Introduction: Why does a high income not necessarily mean no financial worries?
Many people are puzzled by the following:
- Despite having a decent income, they can never save any money.
- When their salary increases, the pressure becomes even greater.
- They seem to earn a lot, but they become more and more anxious.
On the other hand, some people:
- Have an average income
- Live a relatively stable life
- Rarely worry about daily expenses
The difference often lies not in ability or opportunity, but in financial management skills.
If health determines how far you can go, then financial management determines how tired you are along the way.
【 One of the non-depreciating assets of life - health】click to read➜
Why is financial management a kind of "life asset"?
From the perspective of assets, financial management skills have three typical characteristics:
- It requires long-term training.
- It continuously amplifies the effect of income.
- The returns become more and more obvious over time.
What truly sets people apart is never how much money you earn, but how you handle the money you earn.
What "Rich Dad Poor Dad" repeatedly emphasizes is not investment techniques, but a fundamental understanding: financial intelligence.
How do "high-income poor" come into being?
In reality, there is a very common type of people:
- With a relatively high monthly income
- Spending without restraint
- Without clear spending boundaries
When income increases, spending immediately expands:
More expensive rent, better cars, more frequent consumption.
They don't lack money; Rather, all their money is "on the go" and doesn't stay.
The result is:
- Outwardly prosperous
- Inner anxiety
- Lack of security for the future
This is the typical state of "high-income poor".
The true financial logic: What remains is yours.
When I was young, I heard an old saying often repeated by the elders:
You can't starve from eating, nor from spending. Here, "spending" refers to reasonable living expenses, not consumption beyond one's means.
The truly healthy financial logic is:
Income - Necessary Expenses = Discretionary Assets
Rather than: You can spend as much as you want, without considering whether there will be any savings left.
When you start to respect the concept of "surplus", you truly stand on the side of assets.
If we are willing to act like an accountant, simply recording every income and expense, calculating the balance each month, and then accumulating the annual surplus, the financial situation will become clear and controllable.
When you know where the money comes from and where it goes, anxiety will naturally decrease.
I have witnessed too many people misled by the notion of "having money in the bank".
In real life, especially among small business owners or individual entrepreneurs,
this problem is particularly evident.
When they have money in the bank:
- They buy cars first
- They upgrade their consumption first
- They satisfy their vanity first
But they ignore the fact: The balance in the bank does not equal profits.
What they spend, is often not the surplus, but the future costs. When they finally settle the overall accounts, they realize:
- The supplier's payment cannot be made
- The salaries of employees are in deficit
Many difficulties are not due to poor business, but rather a lack of financial understanding.
The essence of financial management is to delay gratification.
What truly makes people get richer over time is not a single judgment, but a long-term choice.
The core of financial management actually consists of just two words:
Delay gratification
- Not being led by short-term desires
- Not needing to prove oneself through consumption
- Not spending the security of the future in advance
When a person can control their expenditures rather than being controlled by them, their freedom of life will significantly increase.
The first step towards financial freedom is financial awareness.
You don't need to become rich overnight, nor do you need to be an expert in complex investments.
All you need to do is three things:
- See clearly your income structure
- Understand your actual spending situation
- Respect every surplus
When you start to be aware of money, it will no longer be a source of stress,
but will gradually become a tool.
Conclusion : True abundance is having control over one's life
Financial management skills, may not immediately change your income, but they will continuously shape your life experience.
When you no longer let money push you around, but instead actively manage resources, you will discover:
True abundance is the stability and sense of control within oneself.
What are the assets in life that do not depreciate in value? click to read➜
《Apart from monetary assets, what other life assets appreciate over time?》
-------Extended Reading and Resource-------
(Disclosure: This post may contain Amazon affiliate links：As an Amazon Associate, I earn from qualifying purchases.）
The books and tools I mentioned are part of my curated toolkit. If you're interested, I've compiled them all on [My reading list ] & [My everyday toolkit] page for easy access.