Learning how money works

Shaun welcome. I have read extensively on this. I’m at a stage where I cant earn more per hour and I’m working all the time, so I’m a little ahead. I feel a bit qualified on how money works but not very on investment.

The best book for me was from broke to multi millionaire in seven years. That got me really interested and motivated.
Next, the essence and not all the book was the millionaire next door. It has a lot of statistics but you can just skip over them. It’s the message. Big hat no cattle is a classic. It’s like nice car no money.

If you are in debt that’s where to focus, I don’t mean an investment mortgage. If you are there like most people, read Dave ramsay total money makeover. The best comprehensive debt management repayment book I’ve read.

1. Start with debt being paid
2. Earn more money
3. Stop wasting money. Most stuff people buy isn’t needed. It’s not fun but have a small home buy nothing not needed. I don’t own a microwave. Be ruthless. I only ride a bike. This isn’t for everyone but spend minimum unless it’s really important. For me fitness is important so my diet is a little more elaborate than others. You’ll find a balance but realise most stuff we buy is rubbish.
4. Save and invest your ass off. this is where this forum excels. Basically, you invest until you make more money through investments than actually working.
5. Master cashflow and retire.

That’s a very simplified summary on how money works. Those books will get you started. As far as earning more money goes, try to do something you like that pays well. Sometimes we don’t get that great combination but decide what’s more important to you.

Good luck.

PHP thanks, I suppose I need to back up my claims. It was always my goal to earn $100,000 a year. One year I was about $99,000 with negatively geared property, then these last few years I made about $115,000 p.a. Recently i would be somewhere around $140,000 but I’m only working 6 months of this year. Getting married and travelling.

So, how did I do it? Well, in your opinion I may not be earning that much but from where I came from my parents were just above minimum wage blue collar so I feel pretty successful. I actually never talk about my job by name in public forums for personal and professional reasons, on Facebook it says Top Secret. The only other jobs I’ve seriously looked to upgrading to would have been air traffic control or train control. There is a clue for you.

Either way, to move jobs would mean a training period and pay reduction for several years. To change to studying medicine or other high paying field would mean years of study and low income. Right now although my pay sits somewhere around $40-45 an hour on average to earn a higher rate per hour would mean a lot of time enduring low pay that I would have to recoup. To move into air traffic it would take me about 7 years. With investment I’d be ahead staying where I am.

Soon I want to change my shifts so I will earn about $45-50 an hour. I work about 60 hours plus per week. I cant fit any more hours in. So, I found a good paying job, I got promoted twice and I am dependable and do as much overtime as I can. I don’t know if I want the next promotion it’s more money but hard to crack and at the moment I like what I do. I love night shifts, I like my job (although not many people I work with) and I’m happy to ride this one out until I can go part time.

Sure, other people may do sales or be a higher qualified professional. I studied something else at uni and this pays better and I prefer it to what I studied.

On the other hand I spend no money. Here’s how

Plan an overseas holiday
Realise that you need to save
You can’t buy anything because you won’t have a home to keep it in. The only thing I remember buying was a caffetiera because mine broke.
Because you’re travelling you need to sell as much stuff as you can so you don’t need to store it. Suddenly you realise just how much stuff you don’t need. I fully recommend the minimalists blog.

With all that money you have to spend it on your wedding and holiday. Ok, this one isn’t what I have been preaching but it’s a life stage for me. I know I can do it for investment just as well though. We just had a plan. When I say save too, I mean almost 10 months of travel. Credit free. A wedding. Budget of $400 per day plus.

So, I don’t have a car, i ride my bike, my biggest costs are martial arts classes and piano lessons. We keep a budget for clothes and entertainment of $200 a fortnight and I pay for martial arts and gym out of that. I was very overweight and now I’m much healthier. For you maybe your spending is on cars, or maybe it is on entertainment. Either way most of us have a personality and interest so you gotta give somewhere.

I buy op shop books for 50 cents each. In one hour of work I can buy more books than I can read in a year. I really just don’t buy new things or gadgets. Something special I asked for was underwater earphones for swimming for a Christmas present a few years ago. I try to think of something I’d like but can’t justify and wait until birthdays or Christmas to ask. I finally have an iPad but I waited until now to get one and it was a present. I almost always buy second hand stuff.

I’ll be. Irving to a cheaper smaller place to rent next year. I’m happy to live like others refuse to. People I know buy a new $70,000 car because they gotta have it. i am using an iPhone 4s with a battery that barely lasts half a day and a broken home button. My watch battery died and I just stopped using it because I realised I don’t need my watch when I have a phone.

There is so much we have that we don’t need.

Next step enjoy holiday.

Step after that, save $40,000 per year or so and invest more.

Humble efforts, I’m not making mega bucks but I’m in my opinion going really well. Investment will make me rich and I’ll go part time and be family man. Working more for the rest of my life is not my plan.

I can’t take credit for this link as it was posted on another forum but I found it good as it gives you a holistic view on how the economy works and then as a result how money and finance works.

http://www.economicprinciples.org/

Good to have an understanding from all levels.

+ 1 for video

Redom I like your answer. I normally explain it even simpler.

When we get too many fat people in our society the government bans donuts for everyone, including the skinny people.