It’s been said time and again that money is the root of all evil; many disagree and claim that it’s not money which is evil, but the love of money is.
I disagree on both points.
I don’t think that either money or the love of it is the root of all evil in this world. I firmly believe that if we let money love us the right way, it could very well be the spring by which all good things come from, rather than that sad claim of it being the root of all evil. As it was said in the book “The Perks of Being a Wallflower”, we only accept the love we think we deserve.
So, here are 3 principles we can build on to let our money love us the right way.
Principle # 1 Do not work for money, let money work for you.
I hope by now you understand the concepts of active and passive incomes, for these two are the core of our first principle.
In case they are still not clear to you, Active Income is when you have to allot your time, skill and resources in order to earn that income. This is when you have to actively use up the resources available to you in order to earn. A day job, where you come in at 8 AM and spend the rest of your day in your office is the perfect example of active income. Active income, per se, is not bad and majority of the population usually start out earning through active income.
The main issue with active income is that you have to remember you will not have the same skill level, and competency forever. You may always have the same amount of time, but you will want to do other things with your time – a growing family, wanting to visit more places for travel, more hobbies, help more people. At one point, you cannot devote your entire time to work. Does that mean, you will have to earn less? Think about it.
Passive Income, on the other hand, is on a whole different case altogether. After allotting your initial resources, you can forget about it, and yet it allows you to earn. Don’t you find it amazing how you can invest your money in a company, let the company do its job, and at the end of the day you earn dividends or your stocks appreciate, giving you returns on your investments? For the more creative lot, they can write a song, sell it to a record company and just receive royalties from that same song moving forward.
With passive income, you let the money do the working, rather than the other way around, because remember your time is best spent playing with your children, and creating memories with them, or helping other people. Your time is best spent chasing that dream destination, rather than slaving your way in your desk job.
There are a lot of ways to earn passive income. Do your research and pick up that mindset. Find your niche, and study how you can earn passive income from it. Earn in the stock market, write a book, create a website; there are options out there.
Principle # 2 Leverage on the power of compounding, and of time.
Compound interest is one of man’s best inventions. Sadly, it’s a double-edged sword that could very well work for you, or against you. If you have debt, compounded interest will balloon up your debt over time. Conversely, if you invest your money in a good financial instrument, it will multiply your money to so much more than what you had when you started out.
On both cases, aside from compound interest, what do you think was the second indispensable factor you need to consider? The answer is time. Putting your money will balloon up or down, depending on the instrument, over time.
So make sure you take advantage of compound interest – pay off your debt, and start investing. Make time your ally, and start now.
Principle #3 Live a notch lower your actual means.
We live in a highly materialistic society, where your social status is dependent on the clothes you wear, the car you drive and the house you live in. Basic human needs such as acceptance and security are all tied up on material things that money buys for us.
Don’t be blinded by this. You don’t have to match your neighbor’s lifestyle if you can’t afford it, and it shouldn’t make you less of a person. Make an honest assessment of what you make, and live a notch lower than what you actually can afford. Why a notch lower? So you give yourself allowance to adjust should things go bad, and you can also allot that portion to invest – for your future.
Money allows us to enjoy a lot of good things the world has to offer; it’s not all bad. We just have to remember and pick up the mindset as to how we let money love us the right way.