Save for the raining day, they say. Learning to make money and managing the money are two different things. When you manage money properly, you can even multiply it while you sleep. These are skills that are taught, but are usually mastered by a few.
The Challenge
In many third world countries, a significant amount of the poverty is as a result of the poor planning and a lack of financial education. Financial illiteracy is a norm there. Also, funds are not properly utilised, and even natural resources are squandered. That poses a huge problem.
These problems are not only on a national level. Individuals and the society at large, also have these problems. In schools, the tutors teaching “economics” are not even saving themselves. I find it to difficult to under how students will listen to their teachers if they are only talking, and not doing.
Even if you are not exposed to financial education at an early age, that’s not the end. Planning and money management can always be learnt. And you don’t have to go to business schools to learn basic savings and investment principles. You only do that when you desire to have a career in management.
The Ideology
There’s this saying that people that do not take saving and investment seriously usually tell themselves; “tomorrow will take care of itself.” But, will it? When you have not set the precedents?
They feel saving for an unknown future is futile, since unforeseen circumstances could befall them. The ideology itself may not be entirely wrong, but the reasons behind the ideology could be the problem. If you saying that as a result of laziness, then I’m here to tell you it doesn’t work that way.
Imagine the combination of two individuals with poor financial education, coming to from a union – getting married. The man has poor financial foundations, and the woman not any different. That union will merely be based on sheer optimism. Hoping for a miracle, but what if the miracle never comes?
Let’s say things went smooth for them for a couple of years. What about when there is financial crisis? There would come a time when kids will need to go to school and rents will need to be paid. As the day progresses, the cost for running a home keeps increasing. Oh, that would be a bad story.
The fact about marriages is that it comes with financial responsibilities. There are times where financial problems become a threat to a happy marriage. That is the sad reality. A friend who works as a divorce lawyer tells me some funny cases she handles, and sadly a majority of the case are money-oriented.
Overcoming Poverty
These three steps should not be looked down on, it should be in this order; making money > saving money > investing money. You can’t invest money that you have not saved, and you cannot save money that you have not made. As for the making part, there are several guides to making money on the Internet. You can as well make money on Hive.
In order to make financial progress, you need to make some sacrifices. The Englishman would say; you can’t have your cake and eat it. The reason poverty is rampant in third world countries is the mentality of some of the individuals. I’ve lived in some African cities, so I tell you from my experience.
In some countries in Africa, you would notice that circle of poor finances have traveled from one generation to another. At times, it seem like there is no hope. But when individuals from these counties travel abroad, they change their mentality. A majority of businesses region are owned by individuals that desired to leave poverty and its generational inheritance.
How can I improve my financial literacy?
Yeah, the truth is you can improve your financial literacy even when you do not have funds to go to college. And I think, it is the key to solving some of the problems in developing countries as well.
First you have to learn, then act on what you’ve learn. So many free course on finance on the Internet. You can read that during your free time. When you learn more about finance, you also do well to help those around you. The knowledge is not for you only.
Also, you may need a mentor. Perhaps, some one that understand your state, that was once in your shoes. I’ve seen worse individuals from slums and huts build big estates. It’s the knowledge that differentiates a man in a hut and the man in the house.
You need to develop an investment mentality. Okay, this is were some people get it wrong. You do not have to buy things that you do not actually need. People tend to replace needs with wants. So as a potential investor, you have to throw away any wasteful desires you have.
There are concepts that need to learn, such as investment opportunities, good interest rates, how to avoid being scammed and more importantly the concept of capital preservation. It is very possible to learn all this, but do not be in a hurry. When one is in a hurry to make money, he/she end up putting money in ponzis or getting scammed.
Final Note
Everyone can become an investor. There is no body born with knowledge. Knowledge is attained gradually. And as already mentioned, you need to learn to save money before you can become an investor.
This is an introduction to an investment series I would be talking about. I’m glad to have your attention. I’d love to see your responses.