Financial Habits

Have you ever wondered how some people make such great financial decisions while others seem to stumble at every opportunity? Do you know the difference between a good financial decision and a not-so-good one? Can you imagine how useful it would be to have a framework for making better financial decisions in your life? Ironically, in most cases people like you and I aren’t actually making financial decisions at all. Instead they are simply following the “path of least resistance” and doing what the “herd” has told them is best. That “easy road” often looks like contributing to a company sponsored IRA, 401(k), or other stock market vehicle without much thought about how it will impact their future liquidy, mindset, or taxes. In other cases running on financial autopilot means trying to pay off a mortgage or student loan debt as quickly as possible without understanding the “pros” or “cons” of their decision. Even worse, the path of least resistance can look like giving money to a friend or relative to “invest” or start a business simply because they asked. It wasn’t YOUR idea, it was someone else’s, but for you it was easier to say “Yes” than “No” without any deeper investigation so you did. I’ve seen enough of these type of investments fail to know that they shouldn’t be taken lightly. So is there a better way? A way to think about money so that you can consistently move toward your goals, and protect yourself from bad decisions that may erase years of hard work and savings? The answer is a resounding “Yes”, but it may not be what you think. The key to making good decisions has less to do with the tools or products you choose and more to do with WHY you are making the choices you make. Tools are only as good as the person utilizing them, so making good decisions is about YOU picking the right tools and strategies FOR YOU! The moment you realize that you can create your own options and you don’t need to just take what the world offers you is a major shift. You’re no longer a slave to other people’s offerings so you can forge your own path! That knowledge is empowering and will ultimately allow you to be the captain of your own ship no matter which way the wind blows! Here are a few questions to ask before you get into any investment or savings vehicle. If you take the time to be honest with yourself, you’ll likely see that most options in the world are NOT ideal for you. This is actually GOOD news… Because you’ll be able to focus on what IS best without being distracted by all of the other options other people are pushing. Once you experience this freedom from being blown from one idea or opportunity to another, you’ll never go back. 5 Key Questions for Making Better Financial Decisions: 1) Is this financial vehicle something that will increase my confidence and empower my mindset, or will is push me toward fear, doubt, or scarcity? Your confidence and mindset is your most important attribute. With a abundant, optimistic mindset you’re going to be better in everything you do! That includes your business & career decisions, relationships, health, and your finances. So making decisions that keep your mindset tip-top is of the utmost importance. Even further, if something made you money but you felt worse or more fearful during the process, would it be worth it? Absolutely not! In my opinion, the whole point of money is to increase your quality of life. So if an investment decreases the quality of my life, I consider it a bad one… even if it makes more dollars in the process. 2) How much do I understand the opportunity or vehicle? If you don’t understand where you are putting your money, your chances of success are much lower. I see too many people putting their money into investments, products, or businesses they don’t understand AT ALL. To me this seems crazy! Why would you put your life’s savings in a place that you don’t understand? You work so hard to earn the money so it’s essential that you protect it as much as possible. So understanding how a financial tool or opportunity works is a pre-requist before investing. On a final note, if you don’t understand something but want to invest in it, then your first “investment” should be in getting educated on that strategy, product, or business. 3) How much control do I have over the vehicle? If you don’t have control over where you’ve put your money, then what do you do if the investment/vehicle isn’t working? Can you get your money out? Will you be able to help improve the outcome of the investment or vehicle? Once again, if you have no control over your money, then your chances of success are lower than when you have knowledge and control. (It goes without saying that if you don’t understand an investment, then you can’t truly control its outcome either) 4) How flexible is this financial vehicle for me? We all know that markets go up & down and the economy is changing at a break neck pace, so the ability to move and adjust to new changes is vital. Not even the smartest people in the world know what’s going to be happening 5 or 10 years from now, so how could you? Being liquid or flexible with your money allows you the maximum opportunity to keep risk low and maximize profitability no matter what happens in the economy AND in personal situations like injury, illness, or personal problems. For example, many people were “investing” in paying off their home mortgage quickly in the early 2000’s. Unfortunately, when the 2008 mortgage crisis struck these people were caught with a lot of home equity but very little cash. For those who lost their jobs and couldn’t pay their bills the equity

It’s been said that the simplest solution is often the best.  I’ve found that to be true in many aspects of life, and after a lot of research, I believe it applies to money and finances most of all. Not surprisingly, most of the TV ads and salesmen you encounter are pushing a different agenda. They want you to believe that you aren’t smart (or knowledgeable) enough to handle your own money… and then they let you know that they are happy to manage your money for you. (Because they are so smart) Now it’s true that the stock market and many other investments can be complex, so a good adviser could help, but that doesn’t necessarily make those investments the right choice for you.  In fact, it seems to me that if you don’t fully understand an investment, then it definitely ISN’T the right place for your money. If we go back to that idea that the simplest solution is best – it seems self evident that you should put your money in places where you have an understanding and control over how they work. Make sense? Ask yourself, are you saving and investing money in places that YOU understand or not?  Are you putting your money in places that you have some (or a lot) of control in how to investments perform? If you don’t have much understanding or control over your money currently, I’d invite you to rethink your investing philosophy. Because putting your money into things you don’t control or understand sounds more like “gambling” than investing to me… At this point I always get some wise guy from the back of the room saying, “What if I don’t know about ANY kind of investment?” That’s a valid point – especially coming from the trouble maker in the back… So here’s the answer: If you don’t know where to invest, figure out an area/topic/field you’d like to invest in eventually, and then spend time and money to invest in your education.  In other words, take some training, classes, or get a mentor so that you can successfully (aka with control & understanding) invest in that area in the future. For example, if you want to invest in real estate, your first step should NOT be buying an investment property.  It’s true that you might get lucky, but you could also lose everything, and that sucks! When I first started, I spent about $60,000 learning how to effectively invest in real estate, but it made me several million dollars back (so far). I’d call that a darn good ROI on my education! So, rather than immediately purchasing a property, I believe you should get the training to understand what you are doing and why a particular property would be a good investment for YOU and your family. In general, if you’re not sure why something is a good idea, then the chances are good that it isn’t… especially in investing. I know that sounds like the old-fashioned, slow way to wealth and you might want to be a gun-slinging, go-for-broke investor – but trust me when I say that a little time and money spent in education is worth a LOT of time and money lost in a bad investment. (I’ve seen bad investments cost people YEARS and hundreds of thousands) It’s easy to forget that building wealth is a marathon, not a sprint. You might find yourself in such a rush to do SOMETHING that you don’t take time to do the BEST THING for your success. DON’T BE THAT PERSON – it doesn’t work. As Robert Kiyosaki said, “Risk is the investor, not the investment” So invest in your education until you understand the investment so well that it is no longer risky for YOU. At that point, you’re stacking the cards in your favor and your odds of winning increase dramatically! Decades of experience has shown me that investing in your own knowledge is NEVER a bad choice, so don’t be afraid to slow down (just a little) and take enough time to get educated. Nearly every major mistake I’ve seen people make in investing came because they were in a big rush to make a decision.  Either they had money burning a hole in their pocket, or someone else pressured them into a “ground floor opportunity” and they got burned.  Don’t be that guy. ACTION ITEM: Look at your existing investments and savings vehicles and ask yourself to answer the following questions on a scale of 1-10: 1) How well do I understand my investments? 2) How much control do I have over the outcomes of my investments? 3) If something was to go wrong, how clear am I on how I would get out of the investment? 4) Do I understand any fees associated with my investment? 5) If I didn’t have money invested in this product/company/service, how much would I care about it? If you don’t like your answers, it might be time to think about making some changes… and if you DO like your answers, great job! I’ve found that if you stick with stuff that seems “simple” to you, you’re probably investing in areas that you know, understand, and control.  But it’s when you try to get “sophisticated” that you end up with your money parked in a bad neighborhood.  So let’s keep it simple and avoid all the trouble! My main focus is helping people build wealth through using financial strategies and tools that play to your strengths.  If we can do that, you’ll stack the cards in your favor and can consistently keep risk low, while returns are high!  That’s MY kind of investing! Want help with your financial strategy? That’s what we do… Click here to schedule a complimentary assessment session. We’d love to help you begin taking action on your dreams starting today! LIKE WHAT YOUR READING? THEN YOU’LL LOVE OUR VIDEOS. YOU CAN WATCH AND SUBSCRIBE HERE>>>