that you should understand too
When it comes to money, people view it differently. Many look at money as a goal or dream, others as the devil, but the wealthiest of us look at money simply as a great tool. Looking at money in that light, wealthy individuals teach their children about finances in a different way than many of us were taught when we were growing up. Here are 5 rules about finances that the wealthy live by, and you should too.
1. Financial Literacy
The first thing wealthy families teach their children about is financial literacy. Financial literacy means a couple of things. First is terminology: the wealthy understand what a liability is and what an asset is. Then they teach understanding: assets make you money, liabilities cost you money. They teach their children by example and in conversation what real assets and liabilities are. They understand the house you live in isn’t really an asset, only the homes making you money are.
2. Never Work For Money
There are a lot of good reasons to work: because you like what you do, because you learn from what you do, because it makes you happy. The worst reason to work is because of the money. Jobs teach a lot of valuable skills that you can use in your own business. Whether your business is income property, stocks, a chain of restaurants or all of the above (it should be all of the above) you can use those skills that you have in your day job towards your business, but getting money from your job should only be a side benefit. Working for money makes you miserable; the wealthy teach their children to have money work for them.
3. Mind Your Own Business
As alluded to in the point above, your job or profession is not your business. The financially abundant mind their assets and ensure that their investments are working to make them more money. Whether or not you have a professional job outside of your business is irrelevant, the wealthy make sure that their money is never dormant, but always actively working. Money management isn’t an option, it’s a necessity, the real secret is that they manage their money, and other people let their money manage them.
4. Money is a Tool
Money has no inherent qualities of good or bad. It’s not evil, and it’s not good. It just is. The wealthy by example teach their children that money is simply a tool that is used to get things. Often times when people want something, they purchase it. However the wealthy have a different mentality. They purchase things that will then allow them to buy what it is they desire. Instead of buying a car they buy something that will not only return an investment equal to the car, but continue to provide income as long as they own that particular asset.
5. Use Other People’s Money
The wealthy understand that you don’t your own money to make money; rather you just need some money. True it’s often advantageous to make investments with your own money, guaranteeing a higher rate of return. However, it’s equally as possible to make just as much money leveraging other people’s money to do your work for you. Whether it’s with a formal loan or a personal deal is struck, you can have no money of your own, and still get to work investing in something that will make you money.