How do you make money work for you at a time when the world at large is struggling? All throughout history, there have been societal and economic shifts. From stock market crashes to pandemics, there have been many periods where unemployment, financial insecurity, and a general level of uncertainty have taken hold. Although you as an individual can’t affect much change on a macro level, there are things you can do to bring a certain amount of security to your life.
The best thing that anyone can do in preparation for and during times of uncertainty is to educate themselves about money. Most people see money as something you receive in return for providing goods or services. That’s true. However, this definition only takes into account one aspect of it. Money is a reward and a medium through which value is exchanged. However, it’s also an asset.
Businesses Use Money as a Tool, So Should You
Businesses use money as a tool all the time. Once they have a handle on their finances, businesses can use a certain amount of income to grow. Of course, that means a business owner needs to know how to create a budget. In simple terms, this means assessing how much revenue is coming in and deducting fixed costs, expenses, and putting money aside as a contingency. Thus, budgets allow companies to partition off funds and, in turn, use their capital for investments.
It’s these investments that help a business grow. For example, a tire fitting company might invest in the latest piece of technology to speed up the removal of tires. The goal here is to take an investment and turn it into something more valuable. The asset itself will lose money as you couldn’t sell it for more than you bought it. However, the ability to remove tires at a faster rate means the business can serve more customers. Therefore, the initial cost of the tool has been offset and, in turn, exceeded by the increase in trade.
This is money being used as a tool. You’ve taken some cash and, instead of banking it, you’ve turned it into something that will be worth more in the long run. Forbes contributor Eric Roberge explains this in his article “Money is a Tool, So Stop Treating it as the Goal.” This concept doesn’t only apply to businesses. You have the power to use money as an asset. When you understand that, you can weather any financial storms that might be raging around you.
You Can Invest in Ways You Never Could
Like businesses, you can invest. However, instead of investing in tools and physical assets, you can invest in shares, commodities, and forex. Thanks to the advent of online trading platforms, investing is more accessible than ever. Modern platforms have not only introduced low-cost trading options, access to market data, and training materials, they’ve introduced new ways of investing.
ECN forex brokers are an example of this. In years gone by, retail customers (i.e. the general public) wanting to trade forex had to go through a proverbial middleman. This middleman would be a person or a company that, essentially, gave traders access to the financial markets. As online trading markets evolved, Electronic Communications Networks (ECN) forex brokers have cut out the middleman. Instead of running a trading desk (which comes with certain costs), merchants use electronic systems to select the best trading options for their customers.
Because they have direct access to the markets, you don’t have to pay spreads (i.e. a premium to trade). This means you can buy and sell forex in the most cost-effective way. Finding ways to lower the cost of trading is clearly important if you’re a novice. However, what ECN brokers demonstrate is the power of the internet. Today, it’s easier to invest in forex, gold, shares, and anything else you can think of. The upshot of this is that you can make your money work for you.
To put it another way, you can use your money as a tool. Naturally, you need to learn the basics of trading and understand what you’re investing in. However, the point here is that anyone can put their money to work in the financial markets. You don’t even have to wait for times of economic stability. Financial markets are always moving, and certain trading options (such as CFDs) allow you to profit when the value of something decreases as well as increases.
Therefore, you can still make money when the world at large is in a tough spot. That’s the lesson here. If you understand that money is a tool, you can use it to your advantage. Of course, just like a business needs a budget, you should only invest surplus funds. However, when it comes to protecting yourself from uncertain times, there’s no better way to do it than educating yourself about the utility of money.