Building Wealth and Finding Financial Independence

I was on my way to a meeting and found many people lined up for an MRT ride. The people then are not this much. Instantly I thought about how hard it really must be for all these people to struggle each day to reach their jobs and still could not make both ends meet. Some people blame the government for not having enough jobs to offer. Or the low salaries that these people make each month, or the ever-increasing costs of prime commodities make it even harder for everyone. That being said, it is almost impossible to save something for emergency funds or even for their retirement. But is that really how things are?

Apart from these ordinary people, even some entrepreneurs fail to safely keep a tiny amount for their future needs. Most of them are not truly aware of the difference between saving money and investing money. Although they may sound alike, they are entirely different things. They play different roles in your financial strategy. Therefore, everyone must become aware what is the difference between the two.

Anyone’s most sincere desire is to have a comfortable life, most especially when they reach retirement. While you may have often heard your parents tell you to save your money, there is more to just keeping in building wealth and financial independence. Being able to do this would mean having a stress-free life, of course.

I have seen so many entrepreneurs and have spoken to some of them who lost everything they owned because they did not appreciate the role of cash in their lives. Although they may have a vision of what they want for their future, they just seem to be unaware of managing their money correctly.

Unless you are a son or a daughter of successful entrepreneurs or investors, it’s unlikely that anyone would have taught you this. Saving and investing money have distinct roles in our lives that we must determine to make it work for us.

Saving Money

Saving money is the process of placing cold cash aside and keeping it in a safe place and can be sold or accessed in a concise amount of time. This can be in the form of savings and checking accounts secured by the PDIC. This may also include Treasury Bills and money market accounts.

In simple terms, the cash reserves must be readily available for you to take hold of with minimal delay no matter what. Suffice it to say, although it may not be as safe, some old folks would have used bamboo coin banks to keep their money as some of them feel unsafe placing them in a bank.

The practicality of having ATM/Debit cards allows us to take out money when we are in dire need.

Investing Money

Investing money is a way of using your cash or as capital to buy an asset that has a reasonable probability of generating a safe rate of return over some time. This means that it helps you earn a certain amount of money which depends on the type of investment you make. Such investments may be in the form of stocks, bonds, and real estate. The amount you earn from these investments depends on the interest rate given by the bank, insurance, or other companies you may be interested in.

Generally, the amount of money you save should be enough to cover your daily expenses. That includes your loan payments, utility bills, mortgage payments, insurance costs, food and clothing expenses for at least six months. Therefore, you need to make a monthly budget to determine if your household’s amount in a month is sufficient to pay everything. Always take a portion of your salary to be placed as an emergency fund.

Although there is a need to consider putting up an investment, this may only be possible if you have more money after paying everything off. Keep in mind that you saving money should be your priority. And only such time when you think that you have more than you need can you start investing. A word of advice, please make sure that you are placing your money on a suitable investment. Don’t be afraid to ask. Learn about how much it would earn and at what rate or other options can make your money grow.

There are so many things out there that tempt us to have one for ourselves. But do we really need them? Or do we just want to keep up with the Joneses? Create an artificial scarcity for you to build wealth and increase the capital that can be helpful for your future needs. You will be surprised how the power of compounding works its magic!

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You may contact Armando “Butz” Bartolome for questions and more information.

By email: aob@gmb.ph

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Linkedin: https://www.linkedin.com/in/franguru/ 

Website: https://www.gmb.ph