The Five Pillars of Money

In its simplest terms, money is anything that is generally accepted as a medium of exchange. It is, however, important to have a good understanding of money vis-à-vis personal finances and money management. These two variables - (personal finances and money management) cut across the five pillars of money, determining the extent to which an individual, firm, or organization will be financially successful.

Having said that, the five pillars of money also include earnings, savings, investments, spending, and giving. While some of these areas refer to how your money can be better managed to grow financially, some of them refer to how personal finances can be best handled in order to excel as an individual.
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What are the Five Pillars of Money?
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Earning: Earning is the first pillar of money, and no finances can be managed if there is no money, or money is not earned. Earning is defined as the monetary gain or reward for someone’s service or efforts. However, to earn money, you need to get a job suitable for your needs and skills. Earning an honest wage is very important for proper growth and to be free from any troubles and consequences.

Many people consider having more than one stream of earnings to generate sufficient income for themselves.  Perhaps your current wage is too meager to meet your primary needs, you may have to consider the multiple streams of income option, which means that a little from ‘A’ and a little from ‘B’ can make a big ‘C’. Having multiple legitimate streams of income could be all you need to attain financial stability.

Saving: Once there is a stable source of income, financial security becomes the next item on the agenda in terms of saving for a rainy day or for any unforeseen circumstances. This will also help to secure your future needs and expectations for a better tomorrow. There are many effective strategies you can adopt to save successfully. For example, you can deposit money in a savings account, and you can also deposit it in a Neo Bank – which is an increasingly popular option and fast-becoming the new normal for speedy digital transactions.

Neo Banks are simply digital banks that make saving and depositing money easier. They eliminate the need to visit a physical bank thus saving you some time and encouraging you to save. Now the basic question is, what percentage of your earnings should you save? While the answer to this may vary, saving 50% or more from your earnings is recommended.

Investing: At times, people see investments as a substitute for savings. Although there is a fine line between both, there is value in preserving the distinction between savings and investment. In the current financial market, for example, you can invest in real estate, stocks, market shares, bonds, or cryptocurrencies. It increases your income and makes you more financially stable by creating more outlets of passive income for your family. The process involves buying at a cheaper rate, holding it for some time to gain rewards (dividends or interest) as Return on Investment (ROI).

You can also sell your stocks when their prices go higher, to make a profit. With recent advancements in technology, you can invest with just a few clicks.  Using designated apps, you can easily grow your funds by investing in stocks and cryptocurrencies. Companies like Astralis, Coinbase, and CashApp provide these investment features. However, always do your due diligence checks before investing, to avoid any potential losses.

 Spending: There are always times when you must spend money, but you should always remember to spend wisely and properly. Improper spending can lead to financial problems which can impede financial stability and growth. Always know how much you can spend without having any issues and keeping a budget also helps to keep a check on your finances.

Giving: Giving refers to the act of helping others through donations or by fundraising. Some people regard giving as a poor use of hard-earned money, regardless of the motive. However, the basic question that must be answered prior to giving, is to know if you can afford to give, why you are giving, and to whom? When there are valid answers to these questions, then such giving becomes a reasonable act. Invariably, giving is a great way of helping those in need and it also increases the giver’s value within society. It is indeed an act of charity with multiple advantages and abstract rewards.

Conclusion

In summary, the Five Pillars of Money as discussed above, give a recap of our everyday financial life and activities. It starts with how you earn, which also determines the propensity to save. The other pillars centre on how money is distributed after earning and saving. Regardless of how the money is distributed, to avoid losing your earnings unnecessarily, you must ensure to invest in only safe and profitable ventures and always seek knowledge for a basic understanding of financial sustainability.