by Mika » 30 Jun 2026, 06:51 Effective financial management skill equals to long-term wealth and financial stability. If you peek into the history, you can see a lot of evidences of how once-wealthy individuals and rich corporations lost everything due to poor financial decisions, mismanagement, or an inability to adapt to changing market dynamics.
How Millionaires Went Broke
In our own country, there is a well-known story about a wealthy politician and his son. The son inherited 100 million in local currency (about $1.42 million USD), however, he tragically ended up homeless. Despite receiving a massive inheritance, he lost everything due to poor financial decisions, lack of planning, over spending, and failure to save or invest wisely.
Not just individuals, even companies go bankrupt due to poor financial management. One such example is Enron. At its peak, Enron was valued at $70 billion and was ranked as the fifth-largest company in the United States in 2002. Yet, within just four years, the company filed for bankruptcy. Another example is Blockbuster, which was once world’s largest movie rental company with over 9,000 stores and $6 billion in annual revenue (in 2004). But by 2010, the company collapsed because it couldn’t adapt to the rise of digital streaming and changing consumer behavior.
Lessons From the Past
What can we learn from the failures of individual and companies started above? Well, these stories point to the same fundamental lessons.
Money alone doesn't make you rich, how you manage and grow your money actually make a difference, as stated in the story of the politician’s son.
Bad business strategies or policies, like in the case of Enron or Blockbuster, can destroy even the largest companies.
Inability to adapt to innovation, as with the case Blockbuster, can make you go bankrupt.
Money Doesn’t Grow By Its Own, You Need to Make Your Money Work for You
Making your money work means putting your money into productive use, such as investing or starting a business, so that it grows. This could include:
Stock market investment
Real estate
Building or funding a business
However, you need to beware that investing and entrepreneurship carry risks. You could lose your money if...
You invest without research
You follow market hypes
Your business plan is flawed or unsustainable
That’s why financial knowledge is essential before you make money moves.
Financial Management: The Most Important Skill to Acquire For Success
Success means money. That’s because you can not only pay your bills but also live in comfort, do charity work to build reputation, and earn respect in the society. However, how much you are making or how much money you have doesn’t make you successful. You need to manage your money properly to build your wealth. You need knowledge about finances and skills to handle money. It is easy to acquire knowledge through education, training, and self study, but it is difficult to build skills. Building skills means you need to put your knowledge to work. It takes a lot of practice.
