A systems dynamics model allows an engineer to model feedback loops and gain a holistic understanding of now a system works. This frame work is sufficiently flexible such that it can apply to any domain.
Here is how I intend to use this framework to teach the fundamentals of personal finance to my students.
The diagram above summarises our financial lives.
Upon first inspection, our monthly cash flow is influenced by our salary from work which is determined by our life-energy exchange.
For the greater part of the financial blogosphere, I think we have make the mistake of thinking that the moment we can start investing part of our money into dividend stocks, we would spark a virtuous cycle of getting more passive income to farm more of our salaries into passive
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