Thread by @mrstingy2014

1/ Money is difficult, so I tried to simplify it into simple diagrams.

This thread shows highlights. Full article below:
mr-stingy.com/personal-finan…

2/ Most people think rich/poor is based on income. Net worth is a better measure.

3/ High net worth = rich
Low net worth = poor
Negative net worth = broke

4/ Most people think "rich" is spending lots of money. Rich is actually about saving (& investing) lots of money.

(I learned this from the great @morganhousel)

5/ Poor people can't easily escape poverty because they have low income and low savings.

It's a problem that middle-class/rich people don't easily understand.

6/ The human mind can't easily understand how interest compounds and grows your money. We usually think in linear growth.

7/ But if you consistently buy good assets over MANY years, you're gonna be rich.

8/ For the same reason, people don't realize how quickly debt can f*ck your life up.

9/ If you don't manage debt properly, you can end up in a very DEEP hole.

Where your HARDEST efforts just stop you from falling deeper.

10/ This is the highway to financial hell.

11/ Making money and KEEPING money are completely different things.

If you blindly spend your money, you may never accumulate good assets.

12/ Earning a 5K salary doesn't mean you get to spend 5K.
After the "responsible" things to do, your play money might only be 500.

Budgeting is important.

13/ There's a limit to how much money you can save (especially on low salaries).

If you wanna be financially strong, you have to figure out how to earn more money.

14/ How much RISK you take when investing depends on your own personality and skill.

Most investors should keep the majority of their money in safe investments.

15/ p.s. I've oversimplified many things -- but for a quick introduction to personal finance, I hope this is enough. Full article below:
mr-stingy.com/personal-finan…