Hi everyone and welcome back to practical wisdom, in this video I’ll be talking
about the life lessons and experiences of money. So, to begin, money can be termed
as a commodity that is accepted for use as a medium of exchange in various economies.
Money is circulated among people of all walks of life,
from region to region and country to country, thus allowing trade to take place.
It is also used in determining the values and price and can also be used to measure wealth.
Money is therefore a very important aspect of your, and especially how you interact with it
every day. As an essential commodity, money attracts a lot of attention,
and of this it can be used well, or greatly misused.
So, what can we learn about money? How can we use this essential commodity that controls
all the decisions we make to our benefit?
If you want to learn more about money, make sure you watch this video till the end.
Now, let’s begin shall we?
1. Start saving now You, me, and pretty much
everyone you know, always complain about not have enough money to save, but if you push yourself
and diligently spend your hard earned money, you will actually find something to save. Most
people wait until they get a salary increment or receive huge amounts of money to start saving,
but you are smarter, and you will start putting money aside before anything else.
Focus and determination will help you start a journey of saving
and managing your resources well. You don't have to wait for tomorrow,
but you can start now with whatever you have however small. A few years down the line you
will be surprised how your savings have generated huge amounts of money through compounded interest.
However, identifying a good and reliable financial institution
or a financial product which you can use to save your money is key. Put your money where it will
earn you a high rate of interest with minimal charges, and you will start seeing it grow.
2. Don't borrow money if you can't pay
It’s interesting that, for many people, when they have an urgent need for money, what comes
first to mind is to borrow money, and usually at a very high interest rate. And even worse,
they never have a plan on how they will pay back the money. This dangerous situation
can put you in a difficult situation when it comes to paying back your debt.
You see, extra costs and interest accrued, will straggle your financial dreams,
and you might end up losing more than you had bargained for. It’s very important and
mandatory to have a plan on how you will pay back your loans, before you even borrow it.
The sad thing is that, interest on debt does not care what your current situation is,
nor on whether you have problems paying or not, it will keep accruing.
When you borrow money, it’s also important to know exactly
why you are borrowing it, and for what purpose.
For example, if you borrow money to buy an item that appreciates in value like land or property,
you stand a better chance of managing this since you can
sell and repay your loan. But if you use your money for consumption items and leisure,
you will definitely have a hard time servicing your debt.
3. There is nothing for free
Have you ever been to town and spot someone shouting,
get our services for free, or, get free goods and so many things on offer for free.
Incidentally, it goes without saying that there is nothing for free. There is always a catch.
If you look critically, the person offering free items, is also taking something out of it.
It’s always good to be cautious and to ask yourself
whether what you are giving is equivalent to what you are being offered for free.
Most of the time, there’s a catch to these free things, so look into it first.
For example, many stores promote almost expired products, so they don't expire in their shop.
By the time you finish using the said free product in case you take the offer, the good product you
had bought together could be expiring meaning you may not be able to use it. A good habit to keep
is you should always ask yourself why something is being given to you for free.
4. You can make money in many different ways
We tend to think that the only way to earn money is through
formal employment. This has been entrenched in the minds of people in all parts of the world
through the education systems. However, if you do your homework, you’ll find there are
so many opportunities out there, and the only thing you need to do - is how to get them.
You may have a permanent job but during the weekends, you can do other things that can
enhance your income. One way you can do this is by identifying the needs of those around you,
and then finding a way to meet and capitalize those needs, this could
be through proving a service or a products depending on the need you have identified.
Another way is by looking at your hobbies or your passions
and looking for ways of monetizing them. There are no limitations in these areas
as people's needs will always arise because we live in a dynamic world. Do not stick to one area
only even if it is your area of specialization as there are many ways to earn money out there.
5. Your employer owes you nothing.
Other than the paycheck you receive at the end of the month, and maybe respect,
your boss owes you nothing else. Employment is good since it offers a steady stream of income for
the period you are in employment. However, things don't always remain the same, and a day may come
when the job is no longer available. This could be because of economic changes where your place of
work cannot proceed due to economic challenges, company mergers, takeovers or retrenchment.
When you work for someone, you should realize that anything can happen,
and you must identify ways of cushioning yourself incase anything happens.
Always look for ways of earning extra income or side hustles even when you have a permanent job.
Many people also try to manage and plan their money well through
savings in interest earning facilities to give a soft landing when they lose their jobs.
6. Spend money on what you need
It’s a wise thing to avoid extravagant spending especially on items you really don't need.
Sometimes you might buy things simply because others are doing it or because someone is making
a good offer on something you like. You need to ask yourself if you really need to make that move
or whether your budget allows you to do that. Many times, we buy things and later realize that
we could have done without them, and they don't add any value to our lives. Spending your
hard-earned money extravagantly will only leave you distressed and unhappy and full of regrets.
If you think about it, nobody drives two cars at the same time,
nor can you live in two houses at once. I’ve seen cases where people have bought for example
many houses which they don't use or rent out to earn money, which end up depreciating in value
due to lack of maintenance. In other words, spend on what you can manage,
utilize it and maintain it well. Another example is a closet full of clothes that
have never been worn for years. This is wasting your hard-earned money, and should be avoided.
7. Planning for retirement early When we are in our youth and just started earning,
we see retirement as something that is very far away, and don't find it necessary to plan for. As
years go by, you’ll finds out that, it’s actually important to think ahead and make choices on how
you want to retire. However, this in most cases happens after working for a number of years.
Planning early for retirement ensures that you have a longer time to save
and grow your savings through compounding in the financial product you choose to invest in.
There are so many retirement schemes available in the market for those in employment or in
self-employment. It is crucial that you do your research to identify a good scheme,
since this is a long term project. You don't want to work hard for years and
then discover that your money has been mismanaged or lost altogether.
People retiring at an early age from formal employment are more versatile as they can still
continue earning and making money. But for the elderly who retire at seventy years and above,
not many are willing to continue working for money, so their retirement savings comes in handy.
For your own good, start your retirement savings early when you are still young,
especially if you want to be financially healthy in your twilight years.
8. Don't put your money where it does not earn interest
Savings account generally earn very little or no interest. When you save your money in
these accounts, you are actually enriching the banks or the financial institution
you have partnered with through service charges, taxes and others. It is more lucrative to put your
money where you will earn a high interest and allow your money to grow. Money market funds
offer better rates than banks, so it is necessary to identify where you should keep your money.
This is an area where you don't want to rush but carefully search for the right places to invest.
You can spread your risks by using different investment partners that suit the goals you
want to achieve. People are at times scared as to where to invest since there are so many
unscrupulous firms out there which don't manage funds well in the interest of their customers.
But on the other hand, we have very good and legitimate institutions
that are approved to manage people's funds.
You should use your networks to get referrals that will point you in the right direction.
9. Not every deal will make you money In today's fast paced world, there are
many people selling ideas on how to get rich quickly or how to make or multiply
your money fast. You may want to be a bit wary of such, and take a step backwards and review.
There are some deals that promise unrealistic high yields that people have fallen prey to and lost
heavily. Although not all deals are bad, one needs to practice caution so that you only engage with
legitimate people. Deals can also start well but later gets sour causing you to lose money.
Not all deals are worth your time and money, so choose wisely.
On the other hand, you also don't want to miss out on good opportunities so you need to weigh your
options and take only those risks that you can mitigate. Sometimes you need to have the A to Z
of a project, so that you make the best decision before you jump into the deal.
You can also invest minimally as you test the waters to determine if it is really worth it.
Well, I hope you learned something from this video, and give it a thumbs up if
you enjoyed the content. With that said, have great day and see you in the next one.