6 Things You Should Know About Money
Money Exists To Facilitate System of transfer
What if money didn’t exist? Try to imagine a world without money. We would have to go back to the barter system. But can it be efficient and more specifically how can it solve the problem of double co-incidence of wants.
It means if I want X and I have Y and you have Y and want X. So in the barter system, this would have been a perfect exchange. But these types of exchanges have a very rare chance of happening in the modern world. And money solves that problem. It is nothing more than a medium of exchange for goods and services. Money is something that is needed to run a society and without it, couldn’t function.
What Money Can Give You
Money gives you choices. It also gives you the freedom to do what you want, when you want. It doesn’t give you happiness. What it gives you is more control over the choices you make. Autonomy comes with it. And you become happy because of the autonomy.
Build Wealth with Money
You should understand the difference between debt and equity. And you should know about assets and liabilities. An asset is something that puts money in your pocket. And liability is something that takes out money from your pocket. Build assets and try to minimize liabilities. Your goal should be to build assets over time and to decrease the burden of liabilities.
Don’t confuse between assets and liabilities. A mortgage on the house isn’t an asset. It’s a liability. You can’t escape from it unless you pay it off. Consider your freedom the greatest asset you have. Never ever trade it for some liability. Types of liability — credit cards, mortgages, etc. But then why does it exist? It benefits wealthy people. Liabilities benefit the lender because it’s an asset for them.
Build your assets. Don’t take on liabilities. Start saving. You can also build a business for yourself. It’ll take a significant amount of time. Maybe 5 years, 10 years, or more than that. You can do it on side of your job. Live within your means. Take out 15% of your salary and save it. Live on what is left. Start small and refuse to take on liabilities.
Don’t borrow money. Save. Create income streams. Don’t depend on pensions. Build your assets. Nobody will take care of you. You have to care for yourself. Do opposite of what everybody else is doing.
What you’ll get from all this? Freedom. Ability to do whatever you want, whenever you want, wherever you want. The whole world will be one nation for you. Working on your own thing is the best thing you can do for yourself.
The risk of doing all this is a limited downside but unlimited upside. The most you can lose is your job. And avoiding liabilities and building assets has unlimited upside. You lose a lot more if you have large liability. You lose your freedom. Try to retain it at all costs. Look out for limited risks and huge rewards. This makes you anti-fragile. Look it up.
Why does Nobody tells You This?
Traditional wisdom will not tell you these things. Imagine what would happen if nobody are buying houses or buying the things they couldn’t afford. Schools will tell you to follow what had been done before. Parents will back them up because they want to protect you. The message which is pumped out is get a job, take out a mortgage on your house, buy more things, and take out more mortgage to pay for them. You fall into a trap. A dangerous trap. In exchange, you lose out on your important asset. Freedom. Is this sinking in yet? You are born with it and you give it away.
Social media will not help you get rich. Those who are “flashing” wealth, the truth is they don’t have any. What they have are liabilities. Don’t seek out those people. Seek out those who have assets and no liabilities. You will not regret that.
Look around you. Most people around you have no money at the end of the month. Look what the lifestyle they are living is taking in return for that. Freedom of theirs. You should make money work for you and not the other way around. Is that working for them? Is this value you are putting on your time on this planet?