Is it true that money attracts money?
What does the phrase “money attracts money” mean?
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Surely, you've heard someone say that money attracts money, right?
The truth is that to build wealth, you need to take good care of your money. This means controlling your spending, developing healthy spending habits, and, of course, making wise investments.
And financial education is essential for you to optimize your budget and, consequently, increase your earnings.
To better understand the subject, continue reading!
Do you know what your expenses are?
Dealing with personal finances requires responsibility and organization.
Without this, all your income could be spent on non-essential expenses, that is, unnecessary purchases that take away your savings.
Furthermore, the lack of financial planning hinders the achievement of goals.
If you identify with this situation, the first step to organizing your finances is to separate essential expenses from non-essential ones.
Essential expenses are those that, depending on the situation, can be reduced but not eliminated, such as electricity and water bills, rent, mortgage, food, transportation, healthcare expenses, etc.
Superfluous expenses are those that can be cut from your routine, especially in times of financial difficulty.
These expenses include eating out and happy hours, travel, service subscriptions, etc.
It's very important that you analyze your budget so you know exactly where your money is going.
The three pillars of financial education: saving, earning and investing
To achieve financial freedom, you need to save, increase your income, and invest to maximize your earnings.
In theory, this sounds simple. But we know that in practice, each of the pillars requires a lot of discipline and even the creation of different strategies.
To help you improve your financial life, we'll explain a little more about each of the pillars.
This way, you will understand why money attracts money and how to plan your finances.
1. Save
Saving is accumulating values in the present to use in the future.
Saving is important to help you achieve your financial goals and have peace of mind during an emergency.
One of the best ways to save is to set goals and objectives.
What's your purpose in saving money? To build your emergency fund? To take that dream trip?
Goals will help you stay focused and disciplined. Saving can be exhausting without a clear objective. Consequently, you run the risk of spending all your savings on things you don't actually need.
2. Invest
Investing is taking part of your money and putting it into an application.
Saving is the first step. However, simply saving money isn't enough.
After all, over time, idle money will lose its purchasing power. That's why you need to start investing to maximize your earnings.
In other words, investments are necessary so that you can obtain gains above inflation.
Some investments require you to already have a large amount of money before you can start investing.
However, there are several investments, both in fixed income and variable income, that are much more accessible for beginner investors.
The first step to starting to invest is to understand the your investor profile which is basically an analysis that identifies your preferences, characteristics and expectations regarding money.
There are three profiles: conservative, bold and moderate.
A conservative person is someone who is risk-averse and, therefore, prefers safer investments, even if this means obtaining lower returns.
Conservative investors tend to prefer fixed-income investments. Bold investors are willing to take more risks in exchange for good returns. They typically have a portfolio with several variable-income investments.
The moderate, on the other hand, is willing to face certain risks, but without giving up security.
Money attracts money, and investments are proof of that! After all, the more you invest, the more your money will yield.
3. Increase your income
As you already know, saving and investing are two essential things.
However, it's important that you find ways to increase your income, so that, in addition to improving your quality of life, you can save and invest more money.
In other words, the three pillars are connected. Following just one of them isn't enough to achieve financial freedom.
Some people, when they start earning more, end up increasing their spending. This isn't necessarily a bad thing, as long as there's planning and superfluous expenses don't exceed the budget.
But saving alone isn't enough, because savings have their limits! You can reduce some expenses, but you can't eliminate them completely.
Investments accelerate the growth of financial assets. But patience is essential, as financial investments generally begin to yield positive results in the medium and long term.
How to carry out financial planning?
As you can see, money attracts money.
But it's not enough to just know the importance of saving and investing and not put this idea into practice.
To make it easier to control your expenses and optimize your budget, it's important to create a financial plan.
The financial plan is basically a tool that will define short, medium and long-term financial guidelines and goals.
One of the main pillars of planning is discipline. There's no point in creating a strategy and then following it for just a month (or even less).
We are talking about planning that should guide your financial decisions.
In your plan, it's important that you include all your essential and non-essential expenses so that you can know where your money is going and eliminate unnecessary expenses.
Additionally, it's important to set aside a portion of your budget for essential and non-essential expenses, and of course, your savings.
Conclusion
When someone says that money attracts money, they mean that the habit of saving and investing allows you to find good financial opportunities, which will help you increase your earnings, in addition to improving your consumption habits.
We hope this article was helpful and that you understood the importance of each of the pillars of financial education!
