99.5% of all People in the World are Financially Illiterate
By: Christian Soschner
Tags: Literacy, Money, Financial Services, Success, Entrepreneurship

Becoming wealthy has nothing to do with luck or making a fortune. Most of the millionaires just learned to follow these principles daily. Instead of complaining and ranting, 99,5% of society chooses to.

We are living in the best times ever to make money. The internet has opened up so many opportunities. They are there, and everybody can grab them.

But it doesn’t matter whether you have 500 EUR monthly income or 50,000 EUR. The principles you have to apply are the same.

These are the principles that I learned at the commercial School and helped me through times when I almost made no money. Without getting any financial support from my parents or society, I was able to get a master’s degree in economy, some other degrees on top of that (martial arts, communication, and psychology) and build a bit of wealth for myself.

What are these five significant mistakes the poor make? How could they overcome these problems and become as rich as f’)%?

You have to consume

The pandemic has changed a lot. The economy was shut down. And two months later, it was re-opened. Immediately politicians mentioned “the brave citizen’s duty to consume”- to save the economy.

I never understand why people are so proud of possessing many things. Many of the “eat the rich” complainers I know have tons of clothes, two or three cards, and the little house in the prairie on debt.

Why do people value consumables so much that they spent all the money they make in a month on things they mostly don’t need?

How to overcome this problem?

Learn how to budget

One habit I learned in the commercial School was putting together a budget. It doesn’t matter at which income level you are. When I was a student, I lived by the same principle as today. The budget didn’t change. I just put it as a percentage of my total income and fixed it. How does that look like?

50% in needs

I put 50% of my income into paying rent, buying clothes, food, and beverage. Everything to keep my body running. Basic needs. When I was making less than 1,000 EUR, it meant that less than 500 EUR was available for those needs.

When I was a student, of course, I wanted the 200 sqm apartment, the nice Audi A6, the trip to the Maldives. Like my other colleagues who choose to jump directly into work-life while I was spending my night hours.

But with only 500 EUR available, I didn’t want to afford that. Either I had to accept my situation or stay broke forever.

The other 50% are available for other activities.

A regular job is not for me — I deserve better.

Some might say, well, this guy had a 1,000 EUR while he was at the university. He was well off. 1,000 EUR back then is about 1,600 EUR in today’s purchasing power. Why does he try to lecture the poor that merely make a living?

Well, my main goal in my 20s was to get this damn master’s degree. It was my vision of “opening the door to a rich life.” Unfortunately, nobody gave me money — for various reasons.

But instead of giving up and just joining the army of complainers, I needed to raise money to get this degree. Without an income, a student loan was not available in Austria. And this was great luck for me as it helped me to create the right money patterns.

So what was the alternative?

I

picked up any stupid job

I could find. I was put down and humiliated very often by people who I served with my labor. But, I had the goal, and this was necessary to go through. In my mind, it was just a short phase to overcome.

And this exactly is the second problem I see in many people. They do not want to work. And I can imagine those people saying, “He doesn’t know what he speaks about. It is so difficult to find a job these days.

Back in the 90s, eMail was not accepted as a means of communication. When I wanted to find a job, I had to write a proper letter on the computer, print it out, put it in an envelop and pay 1 EUR to get the letter delivered to the recipient.

Applying for a job was hard work and did cost a lot of money. For every 100 letters I wrote, I got one paid job. Sometimes I had two or three jobs at the same time. At the same time, I was studying through the night hours.

But it trained me well for the coming years. Financial success evolves from being of service to others.

Saving money is useless — the inflation eats it all.

One of the principles I learned in commercial School was:

Always make a profit of 20–30%.

For private people, it means: Put away 20–30% of your monthly income. Period.

This is a simple and powerful rule. But the excuses are manifold.

“I do not make so much money. You do not understand my situation.”

“I have so many payments to make. I cannot save money.” or my favorite one.

“Saving is for losers. Inflation eats it all.” Or lately

“The interest rate is zero. Why should I save money?”.

When I think 20–30 years back, I worked my butt off and studied every night. And yet, I put 20% of my income away. Let’s stay in the 1,000 EUR per month example. It means putting aside 200 EUR every single month.

On the contrary, it leaves 800 EUR for everything else.

And this is the number one principle every successful person or company follows. Know your income, adjust your expenses, and factor in 20–30% profits.

The 200 EUR goes onto a savings account. Nothing sophisticated. They are just building an emergency fund.

I was delighted to have that available in March 2020. Very often in my life, a job loss or similar tragedies didn’t make me panic, as I knew I had built my safety net of 3–6 months’ expenses in a savings account.

This was the time that was enough to find a new job or rebuild the business.

Save to invest

The fourth principle. Once the emergency fund is filled up, money is available for investing.

Well, many people fall back into the “spent everything” pattern. Smart ones re-allocate the available resources to something that has the potential to build another income stream.

For all those who work themselves out of an employment position, I particularly find investing in the stock market an attractive next move. Why?

today in 2020, it is a simple process with all the online brokers around

The cost of allocating capital is relatively low.

In case anything goes south and the emergency fund is eaten up as well as all financial income stream goes bust — money is quickly available.

These three reasons were the main ones that made me move into the stock market in the 90s. Well, it was not that easy to invest back then as it is today.

ETFs were not available, and online brokers almost didn’t exist.

But, in Europe, investment funds for ordinary people like I was were available. The first ones started with monthly installment plans.

Little did I know, so I chose two plans and allocated 20–30% of my income into these plans. Monthly.

Most of the time, I wouldn’t say I liked it. While my friends got their new cars and told tales of dream vacations, I was working every day and studying in the night hours, weekends, and every single holiday.

Due to the savings plans, no money was left at the end of the month for luxury.

Now 20 years later, it was worth it. But this is a different story.

Read, read, read

At the end of School we had a huge celebration. Everybody was happy to get their final exams. Many of my friends said: “School is over. I am done with learning.”

I never had this urge to quit learning. Life is so exciting. There are so many exciting topics in the world. I always have to stop myself from becoming a Jack of all Trades. I am interested in everything.

The thing is, never stop learning new things. Never stop increasing your expertise. Always go for the next seminar, webinar, or college degree.

Warren Buffett has made this one principle of his successes. In interviews, he said that he spent all day reading annual and quarterly reports — nearly 500 pages per day.

Bill Gates is known as an avid reader. Rumour has it that he reads a minimum of one book per week.

There are so many successful people in the world who say that the basis for their success is learning.