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The Importance Of A Good Money Mindset

Updated on November 27, 2016
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Money is a tool for living, so it is important to learn to respect it. In a cashless economy, goods and services are traded and bartered. Money enables the process to be more accurate.

There are three ways to earn money; working for pay, selling a product, and investments.

WORKING

How you will earn a living is a very important decision. Doing well in high school is just the beginning; from there, you can choose college or a trade school to acquire the skills you need. Generally, the more highly skilled a person is, the better he or she is paid. The lifestyle you live is dependent on this, so it's not a decision to make lightly.

SELLING

Owning your own business is the ultimate American dream, but a mistake many people make is to look only at the "gross receipts", income earned from sales. Owning your own business requires a high degree of organization; you need money for startup and continuing expenses. You also need to save money for times when sales are slow, or you're unable to work. Most businesses fail within 5 years because of inaccurate attitudes regarding money.

A business owner must decide what quality of product to sell. Shoddy products can be sold at a lower price, and they have to be replaced more often. However, with important purchases, people tend to be more willing to pay a higher price for better quality. Also, shoddy products lead to a poor reputation, which will ruin sales altogether. It is better to make fewer sales at the beginning, and maintain a good reputation.

INVESTING

This involves loaning money to a company, which pays interest during the term of the loan. A basic passbook savings account is a form of investment, since the bank is able to use the money. Many people feel as if they're depriving themselves when they save money, rather than spending it. This belief is very destructive. People need to realize that the easiest way to earn money is to have it work for you. Passing up frivolous purchases to save money is a good idea, when you consider the payoff.

You can get higher rates by locking your money into a certificate of deposit; however, you must leave it in for the specified amount of time, or pay penalties.

Other ways to invest are through stocks and bonds. Bonds, like certificates of deposit, lock your money in for a specific amount of time. Stocks tend to earn more money than bonds, but they can also lose value, so they are riskier. As a rule, the safer the investment, the lower the interest rate.

A NOTE ON BORROWING

It is extremely important to borrow money wisely, because you pay interest on your loan. Going into debt for frivolous purchases may mean you're still paying for them long after their usefulness. So one must always count the true cost whenever deciding to take on debt.

In conclusion, money is a powerful tool. With respect, it will serve you well. Ultimately, true wealth is measured not in how many fancy objects people have, but how well they have learned to manage their money.

The Road to Wealth
The Road to Wealth

This book details various ways to invest money. It talks about stocks, bonds, mutual funds, annuities, buying real estate, and a lot more.

 

© 2012 Yoleen Lucas

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    • Say Yes To Life profile image
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      Yoleen Lucas 4 years ago from Big Island of Hawaii

      When you acquire money in legal ways, you're moreli likely to keep it. When you do so in illegal ways, you'll get more, and much fraster, but you're also more likely to get picked off by the ripe old age of thirty.

    • profile image

      Benjamin Chege 4 years ago

      I am also in the learning stage. We will get there. It does not matter how you get there, as long as you get there. However, one must make sure to do it within the limits of the law.

    • Say Yes To Life profile image
      Author

      Yoleen Lucas 4 years ago from Big Island of Hawaii

      I used to spend more than I made. That changed when I had to be fully responsible for myself while working a series of abusive jobs. Now I'm obsessed with saving and investing!

    • profile image

      Benjamin Chege 4 years ago

      Useful and awesome hub. I think people need to learn that nothing comes easy. Great investors have been great employees at one stage or the other, but the difference between them and those who are stuck in the rat race is their perseverance after starting up a winning business, the power of borrowing, and going for opportunities at the right time before everyone does. Nice read.