Chapter Six - Why The Need For Financial Knowledge

Let us touch on the issue of our basic educational institutions, the schools, where we learn about the facts of life. What are the subjects covered in school? Language, mathematics, science, history, social studies, religion, among others are all important for us to study to blend ourselves well with society. Even in the collegiate level, depending on what course one chooses to take, lessons are concentrated on the theories, principles and/or basics which are hardly in consonance with the real world.
I will site a true-to-life example. My father is an electrical engineer. He took up a Bachelor of Science major in Electrical Engineering course in one of the leading universities in our country. After graduating and passing the board exams, he decided to look for a job in line with his chosen profession. He found a job in sales of machines for the wood industry. Naturally, the machines they sell are made up in part of electrical components. Although some of the electrical components were familiar to him based on what he learned from the university, many major components were new to him. He never encountered them before in school so he was at a lost as to what they were or what they were intended for. In short, what you will learn or have learned in school might not necessarily be what you will find in the real world.
When it comes to creating wealth, there is not a single course in school that teaches this subject (or very minimal if ever there are). You will learn to create wealth, out of school.
So, what our forefathers told us before: “Go to school, study hard, and find a good job” is still sound advice but not good enough. The future does not look too bright anymore if you follow this advice. What you need to do is to learn what’s going on out there, where reality is.
Learn to gain more knowledge. Learn to be updated and leave to experience what is antiquated. Learning is to keep pace with the latest technology and information. Since learning or knowledge is power, it follows that information is power. And if we have power on hand, we have access to wealth. So it makes sense that information nowadays is vital to creating wealth. The more updated you are, the better your chances of making more money.

The Learning Process

How do we learn new things? Reading books, attending seminars, and talking to people more knowledgeable on the subject are some of the ways. We also learn by making mistakes, like babies learning to walk. It is like roller skating where we get bruises every time we fall. The message is: “Don’t let mistakes stop you from learning. Learn from those mistakes and let them encourage you to learn more.”
Always bear in mind that education in school is only the fundamental foundation of general knowledge. Outside school , we must gather as much skills as possible especially those pertaining to creating wealth.
I firmly believe that one’s choice of endeavour must be anchored on love. Because when you love what you do, you will enjoy and take good care of it, not to mention the benefits it will bring to your health. With this in mind and in heart, you are following the dream of your life and you can use this principle in the choice of your business to gain wealth.

Loving is one thing. Knowing is another. Know your business. Know how to go about it. It is imperative that you acquire financial knowledge to gain wealth. Today, information is wealth. Get to know what is going on around you. You will find opportunities to get rich from information that is current. Time can be of the essence depending on the subject of the business. Knowledge on the business is vital; that is why learning is a non-stop process. You need not necessarily be familiar with a particular business, but you must learn to know the business before you get involved in it.
People who have actual experiences on a subject are the ones you can talk to in gathering information. Do not listen to hearsay or to those who neither know nor have any experience on the subject. Knowing is an asset; not knowing is a liability. That is why, information is wealth.

Exchange information regarding financial matters with your colleagues as frequently as possible. This is one way to acquire updated news. On topics that are not clear or familiar to you, ask questions (rather than pretend you know when you don’t) and be generous to share what you know when asked. Opportunities are sometimes born spontaneously in discussions that are beneficial to either or both parties.
The risk factor is always there even if you know the business. This is inherent in every type of business. But risk can be managed and kept to a minimum if you have the proper knowledge.

Gathering information may be time consuming but time well spent. Sometimes, it takes more time to gather information than the business itself. Keep in mind though that timing (when to act) could be important in the business you are interested in. How much you know is different from how fast you know. Remember the old saying: “The early bird catches the worm?” The first or earliest to know gets the opportunity. If you know of an opportunity that is not yet in the news, it’s good news. Stay focused. Keep a clear and keen mind. Just like the advice of a weather station: “Know before you go.” The same thing is true in business: “Know before you go (into action).”

When in business, you must learn to manage the flow of money, your people, and your system. Get to know where the money you invest should be at any particular time so that you don’t get cash strapped in the middle of your transactions. Make sure your money flows smoothly to where it should be. Learn to manage your people. They work for you, so take good care of them and they will take good care of your business. Systematize your work flow. This will cut wasted time, energy, and money as well. What you save is additional profit.

Keep in mind to leave some time for your out-of-business activities too, like family and social affairs. Like giving credit to where credit is due, give time to where time is due. Think of ways to do more in less time. This will increase your profit margin making you more competitive.

Most people find difficulty in marketing or selling products and / or services. It takes time and patience for your prospective clients to get acquainted with what you’re offering. Their most likely first reaction is to reject it. This is normal. With the right people negotiating and handling the marketing aspects of your business, you can surmount this difficulty and eventually come up with positive results.

Communication skill is very important. It is your eyes, ears, and mouth rolled into one. It is a friendly spy to keep you updated and more knowledgeable. Without it, you’ll be groping in the dark.

Here are additional helpful tips to gain financial knowledge:

1. When hiring a person to work for you, hire one who is more knowledgeable in the position you intend to hire him/her for. This way, you will have less worry if he/she is able to perform the job. You get to learn from the person, and you’ll have more time to attend to other moneymaking ventures. Don’t think the person might be a threat to your business, as long as you pay him/her well. Otherwise, he/she need not work for you in the first place.
2. Changes, especially those that involve bargains, can spell profit. Take for example in a supermarket where there is a “sale.” People’s most likely reaction is to buy and stock up. It is normal reaction but peculiar when analyzed. In the stock market, when there is a price crash, people tend to shy away. This is contrary to what happens in the supermarket. Why? Perhaps, we will never know. On the other hand, when prices in a supermarket go up, people shy away. Again, in the stock market, when prices go up, people start buying which shouldn’t be the case.
3. Part (or shall I say a big portion of) financial knowledge is knowing the difference between an asset and a liability. Actually, an asset or a liability depends on the person looking at the thing. What you think is an asset, could be a liability to another person. As mentioned before, anything you own that earns is an asset; otherwise, it is a liability.
4. Oftentimes, we stick to the conventional way of doing business: “This is the way it is done here.” For all we know, the conventional way might not be the best way. Look at it another way, the unconventional way. It could save money, and money saved is money made.
5. High emotions (fear included) can sometimes suppress financial knowledge. Do not let your financial ability submit to your emotions. Overcoming emotions is, per se, part of the learning process. Similarly, making financial decisions without proper training on finances is disastrous.

Gain more financial ability is simply having more options for opportunities that come your way. In the same manner, a higher level of knowledge can help you spot opportunities other people don’t see. What you can’t see with your eyes, you might see with your mind.

Money comes and goes. But unlike money (although this is what we’re aiming for), financial knowledge stays. The nourishment it needs to stay keen is to keep it accurate and up-to-date. If you feel like you’re being pushed around, stay smart, exercise self-discipline, and keep updated. Be alert and look out for “double standard” information (information that requires double checking). It is better to reconfirm than be sorry later.

The basics of financial knowledge should have been taught in school; but it hardly did, and it looks like it hardly will. This explains why the poor and middle class comprise the majority of the populace with its gap from the rich ever widening. If a person winds up with a lot of cash without financial ability, this person is bound to find his/her money gone soon. We’ve heard of athletes who earned millions during their prime and movie stars who amassed untold fortunes only to grow old broke.

Having financial knowledge is truly vital to maintain and grow your wealth.

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