10 Most Important Things About Personal Finance That Someone Without A Finance Background Must Know
1. You really need to be good at basic math.
Seriously... I still meet people who can't do basic addition or multiplication. Don't ask me about finance until you learn to multiply and divide.
2. You need to know what money really is.
How are you gonna manage or make money if you don't know what money really is? No, it's not paper bills or numbers on a screen.
3. You need to understand supply and demand.
Money is basically the difference between supply and demand. Understand supply and demand, and you understand how money works, moves and multiplies.
4. You need to understand the difference between assets and liabilities.
I like this simplification:
"An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket." ~ Robert Kiyosaki
5. You need to start building up your most important assets.
One of the most important assets you can have is your skill set. Specifically, skills that are high in demand but low in supply.
6. You need to understand that money loves speed.
The faster you experiment and try out new things, the more money you'll make.
7. You need to understand the relationship between money and happiness.
The human brain measures happiness relatively. That means you'll be happier consistently increasing your income a little every month, than you will be making a ton today but nothing for the next year.
8. You need to understand the relationship between money and time.
You can always get back lost money. You can never get back lost time. Wherever possible, use money to buy time.
9. You need to understand how to leverage the power of compounding.
I'm not talking about compound interest. I'm talking about compounding improvements. Specifically, compounding small, daily recurring improvements.
For example:
If you spend 8 hours a day at home building one new micro-stream of recurring income that brings in $1 profit a day and do that everyday, in one year you will be making more money than someone who makes $10,000 a month from their job working 8 hours a day.
10. You need to understand how to create something out of nothing.
If you understand how to create psychological experiences in the minds of the prospect, you can create money out of thin air. And to do this, you need to understand how the brain works and makes decisions.
Consider, for example, the guy who took rocks on the road and sold them as Pet Rocks and made millions.
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