Self-Educate Yourself to Win The Money Game

Posted On 16 October 2021

Last updated on April 9th, 2024

When I was in school, I remember being taught how to write a check, calculate change, and calculate interest rates. What I was not taught was how to manage money and how money works. From what I have heard while talking with others and what I have seen online, there is not much about money taught in school.

Since we are not educated very much about personal finance in school, where do we learn about money. Family members are usually the most common way that we learn about money. The problem is that they may or may not be able to teach us how to be good with our money. Now, as we learn about finances, we should teach our kids how to be good with money.

Unfortunately, most of what we know about money comes from the media and advertisers. The problem with these two is that they do not have our best interests at heart like family does. Advertisers’ job is to get us to want to spend our money. The media helps normalize people living in debt and living a lifestyle that is beyond their income. Salespeople tell the customer that it is the payment amount that they need to pay attention to more than the total price.

Look at Different Sides

There are usually different points of view for everything. Let’s take debt for example. I have heard some people talk about debt like it is the worst thing in the world. There is mention of “good debt” and “bad debt”. What if debt were simply looked at as money that needs to be paid back to the lender?

I like how Robert Kiyosaki (Rich Dad, Poor Dad) talked about debt. He said that if we take on any significant amount of debt, we should make sure that someone else pays the interest on that debt. The most common way this is done is with a business loan or a mortgage on a rental property.

Now, most people would agree that consumer debt should be kept to a minimum. And I agree! A good topic of debate is school loans. This can be argued both ways. I think that college is a great experience and a college education can be very beneficial. If that degree is not something that will get you to where you want to go in life, or it is not a marketable degree (I got a BS in History), borrowing money for a degree is not worth it.

There are so many angles that we can look at anything. When we remove the labels of good or bad, and look at it simply as what it is, we can then apply it to our life in a way we can get the most out of it.

Interest

Right now, the interest rates are absurdly low. Still, interest rates for borrowed money are talked about a little as possible by those trying to get us to borrow. In fact, “buy now, pay later” is becoming a popular way to make small purchases.

Albert Einstein has been credited with saying, “Compound interest is the 8th wonder of the world.  He who understands it, earns it; he who doesn’t, pays it.” We must educate ourselves about how much leverage interest has with our money.

If we apply the concept that Kiyosaki talks about with making sure that someone else pays our interest, we can then invest our money to earn even more! Interest can be a wonderful thing when you have it working for you.

Budgeting

Some people act like the word budgeting is a swear word! They act like it is something to be dreaded. If only we were educated in school that a budget is simply a way to determine how to get our income and outgo to balance.

The first place to start when we are attempting to balance our budget is by looking at our expenses. We can then plug some of the “holes” where our money is leaking out. If we cannot control our spending when we are earning small amounts of money, there is no way we can control our spending when we earn more.

Learn to Add, then multiply

The next thing we can do is increase our income. When we combine controlling our expenses and increase our earning, we can then accelerate our wealth accumulation.

Ben Franklin gave us many great quotes. Two of his quotes come to mind when I think about saving money or living frugally. The first is, “Beware of little expenses. A small leak will sink a great ship.” The second quote is, “A penny saved is a penny earned.” Ben Franklin lived in a time before income tax, so saving money now is worth even more.

Frugality is a starting point for mastering our finances. The truth is that no one ever saved their way to becoming a millionaire! We must also learn how to increase our capacity to earn and learn to put our money to work for us so we can earn money while we sleep.

Saving is the adding part of personal finance, while business and investing are the multiplying part of personal finance. We also need to keep educating ourselves so we can continually improve and grow.

Learn from Someone with Experience

I heard that if we want to cross a minefield, we should follow in the footsteps of someone who’s made it across the field. If we want to be wealthy, we need to learn from those who are already wealthy. Now, we don’t have to agree with everything that a person does in order to learn from them.

J. Paul Getty was the richest man in the world in the 1960’s and 70’s. He made his fortune in the oil industry. We probably would not become wealthy today by trying to enter the oil industry. The important thing to learn from him is HOW he looked at business and money. He was also married five times, so I would not be interested in taking marital advice from him.

While experience is the best teacher, someone else’s experience is a more efficient way to gain an education. We can read a book that contains the wisdom a person gained over the course of their life. Instead of spending a lifetime to learn all that, we can learn it in the time it takes us to read their book!

Our Responsibility

What it really comes down to is that financial education is our personal responsibility. If we have parents that can teach us that is a blessing. I also believe that if we understand personal finance it is our responsibility to teach our kids.

Time marches on, and as it marches, we must change with the seasons in our life. Not only do the stages of our life change, the economy changes. We must learn to adapt to these changes. While having to change can be a challenge, we do become stronger and smarter in the process.

Let’s keep growing and learning together as we stumble through life.