May 06, 2006

Make Money Work for You: Part One

Turning the Tables on Money

As stated in the last post I recently read a book that made me aware of the financial opportunities around me.

Most people work hard for money all their life, but barley have any money left for retirement. The cost of living is increasing and American's live in a rapidly changing economy. Right now we are in a 12 trillion dollar economy- and it’s growing. Things are changing at rapid speed. Yet, there is still a great divide between the rich and poor. What is causing this division is the lack of education, not only academic education but, financial education.

Improving your financial education is the most crucial thing some people don’t realize, ignore or disregard when trying to increase their income. How do I make my money work for me? Is a question people want to ask themselves. There’s more to life than worrying about downsizing, outsourcing and complaining about your job. If you can get a tiny fraction of that 12 trillion dollars coming your way you probably won’t have to worry anymore.

Some people realize they can live their best life, but see no way of doing it. They have a good education, they have a job, which earns them five figures, but still are struggling. There’s an interesting shift that is occurring between salary and education in the 21st century America; a good education sometimes isn’t enough to be financially independent. What does it mean to be financially independent? It means making more than what you spend and only going to work by choice.

There are a lot of people who have college degrees and or even PhD’s but, aren’t making enough money to make ends meet. Some people of the younger generations are quickly catching on to that fact. They see movies stars, glamour queens, athletes and other highly paid figures who regardless of the fact of whether or not they gone to college, are earning more than enough to be financially secure. This creates a drive in some of people have that kind of financial security. There’s more to life instead of being worried about money all the time. People want to have time to enjoy their family and friends or devote some free time to developing personal growth.
There are many who are creating their very own companies on the internet. They are tech savvy and very ambitious.

This is not to say everyone should not go to college or quit their jobs immediately and become business owners. That would be about as smart as trying to fly a plane without knowledge of how a plane works. Getting a good education and gaining knowledge are one of the keys to becoming successful. Everyone needs a good education to build the foundation for the rest of their life. But the in addition to required classes, school’s should also teach finance and possibly business.

I’m also not saying being an employee of a company is a negative thing. Being an employee helps people learn how businesses work and this valuable knowledge will help people who want to start their own business. If your job is making you or your family financially secure and you have enough security for the next generation, that’s great! The main point I’m stressing is people need to build up their financial intelligence; the younger you are the better. If your job isn’t giving you security there are alternatives out there. For those people who are giving this serious thought think about it in this way: your life is your job, not your job is your life. It is your job to make sure you are happy healthy, wealthy and wise.

One thing getting stuck in the “rat race” does is it makes individuals focus on their jobs and how much money they are making or not making. But they need to start asking themselves "who am I making money for? Myself, the company or my boss?" It would seem like they are making money for themselves but, a chunk of their paycheck goes toward someone else's income.

Don't quit your day job just yet and don't think about dropping out of school unless your start-up is generating cashflow, just start building your financial intelligence. As Robert Kiyosaki writes financial intelligence is knowledge of “accounting, investing, understanding markets and the law."

The key to becoming financially secure is turning earned income into passive income. We'll have more on that tomorrow.

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