Building Your Financial Future: A Serious Lesson for My 13-Year-Old

- From a Father to His Daughter

“Today, I want to share with you an important lesson about money — one that will help you build a secure and successful future. This isn’t something you’ll learn in school, yet it’s critical for living a good life: how to manage your finances wisely to grow your wealth.

Let’s start with the basics. Think of an income statement as a way to track your money. On one side, you have income — the money you earn, like a salary from a job. This is what adds money to your pocket. On the other side, you have expenses — things like food, utilities, or rent, which take money out of your pocket. It’s straightforward, and I’m sure you already understand this concept.

Next, there’s something called a balance sheet, which shows what you own and what you owe. On one side are assets — things that make you money over time, like a savings account earning interest or investments in stocks that pay dividends when companies do well. Assets increase your wealth. On the other side are liabilities — debts, like money owed on a credit card, which reduce your wealth by taking money out of your pocket.

Now, let’s talk about why some people struggle with money their whole lives while others become wealthy and live with financial peace. The difference comes down to two things: financial education and the decisions you make.

To explain this, I’ll use three categories. People with limited financial knowledge — we’ll call them financially uneducated people (FUP) — rely on a single income, like a job, and spend it all on expenses with little left to save.

Then there are financially educated people (FEP), often the middle class, who also earn a salary and have expenses, but they might owe money on a house or credit cards — liabilities that eat up their income.

Finally, there are the wealthy (RICH), whose income comes from assets, like property they own and rent out. Their assets not only cover their expenses but also generate extra money to invest further.

You might ask, “If my income only covers my expenses, how can I become rich?” That’s an excellent question, and the answer lies in two key principles: making informed choices and managing your money strategically.

Informed Choices

You have control over your career and your spending. Choose a profession that you enjoy AND that pays well — this sets a strong foundation. Also, be thoughtful about your expenses. Before you buy something, ask yourself: “Is this necessary, or can I save that money instead?”

Strategic Money Management

As you grow older, the path from FEP to RICH involves using liabilities wisely — not to fund unnecessary expenses, but to acquire assets. For example, save money, then invest in a small commercial property. You might pay 30% upfront and borrow 70% with a loan. The rent you collect should cover the loan payments and operating costs — like insurance or repairs. Over time, once the loan is paid off, you’ll own an asset outright that generates income. You can then repeat this process.

This is the foundation of financial success. By making smart choices and managing your money well, you can build a future where wealth works for you.”