Money makes the world go around, and while there have been people who have said that "money does not bring happiness", the reality is that those who do not master the financial game will live a life full of uncertainty, poverty, and worst of all: an inability to truly reach their potential as human beings.
The cold hard truth is that we all want to be rich, but statistics and economics show that only a handful of us will ever reach it; the majority will simply always be out of reach.
One reason for this is an inability to properly manage one’s financial resources. Generally college does not teach its students, the ability to handle their money.
It is true that a student majoring in finance, business, accounting, or economics will learn more about this subject than most, but only a percentage of college students are majoring in these areas, and this leaves out the rest of those who are not.
People often tell that money does not mean anything to them, but in reality money means something whether you think it is important to you or not. Without money, you cannot buy food, cannot travel, cannot enjoy cutting edge technologies, cannot pay for medical costs, and so on.
Those who do not have money tend to be wanting, while those who have money tend to be masters of their finances.
Having said that, the first step in learning financial management is to learn budgeting. You need to know how much you are spending on any given item on a regular basis.
Once you are able to discover how much you are spending on food, electricity, water, and other things, you will be able to develop a budget which will allow you to control your spending, which will further allow you to save money. It is also important to understand the importance of saving money as opposed to borrowing it.
Unfortunately, we live in a society today which is debt based, and people are encouraged to borrow as opposed to saving. Borrowing money will lead to a lifetime of debt and more debt.
Most people today, especially those living in the U.S. or Europe, are in debt bondage. They live in houses they do not own, drive cars that do not belong to them, and use money (called credit), to buy everyday goods.
This money or credit does not actually belong to them, but is loaned to them by banks, which then turn around and charge them compounding interest to use it.
Many people end up taking on so much debt that a huge portion of their income must go back to repaying it. these individuals become dependent on a bank or loan company to fund their lifestyle.
In contrast, an individual who is debt free and thrifty is a person who is a master of his finance. Such individuals owe nothing to no one, and they can pay for everything they need in cash.
The money that they save is a superior form of capital when compared to credit, and this capital can be used to make investments which can lead to in an increase in one’s income, which can be used for saving and more investments.
This is the basic formula towards becoming wealthy. While there is a large amount of financial advice available out there, some of which is highly complicated, the simple way to wealth is to save a lot, stay out of debt, and invest.
Studying economics can actually be quite valuable If you have the time or inclination, it would not hurt to read some books on economics.
Understanding basic economics does not require one to be a rocket scientist, and you will find yourself becoming even better with finance as a result.
Once you understand how economies function, you will be capable of making prudent investment decisions which can allow you to master the finance game.