5 Essential Reasons Why You Should Master Your Finances
Beat Inflation, Avoid Bank Traps, and Secure Your Retirement.
The world of finance often appears abstract, and sometimes, it is intentionally crafted to make you feel incompetent. This complexity encourages reliance on bank advisors or specialists for any financial decision, making the subject indigestible.
However, learning how to manage your personal finances is crucial for several compelling reasons:
Because Money is a Tool 🧰
A tool used for human development, that can be managed in the same way as we manage water resources or food.
So as we try to stop wasting electricity or recycling plastic, we should optimize and save money in the same way.
Because the Population is Aging
Most Western countries are in debt,
The global population is increasing,
Existing pension systems are under threat.
Like natural resources, money, a critical non-natural resource, must be optimized. The aging population can also offer opportunities, like investing in ETFs focused on elderly care. This dual perspective invites a closer look at investments beneficial in this demographic shift.
Because Time is NOT Money
You know the old 20th century saying “Time is Money,” but what does that mean exactly, it means: “I accumulate money to buy things that make me feel rich and that represent me socially.”
Today, younger generations, including Generation Z, view money through a different lens: “Money is Time.” This perspective emphasizes valuing time above material wealth, seeking personal fulfillment and experiences over mere accumulation.
So yes, managing assets means managing risk.
But this shift in mindset is reflected in the openness of today’s youth towards equities, contrasting with the risk-averse attitudes of previous generations. Today, the real risk lies in inaction. Money in a bank may seem safe, but it’s vulnerable to inflation, gradually eroding its value. Inflation means that money uninvested isn’t just sleeping; it’s dying.
Because Knowledge Empowers
“I don’t know how to do it, I’ll have to ask my banker”
This mindset is a barrier.
Overcoming this psychological glass ceiling requires courage and self-education. Astonishingly, formal education systems often overlook financial literacy, focusing instead on less practical knowledge.
Empowerment begins with self-education in financial literacy.
Because Financial Growth is for Everyone
The misconception that investing is reserved for the wealthy is just that — a misconception.
On this subject, two very important things:
Savings should be a portion of one’s income, regardless of its size. Technological advancements have democratized investing, making it accessible for anyone to start small.
Starting early capitalizes on compound interest, significantly enhancing savings over time (Learn More Here About Compound Interest).
The important thing here is to be aware of the fees on your savings, because most of the time, they’re presented as percentages. These seemingly minor charges can have a substantial long-term impact on savings.
To summarize
Money management is a vital life skill,
The aging population present both challenges and investment opportunities,
The modern view of money prioritizes time and experiences over mere accumulation,
The real risk lies in inaction due to inflation and outdated banking myths,
Financial empowerment is accessible to everyone, regardless of income, debunking the myth that investing is exclusive to the wealthy.
There’s an opportunity today for anyone, the cab driver, the schoolteacher, the waitress, the ski instructor — in short, for everyone, to secure something good for their retirement.
Last Advice: Challenge your Banker
Ask your banker where he puts his money, does he also put his savings in a life insurance policy with 2 to 5% fees per year (fees that take away all your long-term performance)?
Thanks for reading!
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