Financial education, here we go again but yes we just cannot stop talking about this. Understand that just like many other things in life, this is one area that we cannot stop learning about. We all know that when it comes to getting a good education in all things financial, most of us fall extremely short of understanding how money actually works.
We understand that we earn money, we pay our taxes and maybe invest in a 401(k) or similar retirement package. And we do know what is in our bank accounts. Besides that, understanding how money works is a mystery to most of us.
Our education system does not lend itself well to helping people understand what it takes to create wealth using all the immense variety of resources available. As a result, we usually just leave this to the professionals who may or may not have their best interest in mind.
Consequently, by the time more than half of us reach 55 years old or older, we are no longer in any position to be financially secure.
The main reason I wrote this post is to compel my readers to become self-educated in all things financial. Learn that financial education is a continuing education program. Learn that money is an “idea” and is not the true measure of a person’s worth. However, it is the means of commerce and as such, it is necessary for life to understand it and educate ourselves continually on the money.
So just to lay the groundwork, I will state that money is not the most important thing in life. People are! However, money is the one concept in life that can have the most impact on our lives and our relationships. It is, therefore, paramount that we understand financial education as part of our lifelong education pursuits.
Secondly, I’d like to make this statement. Money is like fire or electricity. It is an idea with energy, as all thoughts and ideas are energy. Just like fire or electricity, if we handle it properly it has the ability to enhance our quality of life. If we handle it improperly, it can destroy our life.
Let’s consider money as simply a tool to help us accomplish our main purpose in life after we decide we are going to design that purpose ourselves.
So again the thoughts are as follows:
- Money is an idea
- It is the most important idea in your life, but not more important than people
- It needs to be handled properly to benefit you
- It is a tool to help you accomplish that which you decide is your life’s design
So do not assume that you fully understand the different areas of money and how they work. Let’s look at a bank account for example.
All deposits at a bank are actually on the bank’s liability ledger. That is because we as the depositor are lending to the bank our own money so that they can invest it any way they desire, almost with impunity. Think about collateralized mortgage obligations and 2008 systemic global crash! They then give us a measly rate of return for the benefit of them doing this.
If their investments do not succeed, then of course, as in 2008 the government uses our tax money that we also paid to bail them out. In any other scenario, this would be illegal. So what does this tell you about North American banks and our fractional reserve system?
It means they do serve a purpose, but maybe they are not as safe a place to keep most of our money. We know that there are many great places to place your money and grow your wealth. We just need to start financially educating ourselves.
You can start educating yourself from the list below and learn about each one as much as possible as a lifelong pursuit.
Your financial education shortlist:
- Credit Card Usage
- Loans – collateralized
- Loans – non-collateralized
- Retirement accounts- how do they operate and what are the fees
- Brokerage Accounts- how do they operate and what are the fees
- Life Insurance- It uses for protection and investing
- Precious Metal Investing
- Direct overseas investing
- Real Estate Investing – the multitude of ways to invest in this asset
I could go on, but if you simply took the time to learn these in detail, you will be way ahead of most people. Please take the time to make financial education a lifelong pursuit and implement the positive benefits of this education into your life.