Friday, January 15, 2010

The Weakness of Our Education System

In school we are taught that we need to get good grades so that we can get into a good college, then get a good job. This is old advice indeed. You don't need a college degree to become rich. In fact most of the super rich today dropped out of high school or college. If you want to be rich don't go to college ???? We spent in school for about 15 years but it is sad to note that we almost learn nothing about financial education. In fact, we learn a lot about rubbish theories that cannot be used but merely for passing exam.

Going to college will not make you rich. Our school systems are designed to create employees, people who work for money. But the richest people in the world are not employees, they are business owners and investors. You do not need to have higher education to become rich, and funnily enough it is the people with the advanced educations who have the most bad debt and are in the worst place financially.

Going to college will teach you the skills you need to get a job and to get an income. Most people thinks it stops there. They believe that you need to have a high income in order to become rich. This is not true. You will become rich not based on how much you earn, but what you do with your money.

College will not make you rich, but financial education will. There are a lot of smart people in the world who have been to college and got their degrees but who are financially uneducated. Every time they get a pay rise they go further into debt, every time they get a bonus it doesn't even begin to help them financially. They are so wound up in debt and expenses that they cannot afford to quit their jobs and live the life of their dreams.

If you want to become rich then you need to understand finances. Instead of just working hard and handing your money over to someone else to invest it for you, you need to take an active interest in your money. Every dollar you invest is like an employee that works for you. It is up to you to make them work hard and bring you a good return.

I am not saying that we shouldn't go to college. I am saying that going college and earning a lot of money won't in itself make you rich. It is what you do with your money after you come home from work that will determine whether you become rich or stay poor. So what should you do with your money in order to become rich?

1. Invest in Assets
Assets are things that put money in your pocket on a regular basis. Don't believe their banks at their word when they say anything you own is an asset. This definition may be correct, as far as the English language is concerned, but this definition will make you poor.

Invest your money into things that generate you money on a regular basis. Real estate that generates more income from rent than all of its expenses is an example of an asset that generates regular income.

2. Buy Assets First and Then Use The Asset To Buy Your Liabilities
Liabilities are things that take money out of your pocket on a regular basis. Most people fail to become rich because they use their money to purchase liabilities first, then they have nothing left over to buy assets. Rich people buy assets first and then use that money to buy their liabilities.

The lesson is.


1 comment:

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