#2 - Financial Knowledge is Power

“Formal education will make you a living; self-education will make you a fortune.” 

Jim Rohn

The interesting thing about financial education is that you don't realize how bad you need it until you start receiving it. Although I started investing about five years ago, it wasn't until less than two years ago that I truly started investing in my financial education. Needless to say, I immediately realized how foolish and uneducated I had been up to that point.

It is not uncommon to hear someone say that a book changed their lives. However, most times this is actually a gross exaggeration. What people actually mean is that the book had a powerful effect on them or that they absolutely loved reading that book. Even I used to think and occasionally say that books like Herman Hesse's Siddhartha or Eiji Yoshikawa's Musashi had changed my life because they had changed my way of thinking about some important aspects of life. Yet, I can now see that those books didn't really change my life.

I know this because two and a half years ago one book truly changed my life in a drastic way. When I read Rich Dad, Poor Dad by Robert Kiyosaki, I realized how ignorant I had been about money, investments and even life in general up until that point. So the first and most important thing I want to tell you today is this: read Rich Dad, Poor Dad by Robert Kiyosaki! It will transform your world by allowing you to understand money for the first time in your life. I know this is a bold claim, but it's true. If you read the book and don't like it, feel free to tell me all about it, but I don't think that will happen. By the way, Robert Kiyosaki is a self-made multi-millionaire real estate investor, so he knows what he is talking about.  

The main message contained in Rich Dad, Poor Dad is that, although most people are literate, they are also financially illiterate. There is a big difference between the two. Although people know how to read and to write, they can't read or write financial statements, which just happens to be the most important single element in personal finances. And if you can't even read financial statements you don't understand money at all. That is why Robert Kiyosaki is such a big advocate of teaching people financial literacy, a crucial skill that is systematically ignored by the world's many national educational systems. I personally went to school in four different countries and not once was I taught how to read financial statements or, for that matter, any other basic financial skills. This is a travesty and it constitutes a huge handicap in a world where money matters a great deal.

Financial literacy changes lives. Financial knowledge is a key skill. So you have to start learning these things because you sure didn't learn them at school. Read Rich Dad, Poor Dad and then keep reading books about finance and investments until you start to understand how money works. This is the main message of this post.

In fact, when you start educating yourself on the subject of money, you will soon realize that there are thousands of books on the subject out there. Some are good and some are bad, but the more you read the more knowledgeable you will become. This will change your life in a profound way, I promise you. It has certainly changed mine.

I believe in financial education because it teaches us skills of immense value in our society. Reading financial statements is an essential skill that most people in my generation lack. And the sad thing is that they don't even realize how big of a handicap that is. You can learn to read a financial statement in one day and it will deeply change your life for the better, and yet most people will never learn this basic skill. That will keep them poor. Even worse, they won't even realize that they're poor or why they're poor. They will keep looking at rich people and thinking they got to where they are because they were born wealthy or because they're dishonest or both things. They will distrust and envy rich people and they will remain poor or middle class. Becoming rich is not easy; you don't do it in a day or a month or even a year. It takes time and effort, and it also requires plenty of knowledge. That's why I'm educating myself and that's why  I think you should start doing the same.

#1 - Money Matters

“A wise person should have money in their head, but not in their heart.” Jonathan Swift

In the world we live in everybody needs money. We need money to ensure our very survival. We need money to fulfill our most basic needs such as food, water, accommodation or clothing. Without money, none of these very basic needs can be met. But we also need money to fulfill all of our other needs, such as healthcare, education, transportation or even leisure. We live in a society where virtually nothing can be accomplished without money and this is why no one can ignore money after reaching a certain age. It's always there in one way or another. Let's just say it now and be done with it: money is important. Money is very, very, important...  

I know that what I just said is painfully obvious. However, even that being the case, I must confess that, until relatively recently, I hadn't been able to fully grasp this simple and obvious truth. In fact, for most of my life, I regarded money with disdain. I truly believed I was above such a thing as money. I was more concerned with the higher things in life, such as metaphysics, ethics, history, politics literature or cinema. Money did not seem worthy of my attention. It lacked the nobility, the elegance, of other, more important, matters.

It wasn't until about five years ago, when I graduated from university, that I started to fully understand the pivotal role of money in society. In other words, it wasn't until I stopped being financially supported by my family that I realized how important money is. In fact, I quickly realized that, unless you can make enough money to support yourself every month, everything else quickly becomes unimportant, since you start having trouble meeting your fundamental needs such as food or accommodation.

The truth is that either we like it or not we live in a capitalist society where money is at the very base of the social structure. Every adult who wishes to lead an independent life needs to make money somehow. This is the harsh reality people face when they finish their studies and stop being supported by their families. In fact, a consequence of this reality is that the vast majority of adults in the world today are forced to structure their lives in such a way as to produce enough income to cover their monthly expenses. In other words, most adults exchange most of their time for money. We call this process "working" or "having a job". In fact, the normal status for an adult these days is precisely to be an active worker, that is, to have a job. This usually means working for another person or for a corporation, which ends up being almost the same.

My case is  strange since I'm thirty-years-old and I've never had a job.  Yet, in spite of never having had a job, I have been able to support myself for almost five years without asking anyone for money. I've done this by investing my money, which has allowed me to produce enough income to cover my expenses in these past years.

I got into the investing world by chance, since the only thing I did was run into an investor who showed me the world of financial investments. If it hadn't been for him chances are I still wouldn't know anything about investing, just like most people that are my age and even older. I decided to start this blog in order to share what I've learned so far with those very people. I hope that, through this initiative, I can contribute to improve people's financial knowledge and their prospects in life as a result. I also hope to refine my own knowledge through writing about these subjects on a regular basis.

I must state that, in spite of having been an investor for almost five years now, my knowledge is still extremely limited and I'm sure there are millions of investors out there who are  more knowledgeable and much more successful. Therefore, my contribution can only be a small one, yet I believe that it can be valuable to the extent that I can raise some awareness to the often overlooked fact that there is a world of financial knowledge and prosperity out there waiting to be discovered. If money is so important, as we have seen in the beginning of this essay, shouldn't people dedicate some time to learn about how to make more money with less effort and less time?

The truth is that having a job is not the only way, or even the best way, to make money. I'm not saying that people shouldn't have jobs, what I'm saying is that there are other options worth being explored. Most importantly, if we admit that money is an essential element in our lives, I believe that it makes perfect sense to take some time to understand  how it truly works, since this can lead to more money and more free time and better quality of life as a result. Even though I consider myself an investor, I'm certainly not an expert. I'm just someone who is willing and eager to learn more about the world of money because I believe that this is very important in our day and age. If you agree with me on this, learn with me and from me by reading this blog. Welcome to the Investor's Den, a place of discussion for investors and anyone else who wishes to learn more about money.