As I learn more about finance, about investing, about managing corporate finances, I keep in mind the realization that there is much more I must learn. The world and technology continue to change, and with each change the concepts of investments and the management of household finances change, family priorities change, and in the end we can only continue educating ourselves.
During this time of pandemic, one of my goals not to meet is the idea of doing a kind of financial workshop to educate our community on household finances, how to save and invest, and ultimately how to achieve financial freedom. The perfectionist within me does not allow me to teach the workshop because I want it to be perfect. But personal finances are not perfect, and everyone’s situation is different. So all that’s left is just the simplification of the concept.
What is the teaching on personal finance that is the most important of all?
“You have to spend less than what you earn”
That’s it. That is the key to financial freedom, to be able to accumulate wealth, buy your own home, pay for your children’s education, buy your house on the beach… everything. In order to be successful in household finances, the household has to spend less than the incoming income; and that income can be invested to generate more income for the household.
If you earn very little, find a way to earn more in the future, but do not increase your expenses.
Don’t try to pretend or buy things you don’t really need, just to convince your neighbor that you have.
Don’t take on debt just on a whim, as debt is the antithesis of this phrase. When you owe money, you are giving a bank or financial institution the fruit of your work in the future, without having anything to do with what you bought. This tool should only be used to increase your wealth, not just to satisfy a taste.