Three Basic Concepts about Money

1. Money is just like anything else, we need to understand it.

One of my best friends called me “money-making” person. She basically meant that I am always thinking of making money because every time we communicate or meet, I always attempt to talk or share about money though she refuses to listen. She told me that in life, money is not important as long as you are happy. True! I agree with that.

But how can we be happy if we cannot provide for our needs, our family and our love ones? Money is not bad, as what a lot of people think, it depends on the purpose of the person, the reasons why money is important. We need to understand money, we need to know its purpose and with that we can control money, not the other way around.

2. We need to know how to accumulate it.

After knowing the reasons why, we need to know how to accumulate money and it is very simple but hard to do: DISCIPLINE, discipline of saving.

I am a very thrifty person and a little bit stingy to myself. I love to save money. I remembered when I was still in college; I eat “monggos” (Mongo beans) 5php and 1 cup of rice 5php for lunch to save money, only 10php for lunch and I save the rest of my allowance. The result: a stick-like person named me! Though eventually I leaned to value my health by eating right and enough, my point is that saving has always been my habit.

As I grow knowledgeable in terms of money, I realized that saving is not a habit, but a “must” to everybody. Saving should be a discipline to everyone if they all want to become wealthy. Just like losing or gaining weight, you must have the discipline to eat right and do exercise. Just like quitting the habit of smoking, you must have the discipline to control the urge and do other things to divert that need. To become financially wealthy, you must have the discipline to save in order to accumulate a lot of money. However, people always want things to be instant: instant noodles, instant coffee, instant mami and instant money. That’s why many people are betting in lotto to earn that instant money, not knowing they can accumulate money through the discipline of saving (see link).

3. Lastly, we need to know how it works and grows.

Money works through interest rates. Say for example you have 1.2M php and you put it in an investment or savings that earns 10% per year. Then that means you receive 1.2M x 10% = 120T per year divided by 12 months, you get 10T per month.

The question: did you work for the 10T per month?

Answer: NO. Money now is working for you. The only challenging part is accumulating that big amount which again can be done by no.2: the discipline of saving. Since money works through interest rates, then we must make interest rate our friend. Most people are making interest rates their enemy through debts (esp. credit cards). That’s why instead of money working for them, money is working against them thus a lot are constantly living in debt.

So, what’s the interest rate of your savings? Or any savings at all?

Again, money is just like anything else, we need to understand it, we need to know how to accumulate it and we need to know how it works and grows.

Truly, money is not important but the people that you can make happy with it.