Did your parents give you advice that in order to get rich you should study hard, get good grades so that they can get a good job? I know I’ve heard this advice on many occasions from my parents. But the truth is that getting good grades no longer guarantees that you will get rich. Even many doctors, who are often the best scorers, are now struggling to make a lot of money. If you want to get rich, without having good grades, keep reading.
The thing they don’t teach you in school is that the banker never asks for your report card. If you go to your bank and ask for a loan, either for a business, real estate, or some other investment, your bank won’t ask for your school report card. Your school report card has little to do with whether you get rich or not. There are many highly educated poor people who struggle for money. There are also some very uneducated millionaires and billionaires.
Schools were developed to train people to look for a job, but that alone will not make you rich. The educated people with the highest paying jobs are often the ones with the most debt and are in the worst place financially. You don’t need good grades in school to get rich, but you do need a good financial education. Many people leave school without any financial education. Many leave deep debts of school fees and spend their entire lives trying to get out of debt.
Some very simple financial education can save you a lot of time and hassle and can make you rich faster. In fact, someone with a lot of financial education, but not much school smarts, is more likely to become richer than someone with school smarts but now not much financial education.
You are smarter in school if you can distinguish accurately. Let me give you an example. If you can tell a car from a truck, you have some intelligence. However, if you can tell a 1987 Ford Laser from a 1990 Ford Laser, that’s an even greater distinction. You are able to understand things in finer detail and thus be smarter. In school, you will also learn that there is often more than one meaning to a word. For example, the word “pound” means many different things. It could mean money, in the form of an English coin, it could refer to weight, it could refer to a home for lost dogs or it could mean to strike hard. One word has multiple meanings.
In finance, some words have different meanings. In finance only one meaning will make you poor, and another meaning will make you rich. Neither meaning is right or wrong, just very different, but they have very different outcomes.
One of the most important words you will understand in finance is the term assets. Now your banker will tell you that an asset is anything you own that has cash value. This includes your old golf clubs, your suits, and your car. This is one of the correct meanings of the word assets, but it will make you poor. A better understanding of the word asset is something that generates income for you whether you work or not. Simply put, if you stop working today, an asset will continue to pump money into your pocket. Liability is something that takes money out of your pocket whether you work or not.
Many people are poor because they spend their time buying assets that are liabilities. They buy things of monetary value that cost them money to own. A car costs money to own every month. So, although according to the Bank’s definition of an asset, they acquire an asset, they become poorer. Wealthy people focus on spending their time and money to acquire assets that generate income. It is these assets that make them rich, and it is the ability to tell the difference between assets and liabilities that makes them financially savvy.
