Be Careful With Your Money

Category: Finance, Financial Planning.

Ten dollars is ten dollars. Not really.

Right? I' ve been exploring making money on the internet and recently checked my google adsense account. I was really pleased. I have just crossed the ten- dollar mark. This is the first money I have made entirely on my own, without depending on an employer to pay me, or needing a base capital with which to start investing. On a per hourly rate, it would have made me slightly under one cent an hour. I worked really hard for it.

Pathetic. Last week, I was also given ten dollars from the supermarket I regularly shop at. But I will treasure this money. It came in the form of a voucher as I had accumulated enough points. Afterall, it was free extra money. I spent it immediately. I was told of a study that was done.

If you had bought a cinema ticket for ten dollars, and on the way to the show, dropped the ticket. People were given a scenario. Would you buy another ticket? Then the scenario was changed. About fifty percent said yes, and fifty percent said no. This time, you are on the way to see a show, and you drop ten dollars.

This time, ninety percent said they would! Would you still buy a ticket when you reach the cinema? The point of the study was to prove that we all think about money differently, even though the value is still the same. The hours you put in, the time you sacrificed from your family and friends for the company. Think about your salary. That money was hard- earned. Now think about your bonus.

You would be very careful with how you use it. Say the company did extra well this year, and gave out a much larger than expected bonus. They rush out and treat themselves to a new toy/ dress/ handbag/ sofa, put down a downpayment for a new TV, or go on a well- deserved holiday. What do most people do? At best, the bonus is spent. The same happens when people get a raise.

In some cases, they are in more debt than before. They rush out and put a downpayment on a bigger property, or a new car, putting themselves in greater debt than before. One often hears how people with money problems keep hoping to win the lottery, thinking that all their money problems will be solved. What about those who are lucky enough to win the lottery? But ask them what they will do with the money if they got it and the answer generally involves spending it. It has been described as people taking a financial laxative.

Before long, it is all gone too. As soon as money comes in, out it goes again. It is not how much money you make, but how much you keep. We need to learn how to manage our money. Too many people are ignorant about how to handle money. For those who learn to manage their money, it just keeps increasing.

As a result, money keeps flowing away from them. The poor only have expenses. The middle- class buy liabilities they think are assets. Any money that comes in is used up immediately for daily needs. They buy a bigger house, a car and, a vacation home list all these down as assets. The rich buy assets. But these all cost them money to maintain.

These put money into their pocket. They can be houses which generate rental income, stocks with dividends or businesses which generate free cash flow. Assets come in many different forms. The more assets the rich buy, the richer they become. They are entirely dependent on their jobs. Some people who appear rich are really poor by this definition. We have to learn to see money for what it is.

If we treat all kinds of money with the respect it deserves, it can help us towards our goal to be financially free. It is the same numerical value, whether it was hard- earned, or" free" . I just got an email recently informing me I would get my bonus this year. Instead, I should be putting some time and effort to find out what I can do with this money so that it will grow and work for me, generating more money. It came with a little joke at the end saying" you can still go for the sales! " Once spent there, it would become worthless. I' m not sure how true the story is.

He stooped down and picked it up. I once heard a story that Warren Buffett was in a lift when he spotted a 1 cent coin. As he put it in his pocket, he grinned at the surprised looks of the others in the lift, and said" The beginning of my next billion! " The exact story may or may not be true, but the lesson behind it is true. Take time to learn about it. Be careful with your money. And it will help you to be financially free.