Nowadays, every other person is blaming the government for financial instability in his/her life. When mostly it’s them who create this mess because they don’t have the proper financial literacy; required to run their lives in a better way.
In a way that won’t give them nightmares about paying bills and clearing the debts on their heads. However, instead of getting financially literate, they keep on making mistakes that turn into financial blunders in their lives later on.
Hence, an excuse to blame the government and their employers for not raising paychecks, complaining about inflation and taxes. But the question is, why can’t they stay ahead of inflation and study taxes so they could have the right knowledge of paying the minimum amount of their income in taxes.
Why can’t they stop exceeding the limits of their credit cards and keep drowning in these kinds of debts? Because they think studying money is useless and all they have to do is get a good degree that will get them a high paying job which they’ll use to save money and eventually resolve all the financial problems. Which in reality doesn’t solve the problem.
Savings don’t solve the problem. If people would’ve studied money then they’d know that saving money is useless because money loses its value over time. Thus, the smart move is to keep making money that is done by investments not saving!
How to keep making money?
The only rule to keep making money is by purchasing assets that produce income for a longer period.
Yes! buying assets and limiting the liabilities will do all the wonders in eliminating the financial crisis in your lives.
But by assets, I don’t mean that you start buying expensive cars and houses. Because these aren’t assets. These are liabilities that keep on decreasing in value. And, so instead of increasing the cash flow, such types of investments decrease it.
To buy assets, one has to truly understand the difference between assets and liabilities.
Let me tell you the difference between both in a very simple manner. Assets are those things that boost cash inflow and restrict cash outflow. Thus, generating more income and limiting the expenses.
On the other hand, liabilities are such things that result in more cash outflow and consequently, increasing your expenses and debts.
So, if you invest in expensive cars, clothes, houses, and credit cards. You’ll have to pay more in taxes and insurances.
Plus, these things become a liability as they depreciate but keep on inflating the debt on your accounts.
To be financially well off, you need to invest in assets that appreciate and generate you a lifetime income without increasing the tax value and general expenses.
What are the best income-generating assets? real estate, gold, stocks, bonds, and bitcoins are known as the best income-generating assets
When these assets mature, they will start to generate passive income and keep you ahead of the inflation, and you won’t have a burden on your shoulders to pay huge sums in property tax, mortgage, income tax, etc.
Why isn’t your house an asset?
Your house is no asset! Especially, if it’s a big expensive house. But, why? Let me tell you why. When you rent a house or an apartment mostly the maintenance has to be taken care of by the owner, the property tax has to be given by the owner.
But when you buy yourself a house, you have to do all this resulting in an increase in the expenses which leads to high cash outflow.
On top of that, if you purchased it by acquiring a bank loan, then you’ve to pay the mortgage as well. This drains most of your income and the remainder is used up by other expenses like utilities and bills.
Now, imagine if you were living on rent then you may have more money to invest in an income-generating asset like stocks and generate more money from what you invested. That is why your house isn’t an asset, rather a liability!
Do you really need more money for financial stability?
The answer is; No! You don’t need more money to be financially stable. You need to invest your money to generate a long term stable income that will bring financial stability to your life.
Obviously, your assets will grow, and so will your wealth, but initially, you don’t need to chase higher paychecks, pensions, and government securities.
You just need to invest your money in the right manner to be able to get out of the financial crisis and for that, you’ve to improve your financial education.
How can you enhance your financial literacy?
You don’t get financially literate by going to school or college. This is something that is taught at home by your parents. But, I understand that not many people give the required financial education to their children. Not because they don’t want to, but because they don’t have it either.
Here, comes the role of experts in this field who can teach you to be financially literate. One of the best financial books is Rich Dad Poor Dad, written by Robert Kiyosaki. There are many books like these written on financial education that can teach how to invest and spend better.
Stop blaming the government and start working!
Yes, I understand that the government should be held accountable for the rise in inflation and taxes that affect the financial stability of people. But, we can’t blame the government for our bad choices and say that the government supports the rich.
No, the government doesn’t support them. They save themselves, from financial instability by making the right investments and by giving their children the proper financial education to survive and succeed in this changing world. And, we need to do the same.
Working hard isn’t enough, we should know how to work smart. We should understand the fact that our salaries aren’t enough to live a stable life.
We have to build other streams to generate long-term passive income. I’ll end this article with a quote from Rich Dad Poor Dad “Don’t work for money; make money work for you”
I will love to know your thoughts. So, kindly leave your feedback in the comments section below.