Finance Roll

"Man is born free, but everywhere he is in chains." Jean Jacques Rousseau (1712 - 1778) The Social Contract, French political philosopher.

There is no true freedom without financial freedom. There is no financial freedom without financial literacy, financial understanding. We need to be financial literate to be able to gain and keep wealth. Mike Murdock, author, minister, public speaker says, "People who have what you don't have, they know what you don't know."

Little do we understand that we are a slave to the one we are indebted to, be it mortgage, car loan or personal loan... and as long as our main source of income is active income, we are in essence bound (enslaved) to the one we serve (where we exchange our time (and skills) for income).

Financial illiteracy has led many to ruin their business, company and or personal life. Many financial decisions are taken based on assumptions on one's understanding on what income (active and passive income) and expenditure, asset and liability, good and bad debts, opportunity cost and cost of opportunity are and the impact they have in one's personal finance.

Financial illiteracy is the number one reason why most people would skip paying their loan and not be too concerned about it. We lack the understanding of how taking a loan, using credit card, moving too frequently, electoral roll affects the rate that we are charged when we take loan, credit card, mortgage. Financial illiterate person would skip a loan payment of £5, not knowing that eventually this will cost him dearly on other future financial deals.

What we need to understand is we live in a highly organized world, every person has a record (held somewhere electronically) of who he or she is, the financial decisions that one (including those that one is financially tied to) has taken in the past and the consequences thereof. This is what is known as credit record, credit score or credit worthiness.

Unfortunately, most of us do not know how we contribute either positively or negatively towards our credit record and how it affects us daily. This is due to lack of financial understanding otherwise known as financial literacy. We certainly know how to count numbers, but do we really know what counts?