Grant Ramsey - MONEY MANAGEMENT: A Step By Step Guide For Beginners To Start Saving Money, Master Personal Financial Skills And Learn The Best Strategies To Reach Financial Freedom

money management

A Step By Step Guide For Beginners To Start Saving Money, Master Personal Financial Skills And Learn The Best Strategies To Reach Financial Freedom

Sommario

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Introduction

M oney affects every aspect of our lives. We think about it, use it, earn it, and worry about it. But, do we sit to examine how money works? What makes it a significant part of our lives? How it affects us when we have it and when our accounts are running low?

Most probably not, but if you are looking to improve your financial situation, save more, invest more, and ultimately become financially free, you must examine your relationship with money. What most of us fail to admit is money has high value only because we have given it the value. Looking closely at what money is, we will discover that it is a medium of exchange and a way to store value.

We use it to trade when we agree to exchange it for something else (medium of exchange) and use it to hold value until later (store value). When we use it to as a medium of exchange, we can either keep the money in cash or in a bank account where we can easily access it for another transaction later.

In real sense, therefore, money has no inherent value. You can't eat money, use it as medicine or for anything useful. Materially, a one-hundred-dollar bill is the same as a twenty-dollar bill. Value is only based on an agreement, but the actual currency can be anything. You can either pay in cash or electronic and most recently, through blockchain technology.

Traditionally, barter trade was the medium of exchange. You give me hide skin so I am warm during winter and I provide you with the grain you can eat throughout the seasons. The matching needs determined the value. However, it was hard to store value and sometimes even hard for the universe to align, so you have matching needs with another person.

The use of money made all these challenges a thing of the past and increased the value of items. How much value you give determines how much money you earn. However, the value we attach to money can increase or decrease depending on how valuable we think it is. For instance, when money gets less value, we use more money to buy the same things, and if this continues, money becomes worthless. The opposite is true. The less we use to buy the same commodities, the money value is attached to money.

Think about it. When growing up, how much could you buy with a quarter? How much can you buy with $20 today? The value attached to a quarterback in the day is quite different from the value assigned to the same quarter today.

If we are not careful, we will end up in a rat race. Earn money, spend it all, earn some more and spend that as well. We may even throw in a few debts here and there which further tightens our spending belts. So we earn to pay debts, pay bills, enjoy a little luxury and do it all over again, and again.

However, deep down, what we want is to live a full life where we don't have to worry about money, how much we earn or spend. We want to be free to spend as much as we like but remain with enough surplus that we have more than enough to spend tomorrow on ourselves, our friends and family, and to share with the less fortunate.

Financial freedom is a journey. You must start by tracking your monthly expenses. How much do you spend on a bill? How about holidays and luxuries? Clothes and other home supplies? Transport and commute? Note down every instance you spend money and track it for some time. You will know exactly where your money goes.

It is easy to assume that we spend our money on essential things. Frankly, mostly we do, but some of these 'important' things are wants and not needs. Moreover, by indulging, we end up with little to nothing to save and invest.

Do you have money goals? Wishing you could spend money freely is a good goal, but it's a long-term goal. To achieve it, you need specific short-term goals that will steer you towards achieving financial freedom. How much do you want to save every month? Do you have a strategy on where you can draw more saving by tightening your expenditure? How about investment? What would be the best investment plan for your household?

The purpose of this book is to help you understand money, how it affects you (and those around you) and how you can keep it and invest it, so it earns you more.

Chapter 1: Where does your money go?

I ts the end of the month, your salary just hit your account, and for the first time, you have called all your bills to a meeting. You have a calculator ready, a pen, your bills, and a sheet of paper with the total sum of your cash written in big letters.

One after the other, you write down everything you need to pay, and things dont look right. You need more than you can spare. You go through your list for the fifth time, trying to figure out what you can save, what can take a back seat, and what must be paid right away.

Its been hours, and you are still short. What do you? Should you take another loan? If you do, next months expenses are going to be tighter, so thats not an option. You try to think of someone who can loan you some cash and come out blank. You owe almost everyone you know.

How did you end up here?

Diving into your expenses is scary, especially if they are in a mess. But dont let that discourage you. Every journey has a starting point, and for your expenses, the fixed starting point you need is knowing where your money goes.