In the United States we are experiencing a period of economic growth, at least in terms of macroeconomic indicators. Now that job and business opportunities are increasing, it is a good time to reflect on how to use your money wisely.
Due to multiple factors, the U.S. economy has strengthened. In the second quarter of the year, it accelerated at a growth rate of 4.1%, the fastest rate since 2014, according to the Department of Commerce. The unemployment rate fell to 3.9% in July, while the unemployment rate among Latinos fell to 4.5%. It is not uncommon to find multiple industries looking for workers.
Since job opportunities are growing, it is likely that earnings will also grow or at least stabilize; however, some families use this as an excuse to increase their spending.
It is understandable that if we have extra money, we will be tempted to take our dream vacation or buy something that we want. But before you take out your credit card, it is important that you consider that the economy is cyclical. The good times will not last forever, so we must understand three concepts very clearly: spending, saving, and investing.
In simple terms, spending is using an amount of money to satisfy a desire; saving is setting aside money to use in the future; and investing is using money to make more money.
It should be noted that a need is an essential requirement for our survival– for example, we need water, food, shelter, and clothing to survive. In contrast, desires refer to the things we would like to have or experience, but which are not essential to survive. A person needs to drink water but may want a soda, for instance.
With this in mind, consider the following: it is clear that if you need transportation, you can get around by driving an economical vehicle in good condition or a luxury car. Ultimately, the two cars fulfill the same function, but you will find differences in the price and in the way you feel when driving them.
Our consumer society pushes us towards satisfying our desires over our needs. If you give in to this, you will be incurring expenses, in other words, purchases that will cause you a moment of pleasure and nothing more.
Investing means using resources (money, time) on a product or activity with the objective of generating more resources. Everything else is spending.
If you buy numerous boxes of dietary products that you plan to sell but do not sell them, it is an expense. If you spend two or more hours a day watching TV series, it is an expense. If for years you have religiously bought lottery tickets every week, it is an expense.
On the other hand, academic instruction or professional training are investments. Learning how to start a business or acquiring a new skill can offer you future benefits.
It is important to emphasize that in the world of investing, not all that glitters is gold, hence the urgency to educate yourself about financial issues so that you know how to use your resources wisely.
Creating a business can be an investment if you have the knowledge and resources to keep it afloat. Take advantage of the many available resources that can help you on your way as a new entrepreneur: from books to courses to local chambers of commerce (many of them Latino), as well as Spanish-language websites such as the webpage for the U.S. Small Business Administration: . Once you are on the webpage, in the search bar type the phrase:
Comenzar un Negocio (Start a Business).