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Originally Posted by silenthcourtney
Understand the difference between wealth and money. Wealth is about sustainability. One of the best tools I've found that will help you really understand the difference between the two is the board game, Cashflow.
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I see somebody has read the "Rich Dad, Poor Dad" book too. I'll be honest, that damn book is hard to understand at the beginning, might not be to most but I had a lhard time catching the concept to the story.
On reply to CDAllenGroup: I agree, financial education is the first step but what exactly does one mean to "understand how money works?" That is not really explaining anything, more like a "liquidated category" if that makes sense. Surely one should understand assets and liabilities, but still, I can't really grasp the true meaning behind "understanding how money works."
One I haven't seen yet is investing your money and compounding it. An example I read on a website called "The Wealth Wizard" said a great example: if you you can turn .01 cent into a million dollars in 1 month. .01 * 2 = .02 * 2 = .04 * 2 = .08 ..... keep following the pattern and around the 20th day you'll see your making almost thousands of dollars. Surely there is no such thing, but it brings to mind the power of compounding.
Suppose you invest $10,000USD in a 6% APY account, that should yield you about $600 ... now do it a second year and you should yield $636... you can gain more then the previous year because your compounding. Might not sound like much, but every little penny counts... right?
