Financial freedom, knowledge to alleviate money woes

vitaly-145502“Cash rules everything around me.” A quote by Wu Tang Clan said in the 90s that still rings true today. While many avoid talking about money, financial literacy, along with living compassionately, is essential to living a happy, fulfilling life in modern culture.

Of course many could make the argument, “there are tons of people in the world that don’t have money and are perfectly happy.” While true, this blog post isn’t written for them, it’s written for the majority of us that live in a first world country and depend on money for practically everything.

Money Makes the World Go Round

Money is used for transportation, food, clothing and shelter to name a few important things. While not an immediate source of happiness, when used properly, money offers the means of achieving goals.

Many spend money as soon as they get it, and understandably so—money should be used. Money that isn’t spent is worthless. And many of us cannot afford the luxury of having “extra” money. However, I would urge many to practice money-saving habits, reinvest their money and build their equity instead of buying the latest gadgets or eating out five days a week. In many ways, money can be used to attract more money and eventually earn financial freedom.

If a person is able to live a comfortable life earning what they earn now, they should be able to reallocate extra money they can get their hands on. Extra money comes from saving and only spending on things that really matter. It means choosing to brew your own coffee and cook your own meals at home, and putting that extra money into a savings or investment fund. Extra money comes from saying “no” to going out every weekend and keeping your money in a safe place that won’t be touched unless used to fulfill its purpose, which is determined through developing a budgeting system that allocates the money before gets into the person’s hands—a post on budgeting coming soon!

Reaching Financial Literacy

Financial literacy gives people the knowledge necessary to wisely manage their money and successfully grow their income. I love ordering a double caramel coconut macchiato from Starbucks as much as the next person, but I also know that it’s both bad for my waistline and my wallet—that is essentially financial literacy in an extremely simplified form.

Ways to become financially literate include:

  • Reading books and blogs on personal finance or listening to podcasts by finance gurus
  • Developing a budget and keeping track of your expenses
  • Investing your money in promising, noble businesses or creating a business of your own

Personal Finance is a Journey

I first read “Rich Dad, Poor Dad” by Robert Kiyosaki and Sharon Lechter about a year ago, which kickstarted my journey towards financial freedom. I obviously haven’t reached my goals yet, but since reading that book I’ve already learned a lot and implemented many of the lessons I’ve learned over the course of the year. I’ve saved a lot of money, opened an investment account and developed a budget. That book’s also inspired me to pursue other finance books, such as “the Millionaire Next Door” by Thomas J. Stanley.

Investing in stocks, bonds, ETFs and any of the other broker jargon that you’ll learn when you dive into that whole realm of money management are great ways to repurpose money for the promise of a greater return in the future. An investment is essentially giving money to a company in return for a share in that company’s growth. You can then sell that stock at a higher price or earn off the dividends. While you risk the chance of losing money if the company goes under, if you act smart, you can invest in companies you know will succeed and improve—like Apple, Google or Starbucks—and increase your overall equity over time. For example, over the past year, Apple’s worth has risen 52.32%. That’s just one aspect of financial literacy that ensures your money is working for you rather than working for your money.

I don’t need much money—just enough to travel, live healthily and give my friends and family gifts. Of course, I’ll need the staples: food, shelter and clothing; but, I have learned that I don’t need to buy a latte at every stop to Starbucks to be happy. Happiness comes from learning how to use money to my advantage.

Like learning to read and write, a person can learn how to be financially literate and earn freedom from their money troubles through developing a money-making mindset.

Do you have money saving tips? I want to hear all about them!

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