What Does Your Money Say About You?
In a one-word answer, your money says EVERYTHING about you, but how many people recognize the types of money in their life?
Essentially, there are three types of money.
In your pocket, wallet, or purse you carry around your Basic money. This is the money that you’ll use to buy a coffee, a newspaper, or the morning paper.
Your Basic money will carry through to lunch, dinner, and picking up that loaf of bread and jar of peanut butter at the convenience market while you’re gassing up.
So, you get the idea that your Basic money is the money that you carry around with you for those “basic” daily needs.
The next type of money that enters your life is the Current-Need money.
Your Current-Need money is usually saved or set aside for those expenses that you’ll encounter over the next twelve months.
These are things like your car and health insurance premiums, car payments, mortgage, cable bill, groceries, tuition, house maintenance, and the like.
Getting to the third type is where the action is. It’s your Long-Term money.
This is the money that you will not need over the next year, but will probably tap after a year, a decade, a working lifetime, or a combination of all of these… or somewhere in between.
This isn’t to be confused with your emergency money nest egg, which could be called a fourth type of money, but it’s just common sense that you should have something tucked away.
The money that you have squirreled away for a rainy day is just that; put aside for emergencies.
No, this third type of money is the money that you have to get working for you.
Some choose to keep all their money in a savings account or some sort of passbook account with a fancy name.
Saving is not investing. It’s just parked money and you’re betting that your money will earn more than the rate of inflation.
This means; that even though your money is earning interest, the value of your money over time is losing purchasing power.
Just look at the price of gasoline a year or two ago; it’s changed, well, it’s more than changed; it’s jumped.
I don’t see any ads for financial institutions boasting about the interest that they will pay you on your money have “jumped.” Have YOU?
So, what do you do with your Long-Term money?
Saving part of it is fine, but I did just say “part of it.”
The majority of it has to be working for you.
Some people look to the stock market to make their money grow, but most will invest when the headlines are rosy and everyone is jumping in.
The reason is; that it’s easy to follow. Doing some reading and researching and entering when others are afraid is work.
It’s a lot of work.
So, it’s safe to say that Warren Buffet works hard, but he seems to always be among the top three richest men in the world.
If you are looking for the easy fast buck, you have either already lost a lot of money or you are about to.
Wealth is built slowly. It’s built on sound ideas and the facts. Don’t confuse facts with some “so-called facts” that somebody tries to sell you on.
Wall Street is the largest financial market in the world and there are dozens of approaches, hundreds of thousands of opinions, and more salespeople trying to tell you what to do with your money… it can be a bit dizzying.
Most people don’t know that the Dow Jones Industrial Average is only made up of just 30 stocks.
If you don’t believe me; just ask some people around you: How many companies make up the Dow Jones Industrial Average?
Make it a multiple-choice question. You’ll be amazed at the answers. Most people don’t know… and it’s surprising how many people who don’t know, are willing to give you investment advice.
The media makes a big deal about the Federal Reserve cutting or raising interest rates; most don’t understand what it means.
In simple terms, more money becomes available when the Fed cuts rates and less money is available in the economy when the Fed raises rates. If you are not tied to an interest-rate-sensitive investment, you don’t have to concern yourself too much.
Remember when car loans were 18, 20, and 22 percent during the out-of-control inflation years during the President Carter administration?
Higher interest rates may make financing tougher, but on the bright side, it narrows the field of the people who can afford to get into a deal.
If you wait for an ideal situation to invest, you probably won’t be making many investments.
It can easily be researched that the economy of the country that you live in and the economies of the world move in cycles and they’re never all in sync.
This brings up international investing. People complain about China grabbing up manufacturing jobs.
The truth is; that Chinese labor is cheap, but with the new wealth from the economic growth, the country is dealing with inflation and consumer demand… but demand from where?
First World products and services are being consumed by the people of China and with a rising lifestyle and wages… manufacturers are looking to Vietnam for cheaper labor… and the line is long.
Cambodia, Laos… All have cheap labor compared to the developed nations.
So, broaden your horizon and you’ll spot a trend, an opportunity, or lock in on an idea.
I entered into manufacturing and importing when I discovered the cheap labor in Southeast Asia.
The point is; open your eyes, do your research, and don’t be so eager to give up your hard-earned and saved money to some get-rich-quick scheme.
Don’t expect someone to hand you a billion-dollar idea. Small steps, small lessons, and a big appetite for information will help you hold onto your money.
Some people think that if their money is just sitting, they’re losing out.
Adopt the mindset; that you’re waiting for the right opportunity to jump on.
And you don’t have to throw your life savings into one investment.
Just nibble at it. Buy some and if it feels good, buy or invest a little more.
Any stock portfolio begins with one purchase. Usually, a real estate empire begins with a single property… and McDonald’s began with a single location.
What they all had in common was their ability to grow.
Look for the system, not the killing and you’ll make the money.
Be willing to try new things, and new investments, read different materials, and go to different places… because you’ll never know what you’ll discover.
Wealth is built slowly, but you had better get building.
