The wealth gap is real and it’s increasing at an alarming rate, and guess who’s not in the race?
This is due to none other than financial literacy or the lack there of. Now, what exactly is financial literacy? In short financial literacy is the understanding of money, how it works and how to use it.
That leads us to the million dollar question, what exactly is money? Money can be defined as a medium of exchange and a store of value, that value being your time and energy in the form of paper notes. These paper notes also known as fiat currency which means a decree or command of which we agree to its value which in essence is nothing. It has only the value we give as it’s not backed by anything since being taken off of the golf standard in 1971 by President Nixon. This perceived value is constantly being leaked away due what the government like to call quantitative easing or the printing of money i. e. inflation. Every time money is printed it’s value or purchasing power decreases, thus the more dollars in circulation the less it buys. The U. S. Dollar has lost 96% of its purchasing power as can be seen through the consumers price index which measures the overall change in consumer prices over specified periods of time. For this very reason it’s imperative that we learn about money how to use it and most importantly how to keep it.
There’s a myriad of ways to do this through entrepreneurship and sound investing. The wealthy understand these principles precisely treating money as a tool to acquire assets to park, store and maintain the value therein. The rich understand that paper money is worthless so they employ it to make them more money and acquire more assets. This is the big secret and remedy to poverty. They achieve this through a thing called compound interests which is earned interest on already earned interest. Simply put the reinvestment of said monies. Instead of taking those earned dollars and spending them the key the accrue even more and over time this method snowballs into a massive return which widens the wealth gap and disparity witnessed today. Take the example of the magic penny for instance or a penny doubled for 30 days. When most people are presented with the question if they’d rather receive a million dollars cash or a penny doubled for a month most typically go with the million cash but that would be a big mistake as a penny doubled for 30 days turns into about $5 million. Big difference right? Right! This is the benefit of compound interest and early investments.
I’m conclusion know that money is a tool to be used and not a trophy to be shelved. Banks don’t pay enough but they most certainly make enough off of your money and give you next to nothing in return. Til next time, good business sells itself…#peace
Entreprenuershit 