05 May 2022

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How to manage money efficiently

Author: Luigi Campopiano

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"Rich father, poor father" is the most famous of the books written by the Japanese-American economist Robert Kiyosaki. It could be defined as a "financial mentality" treatise explained through the true or alleged story of the author. In this bestseller, he recounts six life-changing lessons. And that he tells in his bestseller. In schools they should teach how money works and what money means: many do not know how to manage their personal finances well because they have not understood how money works. Money is the tool through which our company conveys every commercial exchange and knowing how it works is of fundamental importance for one's financial serenity. Taking inspiration from Kiyosaki's book, here are some valuable lessons for rethinking money and how to use it most productively: 

1. Saving is not enough. Saving money is traditional wisdom, but it is important to remember that money cannot keep up with fluctuations in the value of the currency (purchasing power is weakened). It is best to protect money, anticipate such fluctuations and make wise investments; 

2. Active vs passive. Liabilities are the type of investments that, in addition to any debt, take money out of your pockets (eg the car: as soon as it leaves the dealer, it has lost value). Investing in a house, renovating it, renting it out for a certain period and then reselling it at a higher price than the one you bought it for, is an asset. The "real assets" are those businesses that do not require physical presence and can generate automatic income: financial securities, real estate, copyrights on intellectual works (it is recommended to allocate most of the income in active investments so that the capital reinvested in further assets generates a steady increase in income); 

3. Experience makes you smarter. It is only by having direct experience of the financial markets that one learns. You can start with small investments and then broaden your horizons, based on what you have learned in the field; 

4. Design a business correctly. Focus on active investments and on a clear and easily presentable plan. You need to have a great idea (capital can come from investors); 

5. Losses are part of the game. Even if you invest wisely, it will be possible to incur some losses, because it is part of the game (sometimes it is necessary to take risks and test the waters); 

6. Times of crisis bring new opportunities. The greatest gains occur in times of crisis, because the new market conditions are exploited; 

7. The more you give, the more you receive. If what you work for truly makes people's lives better, then people will recognize its value and be willing to pay for the services or products;

Financial skill cannot be learned in a book or in a web article, but deepening the reading of the topic can be a valid inspiration to start perceiving money in a different way and start using it in a new way. Experience in the field, assisted by the supervision of an expert and adapted to one's own abilities and personal goals, will be the best way to manage one's economic resources more and more effectively.