No 1 reason why we mess up our finances

"Financial education needs to become a part of our national curriculum and scoring systems so that it’s not just the rich kids that learn about money.. it’s all of us." - David Bach

"Money is plentiful for those who understand the simple laws which govern its acquisition." - George Clason

The number one reason majority of us end up with financial mess is simply this - No one taught us how to. Even though money plays a very important role in our daily life, our schooling system is not emphasizing enough on financial education. Therefore, people usually graduated from school or college with little or no formal education on managing their finance. When they ended up with credit card debts, mortgage loan or car loan, they are wondering why they are not making enough money even with all the education that they have received. No wonder some star athletes or big celebrities who make big money usually ended up with a huge debt. The money is a tool for happiness but only if it is handled with care. Use the tool improperly, it would end up hurting yourself.

Large income does not equal wealth

“If you are not as wealthy as you like, there is something you don’t know.” – David Wood

“Wealth is largely a result of habit.” – John Jacob Astor

Many of us make a lot of money as we progress in our careers. Many people earns a monthly income of thousands of dollars and some even much much higher. Despite the big money, they are not much the difference between a minimum wage person who earns a few hundred dollars a month. At the end of the month, these people who earns thousands of dollars are just as broke as everybody else. This is because, the higher they earn, the larger the debt that they can accumulate. For example, bigger house, bigger car, fancier gadgets would led them to bigger debt than before.

Wealth is your net worth. Inflow is larger than outflow equals wealth. Outflow is larger than inflow equals headache. Develop wealthy habit and not a spender habit and you are on your way to financial freedom sooner than you think.

Building up financial intelligence

1. Don't get into large debt positions that you have to pay for. Keep your expenses low. Build up assets first. Then, buy the big house or nice car. Being stuck in the rat race is not intelligent.

2. When you come up short, let the pressure build and don't dip into your savings or investments. Use the pressure to inspire your financial genius to come up with new ways of making more money and then pay your bills. You will have increased your ability to make more money as well as your financial intelligence.

Excerpt from Rich Dad, Poor Dad by Robert T. Kiyosaki