Top 3 Money skill that everyone should master
When it comes to money, there are many good materials available and, in this article, we will summarize the top 3 most important money skills that everyone should learn to achieve ultimate financial freedom. We truly believe missing any of the skills below will not work.
- Learn to buy Asset
It sounds simple that everyone’s goal is to buy an asset. The challenge here is that one must be able to differentiate what is asset and liability. The famous book “Rich Dad Poor Dad” by Robert Kiyosaki example is very detail and simple enough for everyone to understand. If you have not read his book, we encourage you to buy this book to read it.
The key to differentiating asset and liability is that assets will increase your cash liability will decrease your cash. A great example explain in the book is that most people will think buying a house is an asset, but the fact is it is a liability. The reason is after you own a house you have to pay a bank loan and maintenance of the house monthly which decreasing your cash. However, if you manage to buy a house and rent it to others to collect a net positive cash flow then your house is an asset that increases your monthly cash flow.
There are more examples which we highly recommend everyone should get hold of the book.
- Learn to keep your money
There is a saying making money is easy but keeping it is hard. This is so true. If your goal is to achieve financial freedom and have more options in your life you need to learn how to keep your money.
Many people often focus on generating more money which is not wrong, however, it is not the full picture to achieve financial freedom. The reason being is for most people will increase spending once they increase their earnings! Let’s compare 2 person-situation below:
Aaron: Earning $10,000 salary per month, living in an expansive house, driving a fancy car, having fine dining daily and at the end of the month his saving is $1,000.
Bryan: Earning $3,000 salary per month, living in a normal house, do not own a car, having simple meal daily and at the end of the month, his saving is $1,500.
If we focus on the lifestyle that we wish to and admire, everyone will wish to be Aaron. However, in terms of saving will be Bryan. If both of them invest all their money and generate the same return, we are very sure Bryan will make more money in the long term.
Of course, having more saving does not mean that you will be financially free, you will still need to learn how to invest and make the money work harder for you.
- Learn how to let your money work for you
This is the most important skill when it comes to money is learned how to let your money work for you. In other words, learn how to invest your money wisely. Believe it or not, even you do not have the money to invest but have mastered this skill you will still able to make money!
Learning how to invest can be hard or it can be easy it depends on what is your goal. The common mistake is people setting an unrealistic goal which makes them believe there is some investing strategy that generates 100% return in a month. All they do is keep chasing the return and forget about the essence of investment. Return on investment (ROI) is just a part of the equation there are a lot more others things to consider when choosing the right strategy for you.
Start mastering the skills above and take charge of your financial situation.