The financial industry as we know it today has evolved greatly from what it was originally intended to bring us, which was a common mechanism through which to regulate trade. It evolved rather quickly however, within the first few years/decades of its development, testimony to which is borne by just how quickly the Great Depression of 1929 came after the standardisation of the financial system.
The financial system has gone through many little tweaks and adjustments since then, but fundamentally it has largely remained the same in its principles. If you can figure out how it works on a basic level then there’ll never be any need whatsoever to struggle with your finances and you can incrementally build up some wealth by simply adjusting the manner in which you approach your finances on a daily basis, aligning them with how the financial system was designed and evolved. It’s undeniably dynamic in its nature as well, but fundamentally it largely remains the same.
So if you choose a financial management strategy that is largely effective in one area of your finances, if it is indeed the right strategy falling in line with the basic fundamentals of the financial industry’s inner-workings, that very same strategy can be applied across the board and bring about great results.
Identifying the ultimate goal
So what should the ultimate goal be? The answer lies in considering the ultimate goal of the financial industry, which whether we care to admit it or not or whether we agree with it or not, is to create channels through which money flows and changes hands and in the process of the money changing hands, charging a small fee for the “service” provided. If you’re on the right side of this equation then you get a small cut of these “service fees” charged, however small that cut may be. This small cut builds up and can grow into something really substantial when the transactions start running into the thousands.
So how do you do this in practice? The answer lies in segmenting your finances to minimise the service fees you get charged while taking every opportunity to benefit from the service fees other’s are charged.
Segmenting your finances with the ultimate aim of minimising value erosion (through the likes of bank charges, etc) and maximising value addition (through the likes of interest and capital gains) simply comes down to allocating funds to each risk profile you’ve identified for the investment of your money. So if for instance you’ve allocated a portion of your weekly wages to higher-risk investments, you would proceed to have that portion of your weekly wages directly deposited into the account you’re going to be using for just that. Additionally, you’ll proceed to deploy a fixed strategy that gives you the best odds of getting returns from that investment and you can learn more here about some basic strategies which are specific to the casino game of roulette, but which can be applied across the board.
This way you have some consistency in the manner in which you handle your finances and thus forever giving yourself the best odds of “winning” or gaining value as opposed to losing it.