The vast majority of people are absolutely clueless when it comes to understanding money and finances. It's not taught to us as kids and it's rarely ever discussed openly even amongst families. But proper financial education is absolutely crucial for success in today's world!
You see, these are things they will never teach you in school. You won't learn them from your parents (actually, you are much more likely to have heard them say the complete opposite) or your coworkers (who think you should manage your debt carefully in order to have a "good credit score"). But these are the keys to success! And it has never been easier than it is today. There are countless people who are making a comfortable living by trading stocks on their own and many young folks that are already wealthy or are well on their way. They are certainly not the world's smartest individuals.
So here are the main things everyone needs to know in order to have personal finances that are better than at least 99% of everyone else.
Related: How To Achieve Success in Life | 13 Effective Strategies
Five Ways to have better finances than 99% of people
- Automate Your Investments: Everyone has heard the question, "Would you rather have a million dollars or a single penny doubled every day for 30 days?" We have all heard it, and yet nearly all of us opt for the million dollars without a moment's hesitation. We are predisposed to think in terms of dollar amounts, not exponential growth rates. If you had taken the penny and patiently waited, here is what you would end up with after 30 days: $5,368,709.12. It is difficult for a human being to truly grasp the concept of compounding. Unlike genuine exponential systems such as adjusting your truss bridge after it has experienced structural integrity problems, steady and consistent growth does not have the immediacy with which we are able to perceive risk. We feel the negative effects of taking it step by step and trying to grow slowly rather than take on outsized risk or debt. On top of this, we observe the super-wealthy striding past us, and most often we assume that there was some windfall or superior knowledge that made it all possible. After years, we who are apt to dream of getting rich quick find that the only person who got rich quickly was the one selling us our lottery tickets. In addition to controlling what we can control (becoming financially literate), the key to solving these problems is to manipulate emotions to our advantage. With investing and personal finance, the way to do this is to automate. There are three basic principles: Automate Invest, Spend 50% or Less of Your Income, Pay Yourself First with Will Power.
- Develop a Second Stream of Income: For most of human history, people have had two or more sources of income. It is the modern idea of "one job for life" that has left so many people in trouble when they find themselves without a job. In 2006, Laura Vanderkam wrote a wonderful book called "All the Money in the World" which discussed the benefits of maintaining a side income, often from a hobby. In addition to the wonderful point Vanderkam makes in this book about how a small side income of just $200/month can give you incredible financial security over time, the fact that it requires no special skills and can be initiated while spending time doing a hobby amounts to nothing less than a modern opportunity to be financially secure. For those who want to research the idea of coming up with a second stream of income in more detail, Robert G. Allen's book "Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth" is an excellent written guide. I will mention that Darren Rowse of Problogger.com has written some excellent articles and resources on how to develop an income stream from blogging, and that Jeremy Schoemaker's ShoeMoney blog and book discuss the skills needed to become a successful online entrepreneur. All of these people don't just dabble in their respective streams of income—they have accumulated years of expertise, and their blogs have years of content to back them up.
- Invest in self-education: The truth is that what you know – and, crucially, what you don’t know – affects all the decisions you make. And since most financial decisions are fairly complex, not knowing the things you need to know means making a lot of bad decisions. An incredible number of people have an opinion on money issues. If you don’t know what you’re talking about, it’s easy to be convinced that something is true when the person telling you that has no clue. That goes both ways, of course – if you’re talking with a financial advisor who isn’t really giving you good advice, better knowledge will help you figure that out. The core of self-education is taking the time to read good books, watch good films, and take online classes, and also to make sure that you’ve got a good group of trusted friends around you who can answer questions you have. It’s also about making sure that you’re looking at a number of different viewpoints because – more often than not – the simple advice is incomplete or wrong.
- Master Tax Efficiency: Most people spend the biggest chunk of their income on taxes (almost 30%). Which is why tax efficiency is another core way. And this is something that doesn't require a lot of effort: The bulk of the available investment options and tactics cater for tax efficiency. Start by taking advantage of your tax-advantaged retirement accounts and other work accounts that enable you to deduct your contributions (traditional 401k, traditional IRA, etc). Then, with the right kind of help, invest in securities and funds that yield the lowest amount of taxes from dividends and capital gains, and that are not best held outside tax-advantaged accounts, like retired stocks, corporate bonds, and Treasuries. While learning and applying everything mentioned in this blog will take some time and effort, being a great investor does not require a lot of time. Just about 20 hours a year or 1.7 hours a month, as shown above, will be enough to get you close to the promise land. But the most significant part of the equation is: A more than good enough financial life and a carefree financial future await you on that promise land.
- Measure Wealth in Time, Not Money: It’s a bit embarrassing to admit, but I used to think wealth was all about dollars. Like many, I was taught by society, school, and even my parents to measure my financial success by how much money I had. Then, at some point, I started hearing a different perspective. Religious figures, philosophers, and even my parents began to emphasize that time is far more valuable than money. But I didn’t listen at first. I spent years wrestling with the idea—understanding it in theory, but not really believing it or living by it. It took me several more years to truly put this concept into practice. When I finally did, I began to see wealth differently. Instead of thinking about how much money I needed to stop working for an indefinite period, I started measuring wealth by how much time I could buy with my money. The goal wasn’t just to amass a certain dollar amount but to achieve enough financial freedom to spend my time as I wished. As I started sharing this mindset with others, I noticed a common reaction. Most people couldn’t even imagine what they’d do if they reached financial freedom. It was as if the idea of living without the need to work was a foreign concept, something out of reach, or even a bit scary. This is the real issue: many of us are so conditioned to chase money that we don’t realize that time—our most limited and precious resource—can be our greatest wealth. We’re so focused on accumulating dollars that we forget the ultimate purpose of money: to give us the freedom to live life on our terms. So, let me ask you: If you reached financial freedom today, what would you do with your time? For many, this question feels unrealistic, even absurd, because we’re not taught to think about wealth in this way. But imagine for a moment that your wealth isn’t just a number in a bank account but the amount of time you have to truly live. When I tell people about this shift in perspective, I often get looks of disbelief. It’s not surprising—society rarely prepares us for the possibility of true freedom. But once you start seeing wealth in terms of time, your entire approach to life can change. Instead of working endlessly for money, you begin to work towards something far more valuable: the freedom to spend your time as you choose.
Financial success isn't just about money; it's about creating freedom in your life. By automating investments, diversifying income, investing in self-education, mastering tax efficiency, and valuing time over money, you can achieve a life where your time is your greatest asset. Focus on these principles, and you'll find yourself ahead of 99% of people, both financially and in living a fulfilling life.
Join Be The Glow On Social Media :
Be The Glow.
Comments ()