Money is incredibly important. It allows us to live enjoyable, comfortable
lives. We need money to pay for food, a bed, heating, a home, a car, perhaps
tuition for our children’s schools, vacations, and many other things that are
so important. It is not greed that should drive us to learn about this subject
– when almost everything we need and want costs money – we simply cannot
ignore the importance of understanding money and of being able to manage
our finances. This is the case whether we like it or not - not focusing on
this stuff does not make it go away – on the contrary, money usually
becomes an issue when it is not thought about, and when there is not
enough of it.

Unless we want to accumulate huge amounts of debt, earn every penny
just before we spend it, or live very poorly in retirement, we need to save
money and invest it! And how we save and how we invest has a major
impact on how much we end up with. Some people make large amounts of
money but still end up with financial headaches as a result of not managing
their finances properly, whilst other people that never made a lot of money
own their own homes, enjoy great vacations, send their kids to great schools
and lead lives free of financial worry. The difference is in the doing – how
they save and invest!

This subject is not just important – it is becoming more important all
the time as we become increasingly responsible for managing our own
finances. Historically the government and employers played a larger role in
looking after our saving and investing needs. Today, most governments are
getting smaller and more efficient, not to mention that many are financially
stretched themselves. Governments predominantly set up the framework for
saving and investing through laws and tax rules - the actual decisions and
actions are increasingly left to us. Saving and investing is also usually not the
employer’s core business and can create conflicts of interest – they are also
increasingly outsourcing this. The net result is that we better know what
is going on.

Despite the importance of money, saving, investing and financial
markets, most of us are never taught about these things. Some of us
try to build our knowledge through trial and error - often lots of errors.
Many of us do not even try because we feel that the whole subject is just too
overwhelming and too large to even start worrying about. When we do pick
up snippets regarding this subject, they are often not well explained, or they
are based on opinions that may or may not be true, as opposed to being the
facts that should be the basis of any decision. Without the full picture, trying
to understand what is going on is like trying to build a puzzle with a lot of
missing and damaged pieces, and with no idea of how they connect.
 
Fortunately, learning about saving, investing, and how our financial
system works is straightforward. One key is to get the complete picture. The
other is to understand how things work, and not to focus on what is happening
or what did happen, without understanding why this is or was the case. Many
things exist in the financial world because they create win-win situations that
provide benefits to all of the parties that take part in the transaction, and
these things tend to happen over and over again. Understanding these and
other fundamental concepts is crucial to understanding what is happening
and what might happen next. These are the concepts that we are going to
look at in this book. They are also the concepts that have been used by
anyone that has become rich and that has stayed that way.