We will discuss some of the pertinent things that traditional schooling left out! Whether one , or someone who went straight into the work force, or went on to an institution of higher learning, most of us were not taught a whole lot about financial intelligence. We are often taught to get a good good paying job, save money, and put some money into a plan for your retirement. The only problem with that equation is that these ideas are becoming outdated in this day and age. In the industrial age, this was a great plan of action. In today’s information age, this way of thinking could be a setup for destruction.
Today, jobs are beginning to pay less & less if they continue to exist at all. Some formerly high paying jobs are being outsourced to other countries, where the workers will perform the same tasks at a fraction of the cost that one would want in America. Many other jobs that used to pay well are replacing people with machines or computers. This in turn is greatly diminishing the opportunities that were once available to get a job at a young age, stick in for a few decades, and retire with a good pension plan.
Savers are becoming losers. This may sound like an oxymoron, but this is becoming the case for a number of reasons. With the ever decreasing value of the U.S. dollar, a buck just isn’t what it used to be, literally. Ever since the dollar was taken off of the gold standard in 1972, it has progressively lost value. This is why we hear elders say, “I remember when that was a penny.” It is not that everyone is just raising prices because they can. The reason is that the dollar has lost it’s value, so it takes more of them to buy what used to cost less. Another reason that savers are losing is because of interest rates. When you put money in a bank, depending on the state of the economy, you get anywhere from 1-5% interest for that money. If that same person gets a loan to purchase something, then the bank will charge a higher percentage rate than that on the same amount of money. If one gets a credit card from that same institution, then you can expect even higher rates. So, even though you get a little interest on the money that you re saving, the bank is getting much more off of what you are borrowing.
How many companies offer a full pension plan anymore. Hard to think of many, huh? Most companies have moved to contribution plans, instead of the pension plans. What most do not realize is that the contribution plans are subject to the state of the stock market fluctuation. The 401K plans, Super Annuation Plans, etc. are run by companies. These companies take 80% of the profits off of the money that we invest in. Please understand that the company that you work for is not matching you contribution just because they are nice people. They get a huge tax break for doing do. Even though they get that money back in the long run, they still look at that outgoing money as a liability that they can use as a reason to mitigate giving out higher pay raises. How much more could you do with that money?
There are so many ways that we can produce additional income with a much better return than the equation that i mention earlier. My favorite is discussed in the website Opportunity.legalshield.com. Understand that we always need to look at opportunities to create additional streams of income. Especially if it can result in passive residual income. That “pajama money.” You can wake up, and still be in your pajamas, and that money will be coming in! Now, how would that feel?