8 things people don’t tell you about money

Finance Tips

Money. We all work for it, save it, and spend it. But do we really understand the ins and outs of how it works? Unfortunately, for most of us, our perception of money is skewed by pop culture and modern media, which rules our money habits and knowledge.

We all want it, but money is actually very misunderstood.
We all want it, but money is actually very misunderstood.

Here are 8 things people don’t tell you about money:

1.    Money is not wealth

While the terms money and wealth are often used together, they aren’t the same. Wealth comes in the form of land, natural resources, and the products of human labor. Think about a barren wasteland. If you turn this wasteland into a fruitful garden, you have created wealth where there previously was none. Meanwhile, money is simply the currency used to purchase goods and services. Money is a form of wealth but is not helpful in and of itself.

2.    Parents give financial education to kids

It’s your job to teach your kids about money
It’s your job to teach your kids about money

There is a concerning lack of financial education around the world. And it’s not just schools that are failing, but parents as well. Most kids receive their financial education from their parents, who themselves weren’t always educated adequately on financial matters. This creates a negative cycle where misinformed parents teach their children, who then also become misinformed.

This makes it all the more important to seek financial education as an adult. Then you can teach your children how to be financially prudent from a young age. Money is one of the easiest things to teach a child because it is universally understood and is used daily. Even if you don’t have a strong financial background yourself, you can still teach your kids the basics of spending and saving to get them off to a good start.

3.    Wealth is attainable

If you are currently financially insecure or feeling like you have no wealth, don’t worry; wealth is still attainable. But it does require planning. To grow your wealth, you must first create a financial roadmap with tangible goals and questions. These can include:

  • Why do you want more wealth?
  • At what point will you be satisfied with your wealth?
  • How could life circumstances make it more challenging to attain wealth?
  • What can you do to grow your income?
  • What can you do to reduce your expenses?

Some of these questions will be answered with the help of a detailed budget. Budgeting might not be fun, but it’s one of the best ways to attain wealth no matter your income or life circumstances. Plus, budgeting can be easy if you set a plan… and stick to it.

4.    The stock market isn’t a good indicator for the average person

Financial pundits might have you believe that the stock market is the best indicator to determine how the average person is doing financially. Unfortunately, this isn’t true. In fact, returns in the stock market may have little to no effect on the average person and their financial standing.

The stock market is a network of speculators and those attempting to grow their wealth. And while this is something you can be a part of, if you’d like, the vast majority of wealth in the market belongs to institutional investors and high net worth individuals.

Instead, look at these economic indicators that will better represent the effect on your personal finances:

  • Inflation – If your local currency is experiencing high levels of inflation, it could be that your wealth is being decreased in the process.
  • Unemployment – High levels of unemployment mean more people out of work and competing for jobs.
  • Per-capita GDP – This metric is a better indicator of how the average person in your community is doing financially.

5.    Pay yourself first

As Warren Buffet says, “Don’t save what is left after spending; spend what is left after saving.” In other words, pay yourself first before you spend your money. This is the only way to ensure wealth generation over the long haul. Unfortunately, most people tend to take their earnings and spend it right away and save the minuscule amount left over afterward.

6.    The younger you are, the higher your wealth potential

The more time you have to grow your wealth, the better. One reason for this is due to the immense benefits of compound interest in wealth generation. Compound interest is like a fine wine—it gets better over time. You can learn more about compound interest and how it works here.

This makes it all the more important to control your money now and secure your future wealth potential. They say time is money. This couldn’t be truer in the case of compound interest and wealth generation.

7.    Don’t get emotional with money

Don’t let your emotions blind you to sound financial decision-making.
Don’t let your emotions blind you to sound financial decision-making.

Emotions and money are like oil and vinegar—they don’t mix. If you let your emotions run your financial life, you are doomed to make mistakes that could cost you. Robert Kiyosaki, the author of Rich Dad Poor Dad, may have said it best when he said, “Emotions can take a hit on your finances! In the world of money and investing, you must learn to control your emotions. High emotions equal low intelligence.”

8.    Investing isn’t just for millionaires

It’s said that the wealthiest people on the planet make most of their money from their investments. But that doesn’t mean investing is just for the superrich. Anyone can invest, no matter how little money they have. Take Bondora Go & Grow as an example. You can invest in Go & Grow with as little as €1 and grow your investment with time.

Money matters, so learn

No one can dispute that money is vital to our lives. But if money is so important, why don’t we take more time to learn about it? Do yourself a favor and spend more time understanding money and wealth generation. Doing so could help alleviate financial stress and put you in a position to achieve financial stability more easily than you ever thought.