Sunday, December 20, 2009

Three Stages in Personal Finance

There are three stages in personal finance that a normal person must go through before thinking of achieving financial freedom.

Stage 1: Learn how to make your money
For a normal person who has finished their education stages, he or she must find a job in order to earn a living. A lot of people has managed to pass this stage and has a pay which is more than their expenses.

Stage 2: Learn how to save your money
After having a income, one must learn how to protect his or her money. Not all people has passed this stage due to overspending, or too much family commitment. People who are stucked at this stage will have zero or little saving. And they are more likely to take more loan as compared to people who has a higher saving. Taking more loan mean that they have to pay more interest which make them poorer.

Stage 3: Learn how to grow your money
After passing stage 1 and 2, one must learn how to grow his or her money. A lot of people has ignore this stage as these knowledge are normally not taught in school. That is why a lot of people is unable to acheive financial freedom after working all of their lives. Most people work for money, rather than letting money to work for them. They can save a lot, but due to inflation, they are actually "become poorer". One must learn how to grow their money, otherwise they will become a work horse forever.

Once these three stages are cleared, one can start to think of acheiving financial freedom status. As for me, I have managed to clear these three stages and now slowly gearing toward financial freedom.

3 comments:

ZhuKoLiang said...

actually got stage4: learn how to gamble your money..

haha, jz kidding..

Pukimon said...

Interesting read. But i am not sure if you are really sharing you life expricences.

Freedom Achiever said...

Hi Pukimon,

Yes, I am sharing my experience.

Regards
Freedom Achiever

Have you started your journey towards financial freedom?

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