Are You Financially Literate?- Jerry Fetta
Are you financially literate? Stats say that over 70% of American are not. What does this mean? In a room of 10 people, only 3 or they understand money. If 1000 of you are reading this right now, only 300 of you understand how money works. What is financial literacy? It is defined as the understanding and education of various financial areas relating to personal finance, money, and investing. Our schools don’t teach it, our parents don’t teach it, and it is clear that those who are financially literate make and keep more money than those who are not. It is important that you become financially literate.
So what is it exactly? I know we’ve defined it, but what is the practical definition one could use to gauge whether or not they are financially literate? Does it mean you can pass a quiz? Does it mean you understand the financial language better than others? Does it mean you have a financial advisor? Let’s define this in a pretty straightforward way. The more money you have x the amount of time you have it x how much it grows while you have it = financial literacy. Someone who is financially literate would have money. Someone who is not, would not have money. Just like someone who can read would read, and someone who can’t read wouldn’t read. Even if they “know how” to read, if they don’t want to or avoid it, there is still something they don’t understand about reading. If someone “knows” about money but they don’t have it, there is something they still don’t know about money, making that person financially illiterate.
Here is the reality: 50% of the income and 80% of the wealth is held by 10% of the population in the U.S. The 10% who are winning are more financially literate than those who are not. Knowledge would equate to results. If it does not, it is not knowledge. Throughout my career, I’ve met many people who could explain finances and understood the concepts, but had no money. I do not believe those people are financially literate. Who else has the broke brother in law that knows everything about money? He may sound like he knows, but if he is short on money, he does not know.
I remember when I first became a financial advisor. I even took tests that said I was financially literate enough to help other people with their money. But I was still broke. I was the professional who thought he was financially literate but really was not. It plagues our country in a big way.
To be financially literate I believe you need to know 4 major things:
#1: What money is. Money is not dollars. Money is not Euros. Money is not what you have in your bank. Money is an idea, backed by confidence, used as a medium of exchange. It could be anything that holds the confidence of the person you desire to exchange with and must be exchangeable. When you realize how fluid money is and that it is simply an idea, you will achieve a new level of financial literacy.
#2 How to make more money. Money follows attention. Get attention and you will get money. In fact, this is such a correct statement that if you look at the wealthiest people in the world, they will frequently trade their money for attention to get more money. Step 1 is that you must get attention. You must also be able to gain the confidence of others. Confidence means trust. This would mean that you must have someone’s attention and earn their trust by adding value to them. Then you must exchange. At some point, they will have to trade their money to you for something. That is how you make more money. If you understand how to do this, you’ve reached another new level of financial literacy.
#3 How to keep more money. Money gets bored. If you’re not doing something with it, it will leave. You have debt, taxes, insurance, investments, and all of the other distractions in your life that bid for your money. But keeping money has 2 different angles. When you earn it you must save a portion of it (40% is what I recommend). Once you saved it, you must prevent it from leaving. This is two degrees of literacy. Knowing how to save money and where to save it, and knowing what not to spend on so that the money you’ve saved is still there in the future.
#4 How to multiply money. This is also known as investing. Investing requires financial literacy. The 3 rules you must understand with investing are 1) Don’t lose money, 2) Don’t lose money 3) Invest only in things that cash flow. In fact, many of the best investments require a person to be accredited ($1 million net worth). Why? Because the issuers of these investments do not want to deal with the financially illiterate. If someone can accumulate $1 million in net worth, they have proven they understand the previous 3 steps. Earning money from investments is the 4th step in proving you are financially literate.
The majority of America does not know how to do the 4 things I just mentioned. I know millionaires that can do 1, 2, & 3 but they fail to do #4.
Most people honestly don’t even know how to do #1.
Someone people can do #1 and #2, but not the rest.
True financial literacy is the ability to do all 4.
The more one can do all 4, the more literate they are.
My company focuses on helping you become more financially literate so that you can live your purpose, build wealth, and achieve financial freedom. If you are financially illiterate there is almost no chance of you doing this. We all need to understand money better and we all need to build wealth. If you’re interested in doing this for yourself and you would like a coach and a plan click here.
Own Your Potential,
Grant Cardone Certified Coach
Jerry Fetta helps his clients build wealth so that they can eradicate poverty in their own lives and own their potential.
He believes scarcity and abundance cannot co-exist and that the way to end poverty is to help you build wealth.
You were not created to spend 40+ hours per week serving the 40-year-to-life sentence trading your precious time for money just to live in mediocrity.
However, the truth is that time and money must be exchanged. It just doesn’t need to be you making the exchange.
Jerry helps his clients create wealth that exchanges time and money on their behalf. The only way to do this is to make more money, keep it, and then multiply it.
He has helped clients double their income, save $100,000 tax-free, and secure 8-12% fixed annual returns on their assets.
To get started, go to www.WealthDynamX.com/contact