The Importance of Money
When asked, most people would say that money is not the most important thing in life. When pressed to elaborate most would rank family, friends and relationships ahead of money.
What this means is that money finances our existence and determines the quality of that existence, but money doesn’t give meaning to our lives.
However, that doesn’t lessen the importance of money in our lives. Here are just a few of the really good things that money can do.
Money Provides Choices
- Money helps eliminate poverty
- Money provides choices that simply aren’t available in poverty
- Money allows you to buy ‘wants’ – i.e. your discretionary bucket list
- Money can help others in a range of ways
- Money buys lifestyle – i.e. where you live, how you live, where you spend your money, and who you socialise with
- Money provides you the choice to access high quality healthy food, good nutrition and a program of regular exercise
- Money can’t rule your health but it can buy quality healthcare services, top insurance cover, regular medical check-ups, overseas treatments and expensive medications if required
So money is actually a critically important part of everyone’s life. The difference is that some people embrace the need for money and maintain a positive relationship with it. They recognise the value of the dreams it can achieve for themselves and for others.
Others do not. The other prime importance of money is its potential to create more money.
Money Makes More Money
Wealthy people are wealthy and stay wealthy because they know how to manage the business of money. Money will stay in your hands if you realise not only its value, but also its potential to create more value.
Managing your money is not intuitively obvious which is why most people aren’t wealthy and most people don’t make wealth building a priority.
Regardless of where you spend your money with the intention of making more money, there are a few basic elements you should know.
Wealth is an abundance of money and valuable possessions, either owned or controlled, which earn more money; and / or increase in value over time.
Building wealth always involves placing money into an environment with some risk so managing risk and protecting wealth are essential to the process
One man’s conservative investment is another man’s sleepless night
Every true investment has an income return and a growth return
A bank account is not an investment; it is money that you lend to the bank for the use of which you are paid an income payment called ‘interest’
An investment can be a passively managed investment such as a listed share or an investment property; or an actively managed investment such as a business or money making enterprise
When you invest in a business, you are leveraging off resources you employ, (i.e. people, machines, systems, technology and intellectual property)
The power of compounding returns over time creates more value
Diversification means not putting all ‘wealth’ eggs in one basket
Important … please read this!
What we presenting in this article is educational information only. Our aim is to empower you to manage your own money and make better financial decisions. The factual information presented here should not be regarded as advice. All users of our services should seek their own independent advice about their personal circumstances.