The phrase "Live with Financial Literacy" makes it clear that it is important to emphasize the importance of financial education in our daily lives. This emphasizes that we should have a proper understanding of financial management and make decisions considering the use of our money. By living with financial literacy, we can increase our financial well-being and achieve our goals.
1. Harness the power of supply and demand to your advantage and unlock unique opportunities.
While we're familiar with how supply and demand affect prices, we often overlook applying these principles to our own careers. Consider this: if a particular field is saturated with aspiring professionals, it becomes challenging to make a substantial income from it. However, by exploring less popular or niche areas where your skills are scarce or exceptional, you can unlock the potential for significant financial rewards. In essence, choosing a career should involve a different approach that embraces untapped markets and uncharted territories.
2. When your career hits a roadblock, gracefully exit the current path and embark on a new journey.
Conduct thorough research on salary ranges and career prospects for various occupations, leveraging resources such as the Bureau of Labor Statistics Occupational Outlook Handbook (available in the US). Identify well-paying jobs and consider investing in further education or training to qualify for those positions. Look for employers who offer competitive wages and ample opportunities for advancement, setting yourself up for a successful career transition.
3. If your ultimate goal is early retirement, prioritize salary potential over immediate job satisfaction.
Since your aim is to break free from the rat race, seek out professions that offer exceptional returns through hard work, even if they lack psychological fulfillment or an ideal lifestyle. Industries like banking, investment, sales, or engineering can provide substantial financial rewards. By keeping your expenses low and dedicating a decade or so to these high-paying fields, you can amass considerable savings, allowing for early retirement or providing additional income to support a lower-paying job you truly love. Remember, achieving long-term satisfaction requires clear goal planning and unwavering determination.
4. Recognize the invaluable worth of time.
As Benjamin Franklin, the accomplished American inventor, journalist, printer, diplomat, and statesman, wisely said, "Time is money." Your ability to manage time effectively is a crucial component of your earning potential, whether you are employed or self-employed. Understand how you spend your time and identify the most profitable activities versus time-wasting ones. Focus more on the former and minimize the latter. Complete tasks efficiently and with excellence, prioritizing your most important objectives. By working diligently and maximizing your time, you not only benefit yourself but also gain the appreciation of your superiors or clients. Always remember that time is a finite resource, and investing it wisely can yield significant returns.
5. Embrace the power of price increase.
If you provide technology, services, or goods that are in high demand with limited supply, seize the opportunity to enhance your earnings. Unfortunately, many people shy away from asking for what they deserve, often due to modesty or fear. If you find yourself among them, it's time to shed the habit of being overly accommodating. If you're employed, don't hesitate to negotiate a raise or seek a promotion. If these avenues prove fruitless, consider revisiting the alternative career options mentioned earlier. If you're self-employed, ensure your customers and clients pay you promptly, as this alone can significantly boost your income. Additionally, assess your competitors' pricing strategies—should your superior product or service warrant it, aim for at least an average price. Unless your profits rely on mass production, you might be surprised by the fortune awaiting you without even needing this advice!
6. Stay proactive and defy Murphy's Law:
"Anything that can go wrong will go wrong." Create meticulous plans, perform multiple calculations, and anticipate potential pitfalls in every step of your journey. Develop contingency and backup plans for various scenarios—leaving nothing to chance. For instance, when crafting a business plan, determine your breakeven point and then multiply that timeframe by three for a more realistic projection. Factor in an additional 20% to account for unexpected expenses. The best defense against Murphy's Law is thorough preparation and self-protection. Consider obtaining a reasonable amount of insurance coverage. Remember the words of renowned French chemist Louis Pasteur, who made groundbreaking contributions to disease prevention and treatment: "Fortune favors the prepared."
7. Reevaluate your definition of wealth.
Surprising studies on millionaires reveal that they are not solely doctors, lawyers, or entrepreneurs living in lavish mansions with flashy cars. True wealth lies in living life on your own terms and investing abundantly in assets rather than accumulating debt. As you follow the steps outlined above and increase your income, bear in mind that more money doesn't necessarily equate to greater wealth. Many individuals who flaunt their affluence often have minimal net worth due to high levels of indebtedness. Focus on building assets and maintaining a healthy debt-to-equity ratio to truly attain lasting wealth.
8. Make every penny count.
It's not just about earning more money; saving money can be just as valuable. Think about it this way: every penny you save is a penny you don't have to pay taxes on. Let's say you have the option to earn an extra $100 or save $100. If you have to pay 15% in taxes, that extra income actually becomes $85. However, if you manage to save $100 from your existing budget, every penny of it remains in your possession. And if you take advantage of compound interest in savings accounts, your savings can grow exponentially over time.
9. Make the most of tax laws available to you if you're self-employed.
Saving on taxes is also a way to save money. Keep proper records of your business expenses, such as home office use, vehicle use, and office supplies, as you may be able to deduct them. Look into tax breaks like deducting health insurance payments. These laws exist to benefit businesses, so make sure you're not missing out on potential savings.
10. Check if your company offers a retirement plan.
Many employers will match your contributions to a retirement fund. These plans also provide the benefit of tax deferral. The longer your savings grow (with interest), the better. Start planning for retirement early to maximize the benefits.
11. Understand the difference between assets and liabilities.
Assets have the power to fill your pocket with money, whereas liabilities drain money from your pocket. Your house, for example, might be a beloved possession, but it's actually a liability if you're continuously putting money into it instead of earning from it (unless you're selling or renting it out). Focus on investing in assets like stocks, mutual funds, copyrights, or patent rights that generate interest, royalties, or other income. Let your assets work for you, so you can sit back and make money!
12. Stay ahead of inflation.
Over time, inflation gradually erodes the value of your assets. You often hear older people say that they could get more for their money in the past. To combat inflation, learn to invest wisely. While savings accounts may help you keep up, to outpace inflation, consider investing in bonds, stocks, or other investments that offer higher returns (currently around 3%-4%). Stay one step ahead of inflation and make your money work harder for you.
