Mirabelle Abogi

EmpowerED 2025 Contest Entry

Financial Literacy in the 21st Century: The Importance of Proper Protection in Your Financial Journey   

            If you were to build a house from the roof down, there is a zero percent chance of success due to gravity, load bearing, the engineering sequence, and basic construction logic. Besides, how would it be possible to keep the roof from collapsing without a foundation to support its weight? This analogy can readily be applied to everyone’s financial journey because everyone who has triumphantly established and reached their goal in building a stable financial foundation most likely have accomplished these four things: Having protection, debt management, emergency fund, and investment. Likewise, everyone. who has thrivingly built a house can agree on accomplishing these portions before anything else: Slabs, or load bearing, basements, and crawlspaces. With this being said, before building your proper protection it is vital that the main points of proper protection are understood. In other words, the value of protecting your assets and liabilities, the x-curve concept, and how these are applied today. 

            To begin, what is the value of protecting your assets and liabilities? Liabilities are anything that takes money out of your pocket. So, for example, in my life, liabilities that I have are from the local boba shops and taco bells. Of course, even though treating myself to a sweet or savory treat occasionally, isn't necessarily bad, it can be if it becomes a daily thing. In other words, the value of this liability would not be as high if it was occasional spending, however, as the amount spent increases, so does the value. Now, assets, such as your income, property, investments, and savings, represent the foundation of your financial health. An example of an asset in my life is the money I get from braiding hair. While these two things are both important to know how to protect and manage, the difference is that one can hurt you and one can heal you, assuming you manage well. Without sufficient protection through insurance or other legal means, unexpected events such car accidents, sudden job loss, lawsuits, or events as such can rapidly deteriorate the progress you've made with your assets. So, by defending both what you give and what is given to you, you can minimize your financial vulnerability and grow in many other ways. All in all, as of the 21st century and forward, protection for your assets and liabilities isn't a suggestion, its a requirement. 

            In addition, to ensure proper protection for your finances, a concept that is crucial to understanding is the x curve concept. The x-curve concept is a simple concept that shows the relationship between taking care of your responsibility and building your wealth. This curve also emphasizes the importance of goals of building wealth over time so the responsibility decreases. So, first, the responsibility curve is the curve that states that less savings ensures more responsibility. These savings can include children, mortgage, education, debts, etc. The curve goes from left to right decreasing showing that if you protect properly, the responsibility curve should be going down. In my life, responsibilities I have are doing chores, doing schoolwork, learning basic money habits, and taking care of personal hygiene. If I were to include responsibilities that I would usually only have when I am older, I can ensure less responsibilities later on, according to the responsibility curve of the x-curve concept. Then, the wealth curve states that more wealth means less responsibilities. When we are young, for example my age, it is important to start to save and invest. This is so that when we are older, we can retire. Plus, the earlier you retire, the better. Though, to retire, we have to accumulate wealth. This can be done by using strategies like the x-curve concept. To summarize, a crucial concept to understand to ensure proper protection is the x-curve concept. 

            In conclusion, before building your proper protection it is vital that the main points of proper protection are understood. For example, it is important to understand why you have to protect your assets and liabilities. Additionally, the x-curve concept demonstrates the relationship between taking care of your responsibility and building your wealth. These main points help guide people beginning or improving their financial well-being by explaining the basis of their financial journey: Proper protection.