Money For Dummies: A Basic Guide To Financial Freedom
Golf, gardening or simply mojitos by the beach, retirement is a time for bliss and tranquility, a time to rest ones weary bones after a life (hopefully) well lived.
But rather alarmingly, many today have either very little, or worse still, not a penny set aside for this period of their life, as CNBC notes,
“Half of all Americans have nothing put away for retirement and the vast majority of them have under $1,000 saved, total.”
35% of all adults in the U.S. have only a measly hundred dollars or so in their savings accounts, only 15% have over $10,000 hidden under the bed and, most worrisome of all, 34% of adults in the U.S. have zero, that’s right, zero in savings. [1]
The situation is made immeasurably worse when it is considered that the vast majority of full time workers are living pay cheque to pay cheque.[2]
So what is causing this crunch? Many, many factors, too many to address in a single article, notable examples include the cost of college tuition,[3] the stagnated household income relative to expenses,[4] or the fact that our current financial system is built upon an inflationary currency, which causes the price of goods to go up, year after year.[5]
Whoa, whoa, whoa, before you go and call it quits and run off to live in the hills (wouldn’t help, the tax man will find you, he always finds you) here is a little secret, you have been lied to about how to make money.
Think about it, what have we been told as children, ‘go to school, work hard, get a secure, reliable pay cheque and always have money in the bank.’
With the exception of being in possession of a good work ethic, almost all of that advice will get you nowhere in our financial system, or at best, will leave you treading water, let me explain point by point.
Go to school: I want to get something clear; I am in favour of education, but on a personal level, not the brain dead, parroting parade that is the modern education system.
With the exception of a select few fields in which a formal qualification is required to practice, i.e. lawyer, doctor etc. there is no need to pay exorbitant fees to colleges, nor do you need to suffer the opportunity cost involved with going to college, keep in mind, this is primarily targeted at colleges, high school, in my opinion, is a bare bones level of education that everybody should possess.
So what should you do? Intern, go to businesses in fields in which you have an interest and ask to work for free, say you will do the job cheaper than a college graduate (who will be unable to counter offer lower due to their debt).
But most importantly, if you are unsure about what you want to do, DO NOT GO TO COLLEGE, you are incurring debt for no reason, instead go out into the world and work, do anything, get some money behind you while you have little to no expenses.
Get a secure, reliable pay cheque: Okay, this is where many people will disagree, which is fine and frankly this is more of a case personal preference.
Ever heard of the saying ‘better to die on your feet than live on your knees’? Well that is mentality I have with respect to my finances, I would rather work for someone, briefly, and build capital, then take that capital and invest it in money making mechanisms (MMMs) than work as an employee for the rest of my life. But each to his or her own, not everybody is in the same position as me (a 20yr old with a long time horizon and a high risk tolerance) and as a result will have to take this message and interpret it to suit his or her own needs.
In short, the younger you are, the fewer expenses you have and the higher your tolerance for risk, the more aggressive you can be in making money early on, as you age, the inverse is true.
Always have money in the bank: This is a simple one, if you want to lose money, simply keep it in your bank account, that is it, inflation will slowly eat away at your capital until your initial amount is only enough to buy a can of dog food (yes that is an overreaction, but the sentiment is true). Instead of having all your savings in the bank, maybe only have enough for 6-12 months, opting instead to hedge your money via other instruments like stocks or cryptocurrencies (the latter is aimed heavily at those with a very high risk tolerance).
The simple truth is this, if you wish to end up like the majority of people, broke, unhappy and with little to show for their efforts, then ignore what I have said and do as the majority do.
But if you wish to ‘break the cycle’ as it were, if you wish to escape the ‘rat race’of debt and overdue statements, then make a change today that can have the most amazing ripple effect in your life in the future.
References:
[1] https://www.cnbc.com/2017/06/19/heres-how-many-americans-have-nothing-at-all-in-savings.html
[2] https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html
[3] https://www.businessinsider.com.au/this-chart-shows-college-tuition-growth-since-1980-2016-8?r=US&IR=T
[4] https://www.advisorperspectives.com/dshort/updates/2017/09/19/u-s-household-incomes-a-50-year-perspective
[5] http://www.usinflationcalculator.com/
