Personal Finance is a subject that you must learn. If you have not learned about personal finance, then you will most likely misuse your funds in the future. If not for personal finance, people would be poor and homeless living off the streets or wilderness. That is something that you and most people don’t want and for that reason, you need to learn how to avoid those situations. To do so, you are taught that you must learn personal finance, which is learning how to handle money that you own. If I give you $10, you need to learn how you are going to use that $10. For higher amounts such as $100s, $1000s, $10,000, you will operate on that same principle. This is important because you always want to have a positive cash amount for your day to day living.
This is conventional personal finance advice and I am here to tell you… this advice is inadequate.
Is a budget necessary? Absolutely. Does a budget give you an overview of your savings, expenses, and income? Yes, you can bet on it. Now I want you think about this question; After you have reviewed your budget, do you plan to focus on cutting expenses to save more money or do you plan to focus on increasing your income? Now don’t say both. We know that people always want to make more money when they engage in personal finance as well as cutting their expenses. It is really simple: Do you focus on MAKING MORE MONEY or SAVING MORE MONEY? If you choose the latter, then I am here to tell you that personal finance has failed you and it is not your fault.
Personal Finance Is Sufficient?
Personal finance, although is a great subject to learn and apply, is not conducive to you having overall success. Why you may ask? That is because personal finance focuses on the management of current resources that you already have instead of a stricter focus on acquisition of those resources. If you have not acquired those resources, you really cannot put your personal finance to good use. Although it is a good abstract framework to use when you do acquire money, you will actually need the concrete material that is money to satisfy the condition to accurately apply your personal financial knowledge.
To better explain why, I Implore you to go above personal finance and empower yourself with economic empowerment. To illustrate my point, I will show you half-baked personal finance advice, the problems with savings, and the beliefs associated with savings.
You Need To Save Money
It is often spoken that you need to save money for more opportunities to come your way. I agree with that statement and you should too. But the question is “Do you even have money to save?”
There was a time in my life that all I did was read personal finance books and blogs to try and soak the information and apply it. You know what got me to save? It was when I got my first job, with my first check, and then I was able to save. Was it easy to save? Yes it was. Was it easy to acquire my income? Nope! Not at all. In fact, I was looking for months trying to acquire a job to even get savings. It was harder to acquire that income than it was to save that income. This is why saving your money is only half the battle. Your real solution is to develop a cashflow in the long run to have success.
You Need To Save Money For Financial Independence
You hear this phrase all the time “you need to save money to be financially independent.” It is somewhat true that you need to save money to acquire financial independence, but is saving money even the best way to acquire financial independence? Somewhat.
Earlier, I described how you need cashflow to have long term success. Well that cashflow is what will allow you to acquire financial independence. Most people wish to have financial independence to do anything that they want. Go skiing, traveling, expensive dinners, you name it. So people would try to maximize their income with their job or side hustle, use the savings from that maximized income, and then retire from their job or side hustle. Sounds good, but your savings will quickly be depleted.
What you would instead have to do is save to start a business, to bring in large amounts of cashflow. By having that business, you can grow it and make more money as well as sell it to make an even larger amount of cash for yourself. Although saving money is a way to acquire financial independence, it is only a step and it is more important to increase your income to acquire that financial independence.
You Need To Save Money For A Down Payment And Acquire A Mortgage For Your House
This is going to be an extreme opinion, but if you are to be really responsible you should be capable of purchasing a house with straight cash instead of putting a down payment and paying a reoccurring bill payment. Think about it, you put down a payment for some amount of years and you are stuck with a new bill to add to many of the bills you have. Then, you are rooted geographically in your location and can only go so far in your travels to your job. Lastly, you are fixed to your job so that you can make a living for yourself and hope you can get that raise. You can avoid this if you start a job, start a side business, grow that side business, and make enough money from that business to purchase a house, whole.
You may say that starting a side-business is hard and I will rebut to you and say that anything worthwhile in life will require some time from you as well as hardship. Your job can only do so much for you and can very well be detrimental for you in the long term if you don’t establish your side business to empower yourself economically. At the end of the day, you need to buy a house with cash money if you want to be economically responsible.
You Need To Save Money For Retirement
Here is the truth: your savings will not be adequate for your retirement. your savings shouldn’t be a nest egg, but cashflow is what will take care of you. Having savings is great to have if you want to have some semblance of security, but if you wish to acquire real security, economically, you will need to produce passive cashflows that you own for your own benefit.
It is the passive cashflows that will help you during retirement that can allow you to travel, go to restaurants, hang out with family, you name it. Savings, won’t allow you to do that.
Savings will continue to be depleted with each passing age after retirement which would force you to work under constant stress to stretch the dollars that you have to live. For you to live well in your retirement, you need to establish multiple streams of income from an economic point instead of solely relying on your nest egg which is your savings.
You Need To Save Money For Your Children’s College Fund
College does not have fixed costs. If you are in the U.S.A at the time of this writing, you will know that college tuition far outpaces inflation. Even if you paid college for your child and they obtained a degree, who is to say your child will get a job right away? Even if it were a STEM degree, it is a competitive market where your child could get a job and still not be capable of making a living for themselves.
Now on the other hand, if you saved money to start a business, you could then scale that business and proceed to fund your child’s college fund. If you were to simply use savings, then you would be left wondering why your savings was not enough to circumvent college tuition inflation. This is why its necessary to use your savings to establish a business that you control so you can make that take care of your child or children’s college tuition.
You Need To Save Money To Invest So That “Money Can Work For You”
Let me make this clear: Money doesn’t work for you, people work for you. The best investment you can make is to start a company, IPO that company, and proceed to grow that company and step down. Is it a hard process? Yeah, but you will actually hold the majority of the investments than other individuals. One thing that is not mentioned enough about investing is that you need to have freely available capital to invest as well as taking care of your daily expenses. If you have to dip into your investments every now and then because you are short then you are undermining your own investment strategy. Most founders hold the most investment for their companies than people who merely invest, so if you want real investments, then start your own company and go public with it.
You Need To Save Money So You Don’t Have Any Worries Or Problems In Your Life
Money is just another problem you are going to have in your life whether you have a lot of it or not. You do need to save money to get rid of your current problems, but many of your incoming problems will then become internal problems instead of external problems. For instance, You make more money, you solve your own financial problems, but your family or friends start to ask you for some money. What are you going to do? Say no? It is an option, but now that financial problem you had earlier is now a family and friends’ problem you have to deal with on a regular basis.
You may also have to worry about how you are going to change when more money comes your way. It is possible you may have less problems in your life when you acquire more money, but those less problems may be problems that aren’t money related or even worst than financial problems, such as health.
You Need To Save Money To Do A Side Hustle
You need to save money to do a business. Even though I do believe that people should try to do their best to make as much money as possible, they need to learn how to structure their processes to acquire money than doing an activity spontaneously to make some quick cash. For example, going to a staffing agency and doing odd jobs is a great side hustle, but actually creating a structured business or being a sole proprietor, getting an account, doing proper bookkeeping is more essential. A side hustle, if you ever do one, must turn into business for your own benefit.
You Need To Save Money To Do Generational Wealth
First, who are you leaving your wealth to? Is that even a good thing to do? Are you just following what everyone else is doing? There are some philosophical and political implications with the mantra of generational wealth that can be destructive. For instance, the phrase shirtsleeves to shirtsleeves is a proverb dealing with 1st gen wealthy people leaving their wealth to the 2nd gen wealthy people who spend most of the wealth and the 3rd generation returning back to working hard and being poor. Your wealth can be given and extinguished in a single generation. Knowing that, will you still leave that amount of wealth to your descendants?
What about the corrupting influence between wealth and politics? Do you want politics to merely be dominated by wealthy plutocrats? Slavery, a practice that is horrific to many modern individuals, produced generational wealth for slave families. If you wish to engage in generational wealth, that is fine by me, but I think it is important for you to actually think about it means to create and pass down wealth.
You Need To Save Money So You Can Have “F— You” Money
Although this statement may mean well, it is simply a scaled down version of businesses engaging in F— you money activities for centuries as well as a repackaging of “F— You, I got mine.” For example, If you are wondering why the boss doesn’t give you paid leave or respect you, its because they have F— you money. If a business decides to offshore your job because they can make more money then they have F— you money. F— you money isn’t individualistic; it is systemic and is why the modern economic system functions to the detriment of many, if not most participants.
Let us not forget to mention that you are still working on the framework that you don’t have to care because you have acquired the money that you have, hence F— you, I got mine. I am happy that people wish to become more financially wise and successful, but I cannot in good conscious tell you that you are going to do well financially if you don’t know how often espoused financial quotes can be detrimental to your financial journey.
Hope you have success and leave a comment.
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