Finance is never taught in school. If it helps, finance is the thing that we all avoid. The whole system seems too bundled and different to understand and be taught to children. The only reason we are not financially intelligent is that we are never told how much it is important to understand how money works. Money is not just there to be earned or spent money is there to be used as a tool to craft your life. There are many books such as the psychology of money, and the Intelligent investor. These books can help you to understand how money works and how to be sensitive about money and financial matters. The two books were respectively rated by Napoleon Hill and Benjamin Graham. In both books, you will understand how much is it important to understand money before earning it? Because we associate money with absolute value, we never understand that it can be an asset. We just gather money and think we are rich. More money is not going to solve your problems, it is just going to make you think that you are rich, while you’re not. Your 20s are the time when you understand the world, and how the world works. What are the things that are going on in the world, and how do they affect you. But you need to understand that finance is a thing that is going to stay with you till the end of your days. And if you’re not serious about finance in your 20s, your 60s or 70s are not going to be smooth as you want them to be.
Understand how to save money.
Saving money seems like a big task or just an easy thing, but it is not as easy as it seems. Managing money is harder than earning money. Because you are thinking that it is my money and I will spend it wherever I want, and that seems like a viable option to use it. Money gives you a sense of power. The purchasing power upon which the whole market functions. But if you do not understand the power that money gives you, you may be the victim of the power. Spend whatever you save after saving. This is a very important thing to understand because you have to prioritize your savings first.
Educate yourself about investment.
Savings and investments go a long way in human history. Understand how an investment works, how to invest, where to invest, and how to analyze any investment. Investments are going to make you a lot more power from your brain’s perspective. As you think you are. You will understand how exactly your money is going to function. How will you make your money from the existing money that you will have? And how to save money from being retrograded? Remember, the real power is managing money and not spending it.
Compounding is creation.
Compounding numbers is the biggest miracle in this world. And not just a miracle of magic, it’s a miracle of systems. If you’re patient enough and you’re making the right moves calculated moves, then your value will be compounded over the years and you will get the benefit. Always remember that you need to invest and understand how the system works. Do not be obsessed with investments as well as do not be negligent. Compounding will work in your favor the way you intend it to be. If you’re against growth, compounding will be against you. Understand where the growth goes and follow the path with full discipline.
In our 20s, our hormones are almost stable. But we are earning money and that gives us a push to be independent in our choices. Often we become the victim of the inflated valuation of money. Where we think we have money for a certain thing and we do not calculate our other expenses at that particular time and end up spending more than we should be. The fact is 20s other time when nobody expects you to be rich. And fairly, We shouldn’t be tempted to look rich. Big companies do not target rich people. They just target people who want to look rich but are poor. To understand the bigger difference between need and want and spending on your needs and spare your wants for some time you will be a better money manager.