Author: Mark Rummel

During the past few weeks, we have discussed the first component of financial literacy, earning.

The next segment we will explore is spending. By this point, you should be aware of where your income derives from and how much of it is disposable/available to use for whatever you desire. In a perfect world, all our money would be disposable and never-ending.

Who doesn’t like to spend money? That is its purpose, correct? Wrong. In and of itself, money has no real value. It is as valuable as we make it to be. Money’s purpose is not for frivolous spending,

“Money derives its value by virtue of its functions: as a medium of exchange, a unit of measurement, and a storehouse for wealth” (Beattie, 2020).

Now that we have a general understanding of money, let’s look closely at its function.

Spending money should be a well thought-out process. A process that affords you the ability to use it as a tool and not a precious possession. Spending can “be regarded as complementary to personal saving, investment spending, and production in an economy” (Investopedia Staff, 2020). In layman’s terms, spending money is/should be the perfect way to increase your overall value.

You may be reading this and thinking, “that makes no sense,” and you are correct. In this current mindset, it is insane. However, it would be best if you let go of the current definition of “spending.” Money is not spent; it is used. The value lies in what you are gaining due to using it as a point of exchange. Are you exchanging it to grow your savings, assets (anything with value) and fuel the economy so that you can make more?

It’s the idea of your money should be making money for you. If your money is not making money for you, it is not that you don’t have enough. But could it be that you don’t budget well? Good budgeting and planning are the bedrock of good spending. Budgeting is just planning how you will spend money so that you able to meet your financial goals. During the next seven days, please take a moment and seriously consider your monetary objectives, write them down.

Next week we will be taking a closer look at budgeting so that you can reach those goals. Let’s build!

References:
Staff, I. (2020, December 30). Consumer spending definition. Retrieved February 25, 2021, from https://www.investopedia.com/terms/c/consumer-spending.asp

Beatie, A. (2020, July 17). The History of Money from Barter to Banknotes. Retrieved February 25, 2021, from https://www.investopedia.com/articles/07/roots_of_money.asp

Financial Literacy is broad and deep. There is much to be understood and gained from seeking the understanding of being financially responsible. This week we will continue in exploring the first component of financial Literacy – earn.

Now that we are aware of what it means to earn money, let us examine making money. Making money is what the “American Dream” is all about. It is the cornerstone of American capitalism, entrepreneurship. For the sake of staying on topic, we will dig deeper into capitalism in a later blog. Making is “when you use your own time and energy and a bit of creativity once and get paid over and over and over again” (Donati, 2020). It is your dream and passion on display in ownership form. Making money is when you are independent of another source for financial growth.

Making money can look several ways. For example, observing a societal need and providing it need repeatedly is making money. Bottling water – think of how society has benefited greatly from one idea and think of how much money that person has made and will continue to make. That one idea has placed that person in the driver’s seat of their life related to financial wellbeing. Other examples are writing a book, starting a business by meeting a small local need, or in this digital age of being a social media influencer.

In the finance world, this is referenced as passive income. Any entrepreneur would express that there is nothing passive about making money freely. It takes grit, hard work, and dedication while earning money to keep producing cash, but it’s attainable. What is the takeaway? In whatever way you choose to get your money, be sure that it is decent. Be sure it pulls you just a little closer to financial freedom. Earning from an entity provides you with the safety net and surety that you will have an income for hours spent working. It is a great place to start if what you are choosing as an avenue to make money has a slow return. The name of the game is – earn! In all, you do make sure that you are earning. Let’s Build!

Reference:
Donati, E. (2020b, August 25). How to Earn Money vs How to Make Money. Mint.Com. https://mint.intuit.com/blog/personal-finance/yes-earning-money-and-making-money-are-different/