“You have mind. That’s your greatest asset.”
What do you know about financial literacy?
Do you ever heard about it?
Some of you may have heard about it, and know it deeply, but many of us may even don’t know anything about it. Since Indonesia is categorized as low financial literacy amongst its people, I’m interested to share my opinion towards it. As it sounds like, financial literacy is knowledge about financial based on many literatures. MANY here means that understanding ONE is not enough. Financial literacy has never been taught in school, thus it becomes a RARE knowledge until what we called ‘millenials’ initiate to share pieces of it through online videos, postings on blog, and social media. From then on, curiosity has taken over people and some of them trying to dig deeper than most. Rare doesn’t mean you can’t learn and master it. And financial literacy is not limited to companies, but for all of us. So, what makes financial literacy so important? Well, simply because it impacts almost everything, especially if it’s been taught from school. Right, accounting and management are included in financial literacy and have been taught in school, but I’m not talking about that kind of financial literacy. Learning how money works, how to manage risks, and how to develop your mindset about money, those are the core of financial literacy.
First of all, you need to know the fact that the rich gets richer and the poor gets poorer in our world, like it or not. Why? Robert Kiyosaki in his book “Rich Dad Poor Dad” tell us that the rich don’t work for money. When you work for money (become an employee in a company), you get higher taxes, and those taxes are given to government. Rich people don’t want to give their money to government, so they’ll use their money to invest (mostly property), and when they get profit, they use it for investing again, and again, and again. While many of us would think money as the root of all evil, the rich know that money is power, but they know how to manage it, so they shouldn’t be greedy. Except for the rich that don’t know financial literacy so well. Managing money means they already know how to manage cash flow. Based on Glints definition, cash flow is the total amount of income and outcome in a certain period. Positive cash flow occurs when your income bigger than outcome, and negative cash flow occurs vice versa. Income is coming from your wage, bonus, and assets. The key is not to make your wage bigger, but make your assets bigger. Asset such as property included in passive income, as it is passively makes your income bigger. Not just property, but stocks, mutual funds (reksadana), and even patents also included as assets.
Nowadays, it’s not hard to learn and join in reksadana (with only a hundred thousand rupiah), so it is suitable for students and low-income employees. Being an employee (especially for freshgraduate) is not prohibited, but as an employee, remember not to be a SLAVE for money. Turn that money into something. Poor-minded people would say “it’s hard to get money nowadays, so this is enough”, but rich-minded people would say “gold is everywhere, honey”. Even Glints recommended some things. The question is, what kind of money you could get easily and legally? You need to know that often the easy thing gets harder and the hard thing gets easier. So when it comes to money, there’s no such thing as ZERO RISK. Instead of fear, learn how to manage the risk. Think of it by yourself, wisely. You have mind, the gratest asset of all. You just need to train it. Read books as many as you can, attend workshops, seminars, watch videos, even you could try discussing financial with your friend. Just pick some from your list, ask them to talk in a cafe, spend time with them, talking about life, finance, relationship, etc. Discussion could change your point of views, try it. As you can see, I’m an introvert, but I had a time when I want to get out from routines, when I need inspiration, and when I need a bit change in my life, so I tried to ask one of my friend to go to Starbucks, then I found myself loving it. I’m hungry of knowledge everyday, I had a different perspective and inspiration from them, then I want it more and more.
The very basic knowledge on how to manage your money is by recording your monthly expense, evaluate it, and develop a strategy for next month in order to survive with that amount of money. Glints recommend 20% income for investing and 80% for your needs (Please differ needs and desires). Invest is not starting LATER, you should’ve start it NOW. There are many kind of invesments in Indonesia. Those with minim risks including gold, dollar, and mutual funds (reksadana). But in our period (when rupiah fall), we, as Indonesian people could contribute to raise the rupiah value. By investing in obligation (government’s debt), local products, not exchange rupiah for dollars, and share FINANCIAL LITERACY, you could help changing the status of Indonesia. As a student, undergraduates, graduates, parents, teacher, lawyer, doctor, etc, we need to contribute, because big things come from smaller things.
Thanks for reading!
Here are some recommended business books to read (based on many sources and my to-read-list):
- Benjamin Graham – The Intelligent Investor
- Dave Ramsey – Total Money Makeover
- Alexander Elder – Trading for a Living
- Adam Grant – Originals
- Scott Fox – Click Millionaires
- Sangeet Paul – Platform Revolution
- Alec Ross – The Industries of the Future
- Phil Knight – Shoe Dog
- Ray Kroc – McDonalds
- Duncan Clark – Alibaba
CHILD AND THE UNIVERSE 