Yesterday, an article about more young people are caught in $50,000 debt was published in Straits Times. Today there was an article again on how to equip with financial skills.
There are many methods that was discussed but mainly it was mentioned that financial skills should start from young. Some suggested that it should be taught in school.
I agree that financial skills should be taught in school. However I thought that financial mindset is more important than financial skills.
Why is mindset more important than skill? Give you an example.
All of us know that saving money is important. Saving money is to safeguard us from rainy days and also for our retirement purposes. Since we know it is important, why are there so few who actually save or invest their money? This is a mindset problem.
Once the mindset is right, the skill is easy. Because the first step is to spend less than you earn. Yet in today’s world, young people are spending more than they earn. How can anyone achieve financial freedom if he is spending more than he earns.
The root of this problem comes from consumerism. With all the advertisement from commercial organization, it’s takes quite a bit of will power to resist the temptation of spending.
If you want to be rich, how much time do you invest in learning how to be rich? Be it reading, learning from someone else, attending seminars, looking at investments etc. Do you actually invest time in activities that will get you rich?
On the other hand, let’s look at spending. How much time do you spend in watching advertisement on TV, reading advertisement on newspaper / magazines? How much time you spend on shopping or thinking of what new gadgets/shoes/handbags to buy?
I boldly say that most people spend more of their time thinking of spending their money than creating wealth.
Just look at the newspaper. Every pages of the newspaper consists of advertisement asking you to spend money. But there are only few pages that are of investment and business related.
While we are reading newspaper, subconsciously we told ourselves to spend more money. If we spend most of our time absorbing the “spend money message”, how can we ever save and invest?
To reverse this, you may want to start investing more time in “making money message”. The easiest way is to start reading the correct stuff. Business news, investment article etc is a good start. Get a financial mindset book from the library is an alternative as well.
Start immerse yourself in wealth growing information, and your wealth will grow.
June 25, 2008 at 6:41 am
EXCELLENT POSTING. I love it!
Happy day
June 26, 2008 at 1:15 am
Hi David,
Thanks. Glad you enjoyed it.
June 30, 2008 at 5:10 am
Mindset is very important to reach wealth
July 2, 2008 at 12:54 am
I’m glad I came across this…wanted to add my comments.
I agree wholeheartedly with the statements you make about wealth. It appalls me when I see so many individuals who really have no sense of financial responsiblity. They spend more each month than they have coming in and they spend more time planning vacations and dinner than they would in planning their finances to improve their current situation. It is for this reason that I share real estate investing strategies with as people as possible so they can understand that wealth building is critical.
July 3, 2008 at 1:01 am
Hi Dave,
You are absolutely right. The thought of having an income every month deceived most individual. Thus spending more time planning for vacation since income is coming in monthly.
When they overspent, they won’t have a sense of urgency yet because they can use the pay next month to pay for it. Simple and cool, no problem.
What they didn’t know is this is how debt start to roll over and over, become bigger and bigger. Until they realize it’s too big to handle, it’s probably too late.