Understand How Money Works

You must take care of your responsibilities while building your wealth. For now we work hard, earn extra income. We make money as we can. Some of us aside from working in a company for 8 hours we also had part time small business just to earn extra. It is really good habit that we increase our cash flow and we have multiple source of income. But always remember this “It’s not how much you earn that counts. It’s what you keep.”  Most people work for money but don’t know how to make money work for them. Have a financial Goal and Plan for your future, because people don’t plan to fail. They just fail to plan.

3 Things to Consider to understand how money works

1.      

           Wealth Formula

In building our wealth we need to have a clear goal in the future and of course first we need money plus the time. We should respect the time because many people get scam because they always want an instant. Next is +/- rate of return. If you gain + but if you lose minus. Then - the inflation rate and taxes. If anything left that is your wealth.

2.       The X-curve Concept

The x-curve concept is reality in life we have two lines to follow the red lines is our responsibility line and the black line is our money line or wealth. It shows that from younger years to older years. So now that we are young and no savings we have the high responsibility. The challenge is as we grow older we should increase our money line or have a discipline of savings so that our responsibility will go down. Why? Because once we hit our goal of Big savings and we can be LOI or living on interest we can retire early. And that is money working for us. Because the retirement is not depending on our age but it depends on our money.

3.       The 4 Corner Stone’s of a strong financial future:

We should also understand these four corner stone’s if we want to build a solid financial future. First in savings we should consider the GROWTH because aside from inflation rate we should know the interest rate that we earn from our money.2nd is SAFETY, of course we should consider these one because we work hard for our money and make sure it is safe. But there is safe but almost no growth so it’s useless. 3^rd is HEALTHCARE, why healthcare? Simply because even if your savings had growth and safety and don’t have healthcare when you got sick you will withdraw your money to pay the bills in the hospital and back to zero again. 4^th is the PROTECTION, it is important because while building your wealth you need protection so that if something happened to you whom a bread winner of the family protection will provide the needs of your family.