Financial Education & Knowledge Never Thought in Schools

Our school system does a good job in teaching us math, writing and reading, but they do awful preparing people to work with money. Most people who graduate in the school system are financially uneducated. If you have plenty, should have a high level of financial The good news is that you can learn financial education. It takes effort, much study, and controlled testing of trial and error. But the result is worth the effort.

1. The Difference Between Assets & Liabilities

Many people assume that know what an asset is.

For example: you probably think your house is an asset but it is not. Actually there are basically two definitions for an asset. A definition used by some accountants, which requires a lot of understanding complex accounting terms. Then uses this definition produces financial statements of individuals or companies that reflect something better than it actually is. 

Instead, the rich use another definition much more practical and simple. 

"Assets are things that put money in your pocket and 

Liabilities are things that take money out of your pocket."

Now considering this definition, your house is not an asset, because it takes money out of your pocket every month to pay for electricity, water, toilet, taxes, etc.. On the other hand, if you have your home for rent. Then, this can be an asset. As long as you produce monthly cash flow in your pocket.

2. Cash Flow vs Capital Gain

This is another big difference between the rich and the rest of the people. Rich people invest for cash flow. Simply put, working for capital gains is like playing craps. You invest and expect prices to rise to win. The problem is that investing for cash flow, requires a financial education, so most prefer to invest for capital gains.

3. Good Debts & Bad Debts

Probably your financial adviser tells you that debt is bad and paying high taxes is inevitable. But the rich understand that debt and taxes can be used to generate great wealth. When it comes to debt, there are two types of debt. Bad debts and Good debts. 

Bad Debts are usually purchased in the form of loans to buy liabilities through credit cards to buy clothes or a new phone, ask for a loan to go for a holiday and others. In that case, stay out of debt is good advice. 

Good Debts good are acquired to buy assets, the trouble is that to acquire also requires a high level of financial literacy.

4. Take your own financial decisions

When you do not trust your own financial education, usually placed in the hands of others that decision. You allow your broker to decide how to invest your money. 

But the rich are not the majority. They set the trend and leave when the trend is common. But what is the secret? They think for themselves about money and make their own decisions. They do not leave it to others. And they can do that because they have a financial education. The key to building a fortune is to have a great knowledge to act and great wisdom to know what course of action is best. This type of knowledge comes only apply yourself obtain financial education and apply it to their own situation.

Are you ready to increase your confidence about money? Are you ready to make your own financial decisions? If you are NOT....then you will always be part of the "majority"