If you don't understand money- You Lose

Life, Money and Gratitude #57 If you don't understand money- You Lose

Lets take a look at three things that everyone deals with but might not have a complete understanding of, Banking, Honest money vs Dishonest money, and Taxes.

Banks are in existence to lend you money and open accounts (more on that later).

To be clear the banks want you to:

• get a credit card

• get a car loan

• get a school loan

• get a mortgage (loan)

• get a home equity loan

• refinance your mortgage

• and finally do a reverse mortgage

The interest earned on all of these "products" earns the bank at least double what they lend out. So as an example if the bank lent you $1000 by the time you pay it off they (the bank) will have earned an additional $1000 (a $1000 loan costs you $2000).

The bank also wants you to open bank accounts, as many bank accounts as they can get you to open.

Why? you ask,

FRACTIONAL RESERVE BANKING

(Newsletter # 35 explains this) The bank makes a lot of money on each account you open.

Honest Money vs Dishonest Money  If you don't understand money, You Lose

We'll define Honest Money - as a means of exchange that retains it's value over time.

Here are some examples: Gold, Silver and more recently Bitcoin.

Dishonest Money - loses value over time.

Some examples: almost every currency issued by a central bank.

This includes the US Dollar, the British Pound, the Euro, the Peso, the Yuan ... and many many more. My favorite of the dishonest money comes from the Reserve Bank of Zimbabwe, they actually printed a 100,000,000,000,000 (trillion) dollar bank note, it's worth nothing.

THAT'S FIFTEEN (15) ZEROS

Taxes

It's a strange system that we're in, it's much more of a disincentive program than one that encourages you to make more. What do I mean, the more you make the more they (the government) take through the progressive tax code. Most of us end up in the middle somewhere and don't want to move up only to pay more taxes at the next tax bracket.

Sadly, all of us are aware of how wasteful the money collected through taxes is spent. It would be much better for all of us if each individual got to keep more of what they earned.

So now what?

Having a little more insight here are some of my suggestions:

• Use the bank as little as possible (borrow what you absolutely need to, no more),

• Over time exchange your dishonest money for honest money,

• And do everything in your power to reduce your taxes.

Shameless plug: I cover a lot of this stuff in my little step-by-step guide to financial literacy called Graduation Gift, if you know someone who could use some more understanding, gift them a copy.

Until next time, God Bless and be well.

If you don't understand money- You Lose

M. Joseph Benric is a Christian, husband, father, small business owner, patriot and believer in helping people help themselves. Through a little book he wrote called Graduation Gift, A Step-By-Step Guide To Financial Literacy he hopes to expand the understanding of money and give a hand up to the next generation.