The phrase "it is not what you know that matters but what you do with what you know" could be condensed to a cliche but it resonates with a lot of people, especially in the world of finance.
The focus of financial literacy education has shifted in recent years, going beyond simply how to manage your money, for the most part, to how to build wealth. What does this mean? It means that we're not just learning about saving our allowance or opening a bank account; we're also learning about stocks, bonds, index funds, 401(k)s, cryptocurrency, etc. And that's great.
Truthfully, the world is awash in money, and with a little creativity and discipline, the opportunities to grow one’s wealth are endless.
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Money can buy happiness but not sustainable wealth. The only way to achieve an enduring sense of well-being is by investing wisely and living below your means.
It's time to think about what you want your life to look like when you retire. Building up an emergency fund will help you live comfortably in the future. Saving up for a house is not just about the mortgage, it's also about securing your future and your family's security - building wealth that lasts lifetimes instead of one-time paydays.
You should understand that wealth is not just the accumulation of assets, but it’s the use of those assets to produce an income and increase the money in circulation. It requires a successful mix of financial savvy, education, and management skills.
Some folks claim money can’t buy happiness but they forget it can make you happier. However, it is not just what you have, but how it was earned or invested that matters most in building wealth. Getting wealthy without anything material is nearly impossible, but there are many paths to sustainable wealth which do not require considerable savings or a high income.
You should be able to build the kind of wealth where you can make a living without working day and night and still have something in the bank account at the end of the day. Instead of relying upon the euphoria of working hard enough to make a ton of money but when you stop your income will also stop because there was no real wealth-building plan in place for it.
The idea of building wealth is often equated with making money, but the two are not synonymous. A person can make a lot of money and still not be wealthy because they don't do anything with it. Building wealth must be about more than just making a lot of money. It involves how you use your money, what you do with it, and how you grow it for the long term.
Making more money is just one part of building wealth; people also need to know what to do with their earnings to see lasting success in their financial lives.
What we do day in and day out with our money, the habits we form, and the decisions we take are more important than investing in just one stock or mutual fund. The decision that contributes to building wealth is how well we manage our money. There are great choices to make when managing your money, some of them include deciding;
• What percent of your income will be put towards retirement
• The kind of investments you want to make
• How much debt do you want to maintain
• How much of your income should be spent on paying off debt and
• What percentage of assets should go towards investments and how much towards liabilities?
Most importantly it is worth mentioning that money is a resource, not a goal. And that you should build your wealth through investing in sustainable assets.