Have you ever thought that managing money is very difficult?

This is partly due to the fact that we did not learn lessons about money in school.

In a report published by the Spanish "Embrandiando Asturias" website, writer Diego Ortez provides valuable financial lessons that will help you understand how to dispose of money.

inflation

Inflation is mainly related to purchasing power, and the higher the inflation rate, the lower the purchasing power.

In other words, inflation refers to how high the prices of goods and services are on average;

If the inflation rate is 10%, for example, this means that the prices of products rose on average by 10% during the year.

Inflation is linked to currency devaluation;

The higher the exchange rate of a currency such as the dollar or the euro, the lower the value of your currency. To counter this, you must start saving with dollars in order to protect yourself from inflation and the devaluation of the local currency.

compound interest

Compound interest is the secret to the fortune of many millionaires, what compound interest does is multiply your money over time/the more time goes by, the more chances your money will grow.

But what is the reason for this growth?

The interest generated by the invested capital becomes part of your principal, and the interest is higher each time.

For example, if you invest $10 at a rate of 10% annually, the following year you will have a profit of $11.

On reinvestment, your capital will not be $10 but $11;

Your annual profit becomes $12.1, and so on.

Invest early

The writer stressed the need to invest early so that you are able to generate more profit from compound interest and develop a wealth-building mindset from a young age.

And if you haven't invested yet, it doesn't mean you've lost your chance.

Although your money will not have much time to grow, it is best to start investing today and not continue to procrastinate.

Many think that making a fortune is a difficult goal to achieve, and that only a few are lucky, but they are wrong;

The equation is clear: if you want to build wealth, you should save and spend less than you earn, invest your money wisely regardless of your work, and take advantage of the benefits that build up over the years.

Debt good and bad

Not all debt is bad;

There is a certain type of debt that allows you to benefit and helps you achieve financial growth.

One of the financial lessons that no one taught us in school is understanding the differences between the two types of debt, which is a necessary basis for creating financial wealth.

Bad debts are intended to satisfy short-term needs or whims that do not generate future profits or returns.

Bad debts are all emotional purchases and things you buy because you don't have the money for them.

And unlike bad debt, good debt allows you to get capital to generate additional income, such as debt earmarked for investing in a project.

Cryptocurrencies

Cryptocurrencies have changed the global economic landscape thanks to the “Blockchain” technology that guarantees greater security in capital transactions around the world and privacy without relying on governments.

It is therefore necessary to know how and how many of these cryptocurrencies work, what different investment options are available, and how to invest in digital assets.

Besides Bitcoin, there are hundreds of cryptocurrencies, investment platforms, and wallets for storing cryptocurrencies.

credit cards

A large proportion of the country's economy is driven by credit, finance and consumption.

And if for you a credit card is an extension of your ability to pay, and you use it to buy things for which you don't have money, that's a big financial problem.

Conversely, if you understand that these cards finance you for 30-45 days, and that if you make smart purchases that you can pay for, these cards will offer you great benefits.

Long term investment

A Chinese proverb says, "The best time to plant a tree was 20 years ago, and the second best time is now."

This logic applies to your investments as well.

 A lot of times we feel guilty because we didn't start investing our money early and we think it's too late and we won't get the expected results, but the best time to invest your money is now, you should start today and have a long term investment horizon.

When you think long term, you stop reviewing the daily volatility and focus on the value that these investments add.

You can open up to new investment possibilities that take a little longer to earn.

Real wealth is created over time thanks to compound interest and assets that generate new sources of income, but we never learned this lesson about money in school.

credit history

Credit history plays an essential role in our personal finances.

A good credit history creates a positive image of us with banks and financial institutions;

If we have a good credit history, this means that we will be able to get credit more easily, and access new resources.

And if you think that not paying your debts on time, or worse yet, not paying them will not affect your credit history, then you are wrong, and you should check your credit history to avoid future surprises.

savings concept

The vast majority believe that the rich are people who brag about their money and spend it recklessly and live a lavish lifestyle, but the common factor among millionaires is that they live a frugal lifestyle and do not care about appearances, and are more interested in making money grow for them rather than spending it on luxuries.

What's the point of making a million dollars in profits when you're actually spending double that amount?

That is why it is important to learn how to control your expenses and lead an economical lifestyle.

The importance of investing in developing your financial culture

The writer emphasized the need to start investing in developing your financial culture, either by reading financial books, enrolling in training courses, reading articles on the Internet, tips, or any other resource you have.

If you want to avoid these economic problems, start educating yourself, understand how money works, and learn the basic concepts of investing.

If you start today, you will have many tools at your fingertips to make informed decisions about the future, you will begin to see money as a means to achieving your goals, and you will understand the methods available to achieve your financial freedom.