Cashflow and his money framework The Cashflow Quadrant have become very popular for learning the required skills for achieving wealth.
Financial education is important. It is a fundamental pillar for building passive income. To be rich, you need to have passive income sources.