Become Financially Literate While Staying Home
So you’ve taken this quarantine to rest and indulge your neglected inner child. You’ve been chowing down on cheeseburgers and chugging 4 pm beers.
You took some time off for self-care, realizing that what flight attendants have been repeating since the beginning of their careers is sage advice — put your own oxygen mask on first before helping others.
You are, finally, utterly, well-rested. Great!
Time to get cracking.
This is a great time to be productive and get ahead.
There’s a point where more rest becomes decadent. It does more harm than good. A great way to counteract this is to practice mindful productivity, picking up new skills that will help you emerge out of this pandemic a new and improved person.
And there are few skills in life as important as learning how money works.
The Secret Language of Money
”If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.” — Edmund Burke
So many people are financially illiterate.
Now I use the term literacy because it best describes our collective blind spot.
Not knowing how money works is akin to not understanding the English language — maybe even worse!
Most people simply don’t understand the terms used.
What’s the difference between an asset and a liability? What’s a balance sheet, your cash flow, and an ROI?
To many, these words might as well be in another language. Klingon, or perhaps Elvish if you’re a Tolkien fan. Totally perplexing and seemingly made-up.
I know, because I was like that.
Up until a year or two ago, I was more or less totally financially illiterate, just like most people are.
Now, it isn’t our fault. I’m not trying to blame anyone here.
However, we would have been better served if they taught us actual, financial education in school.
I mean, five years of Algebra never helped me an ounce in real-life, while a month-long class about how to pay taxes would have been incredibly helpful.
I don’t know about you but I’ve had to pay taxes multiple times but not once did somebody stop me on the street asking me to calculate the square root of x.
After starting my own business with a $1000, I realized that I better brush up my understanding of money, and quick. Otherwise, I would crash and burn, and my business will go down in flames with me.
This understanding applies not only to entrepreneurs but to everyone.
Finances are an inescapable part of 21st-century life.
Everyone needs money. Everyone uses money.
So why not better understand it?
I get that it can be very intimidating. When I first started out, it seemed like the financial world was littered with jargon existing for the sole purpose of tripping up beginners like me.
I mean, what does liquidity mean? What is a stock and what is the difference between compound interest and simple interest?
Just looking at these words gave me mild anxiety.
That’s the bad news — there is a somewhat steep learning curve. In hindsight, I guess should be expected. All languages take time to master.
The good news is that there is no better time to learn about money than now.
There is no better time to pick up financial literacy than now.
“The internet is becoming the global village.”
— Bill Gates
Here’s a great example.
A couple of decades ago, trading was only reserved for stockbrokers and well-connected folk.
Now, anybody can get into trading and investing. Any stock, option, commodity or cryptocurrency under the sun can be readily traded with a click of the mouse.
Financial information that was so zealously guarded years ago are now freely available online.
Yesterday, I got off the phone with an experienced trader who gave me several invaluable tips to get me started off on my investment journey.
He lives in India. We were able to connect with each other virtually for free due to the magic of Whatsapp calls.
In 2020, there is little excuse to be illiterate, financially or otherwise.
A great tip I got is to simply memorize the vocabulary of finance.
Find out what the terms mean, and you’ll better understand what money is trying to tell you.
Whenever you’re reading an article about money online and you hit up a word you don’t understand, simply google it.
Don’t understand what’s the difference between an asset and a liability?
A 15-second google search tells me that:
“An asset puts money in my pocket. A liability takes money out of my pocket.” — Rich Dad, Poor Dad.
I took this explanation off Quora. Pro tip! Quora is a great resource for simple to understand explanations. Too many google searches lead to long-winded jargon-filled articles that give you more questions than answers.
Steer clear of these. Needless complexities serve to further intimidate you. When starting out, seek out clear, easy-to-understand layman explanations. The simpler, the better.
A couple of weeks of this and you’ll start to find your footing.
You’ll have taken your first leap forward towards financial literacy.
Don’t be afraid to ask for help
“Mentoring is a brain to pick, an ear to listen, and a push in the right direction.” — John Crosby
Lastly, don’t be afraid to ask for help.
Though powerful, the information found on the internet can be superficial.
Sure, you can find the meaning of things. But real-life examples can be hard to come by. That’s where mentors come in.
Like I mentioned before, I got off the phone yesterday with an experienced trader residing in India.
I wasn’t looking for the basics. I didn’t ask him things like the meaning of certain words or phrases.
Oftentimes, if you approach a would-be mentor with questions like these, they would be annoyed. And rightfully so!
You’re wasting their time with questions that can be answered with a 15-second google search.
I was keen to understand the intangibles. What’s his personal philosophy behind trading. His system. What is a day in his life like? What is the best advice he could give me so that I might avoid the mistakes he has made in the past?
So long as you are polite and engaging, I have found that a great many people would be willing to answer your questions.
There is a level of arrogance that some people display.
They think they’ll be able to do it on their own without help.
These people are more often than not, mistaken. I strongly advise against doing everything by yourself.
Did you learn the alphabet by yourself? How to talk, to form full sentences. Did you pick up the ins and outs of grammar, the rights and wrongs of spelling and pronunciation all by yourself?
Of course not. You had a teacher teach you along the way, for years.
To figure out an entire language by yourself would take a massive amount of pain and hard work. For the vast majority of us, it’s nigh-impossible.
So why do you think you can pick up the language of financial literacy by yourself?
That is hubris.
To want to be self-sufficient is a commendable trait, but it is important to not let it devolve into masochism.
Remember, when in doubt, ask for help.
Just be sure to ask the right questions.
Your Takeaway
You must gain control over your money or the lack of it will forever control you. — Dave Ramsey
There is no better, or more important skill, to pick up than financial literacy.
Now that you’re stuck at home, a great step would be to read some great self-help books regarding money or finances.
The Richest Man in Babylon is an all-time classic and a personal favorite of mine.
When you come across a word you don’t understand, and in the beginning, you’ll come across a lot of words you don’t understand, don’t be disheartened.
Instead, ask good old google.
Find the simplest explanation possible. Once you understand, move on. You’ll have learned one new word.
Chalk this up in the win column.
Once you understand the basics, don't be afraid to ring up somebody more experienced for help.
Be polite and ask the right questions. More are willing to answer than you think.
While staying home, take this opportunity to learn a new language — the secret language of money.
You’ll come out of it more financially educated.
And your future self will thank you.
Thanks for reading my story.