The Basics of Economic Solvency Part 1
When embarking on your journey towards economic transformation in pursuit of financial freedom, learning to cultivate economic solvency becomes essential
We observe that people with financial success follow a common pattern: they understand the basic principles of solvency and, even more importantly, take concrete steps to apply these fundamentals in their lives. The results of internalizing these principles and guiding your financial decisions accordingly are often positive and, in many cases, even spectacular. The key lies in learning, applying, and continually adjusting these principles to achieve solid and sustainable financial stability on your path to financial freedom.
Think back to your earliest memories about money. Do you remember when you first realized that money had the power to buy what you wanted? Was there ever a time when you wished you had enough money to acquire something specific? When were you first told that you couldn’t have something because you couldn’t afford it? And what is your earliest memory of holding a bunch of money and feeling happy about it?
Now, ask yourself something else: when you reflect on those early memories about money, do you feel something positive or negative? For many, these memories are often linked to a feeling of scarcity, the idea that they didn’t have enough to get what they wanted. Unfortunately, this feeling of scarcity, known as “the money issue,” is something many people still experience.
This feeling comes from the understanding that you can’t afford something you want, that you don’t have the resources to take an action you’d like to, or that you can’t help someone you care about simply because you don’t have enough money. But most importantly, “the money issue” sometimes prevents people from reaching their potential and living out the deepest purposes of their lives.
Although there are things more important than money, “the money issue” acts as a restricting factor for many people.
In this blog, you’ll find a summary of the 47 Principles of Financial Solvency, extracted from the book written by Chris Brady and Orrin Woodward. The focus of these principles is not to get rich quickly but to become “Solvency.” The distinction between these two goals is crucial. Over time, those who are solvent and follow the principles of economic success will achieve prosperity, and even financial freedom, by focusing on doing the right things. The relationship between happiness and solvency is clearer than happiness and “getting rich.” Being solvent involves living a life that leads to economic success without unnecessary risks or complications, maintaining a focus on life’s most important aspects. This process is not simply a quick goal but a lifestyle based on solid values and habits, which cannot be achieved and easily forgotten. In contrast, those who seek to get rich quickly often lose everything because they don’t follow the basic rules of solvency. There are 47 principles mentioned by the authors Chris Brady and Orrin Woodward summarized in the most important ones.
Principle #1: WHAT DETERMINES ECONOMIC SUCCESS IS NOT HOW MUCH MONEY YOU EARN, BUT HOW MUCH YOU KEEP. INVEST IN YOURSELF FIRST AND SAVE WHAT YOU INVEST.
Most people who earn $30,000 a year often believe that if they could increase their income to $40,000 a year, their problems would disappear. However, the curious thing is that those who already earn $40,000 annually are often convinced that they need $50,000 a year to solve their problems. The trap of this thinking lies in the fact that if you spend everything you earn, regardless of the amount, you always find yourself on the brink of financial ruin.
In other words, economic success is not defined by the amount you earn, but by how much you can save. It’s possible to be solvent with an income of $30,000 a year, while, on the other hand, there are people who, despite earning $500,000 a year, may find themselves in an insolvency situation. The reason some people have enough money while others struggle with their finances is simply that the former have learned the principles of solvency and apply them in their daily lives… while the latter do not.
REAL POWER: Ultimately, your economic future depends only on you.
Principle #2: MONEY IS A GIFT; IT HAS A SPECIFIC USE. THIS MEANS YOU HAVE A PURPOSE. YOU MUST USE MONEY FOR SOMETHING IMPORTANT, FOR YOUR FAMILY, AND FOR YOUR COMMUNITY.
What would you change in the world if you could? There are so many needs in the world, and some of them may align with your passions and interests. You have the power to do three significant things with money:
- Acquire material things.
- Achieve goals and dreams.
- Contribute to causes and people in need.
If you had the time and resources, what would you do to contribute and make the world significantly better? Take the time you need to write your answers to these questions.
It may interest you: Sustainable Economy: The Path Toward a Sustainable Future.
The principles of Economic Solvency will have a great impact on your life if you apply them regularly and actively invite your family to live them. Take advantage of Part 2 in our next Blog.
