A good income doesn’t always lead to a good outcome. Being smart with money has little to do with your income and a lot to do with how you behave with it. Let’s meet two people who will show just how true this is… Jesse Livermore was the greatest stock trader of his time. Born in 1877, he was a trader before most people knew that was possible. By 30 he was worth the inflation-adjusted equivalent of $100 million. Jesse was already a well-known investor by 1929 when the US stock market crash that year ushered in the Great Depression. In a stroke of luck (and maybe a dash of genius) Jesse had shorted the market the week of the crash, betting stocks would decline. When most lost everything, Jesse had his best ever day of trading, ending up fabulously rich. In the next 4 years, overflowing with confidence, Jesse made larger and larger bets and eventually lost everything in the stock market. While Jesse was very good at getting wealthy, he was equally bad at staying wealthy. Even if you don’t see yourself in the “wealthy” category, the lesson applies to all income levels. Getting money is one thing. […]
I want to introduce you to the intuitive spender… But before I do, I want you to meet the intuitive eater (she’s the intuitive spender’s cousin.) The intuitive eater The intuitive eater is someone who’s slender and is in good shape. She’s able to maintain her physique because she eats when she’s feeling hungry and stops when she’s full. She doesn’t believe in dieting and enjoys having a banana split once and a while — without feeling guilty. Now that you’ve met the intuitive eater say “hello” to the intuitive spender. The intuitive spender Just like his cousin, the intuitive spender is in excellent “financial” shape — he’s debt free, pre-saved for his vacation to Italy, and his retirement savings are on track. The amazing thing is that he (the intuitive spender) doesn’t believe in budgeting. He views being restrictive as “silly.” That’s because he has an innate sense of what he can spend and not spend his money on without having to check in with a budget. The intuitive spender can tell the difference between his needs and wants. And even when he sees a “want” — like the latest designed Salvatore Ferragamo silk tie — he feels it and […]
Perfectionism has plagued me from eating healthy, working productively, and from having financial freedom.
Take eating healthy for example: In my mid-twenties I started to gain weight. I knew I needed to diet, so I joined a weight loss program. The day before my first class I ate my “last supper” will all the forbidden foods I could think of: Snickers as an entre, banana split for the main course, and ketchup chips for dessert. After I finished, I vowed never to eat junk food again.
I’ve always been good at theory. But terrible at taking action. For most of my life, I’d fantasize about what I wanted to do and where I wanted to go in life, but most of the time I never followed through. I was born like that. As far back as I can remember, I always had a huge amount of resistance starting any project of significance (and finishing Super Mario doesn’t count.) Even as a child, I wanted to do my homework but I always pushed it off until last minute and usually didn’t get it done in time. My teachers would tell my parents “he’s a smart kid but he needs to apply himself more.” And this pushing-off-mentality caused a lot of damage in my life — beyond my calculus marks. My finances suffered because I lived in the world of “intention” and not “action.” I used to dream about being wealthy — but always spent my money on stupid stuff and never saved. I read lots of budgeting articles. But didn’t do anything with that knowledge. “An ounce of action is worth a ton of theory.” – Ralph Waldo Emerson Quotes like Ralph Waldo Emerson’s would swirl around […]
“I’m not good with numbers.” Sound familiar? When you talk negatively about yourself — like the example of above — what are you really trying to say? Are you giving yourself an excuse — an exit out from dealing with your finances? By telling yourself that you’re not good with numbers are you really saying you’re not responsible? But what if the numbers part isn’t as hard as you think it is? That all you gotta do is read one short book and away you go (free book link on the bottom of this blog.) To some, that can be scary. Why? Because once you know what to do — and realize it’s simple — that makes you responsible to solve your financial problems. So, now, you have a choice: Either you can a) keep on believing that your not good with numbers and will be financially doomed forever, or, b) take twenty minutes, read the book, and take control of your finances. The choice is yours. Free book link: www.yourmagicnumber.com
Your experiences shape your worldview. Your worldview shapes your narrative. Your narrative shapes your actions. —- You can’t change your past experiences. However, you can change your worldview by understanding where it comes from. Is your worldview from your culture? Something that someone said to you? Is it from your mature adult perspective or your child’s perspective? Think about these questions. They’ll get you started. —- What does this have to do with budgeting? Everything. If you want to take control of your finances, you need to take control of your financial worldview.
Being cheap is to buy single-ply toilet paper just because it’s cheaper than double ply. Being smart with money, on the other hand, is to buy double ply toilet paper on sale — even though it’s more expensive than single ply. I’m not saying that all cheap people buy single ply — I’m sure plenty of them buy double ply. What I am saying is that being cheap is a knee-jerk reaction. “That’s too expensive” is an automatic response that’s usually baked in from an early age. On the other hand, being smart with your money is a skill that’s developed. Not a knee-jerk reaction. It’s knowing how much you can spend, and being smart enough to say “no” when you can’t afford it and “yes” when you can. (And saying “yes” is as crucial as saying “no.”) People who are smart with money don’t buy cheap junkie dollar store cutlery that’ll shread your rib eye steak to pieces and make it taste like tin. Instead, they save up and find a good deal on a Wusthof set that’ll perfectly cut their steak into mouth-watering pieces. So the goal when you’re budgeting isn’t to become a knee jerking cheapo — […]
For most of my adult life, I acted like a kid with my money. Kinda like a financial version of Tom Hanks in BIG. Even though I had a beard and a receding hairline, when it came to spending, I hadn’t changed much since first grade. If I wanted it, I bought it. The only difference between the “first grade me,” and the “older me” was that I had a Visa. And because of my financial immaturity, I racked up some serious debt. I hated the feeling of owing the credit card company money — never mind all those interest charges. Grrr. Listen, it wasn’t easy, but today I’m as wise as my grandpa was with money. (FYI: My grandpa was magnificent with money — he was a natural saver and was always after me to stop blowing my money on Upper Deck baseball cards and start investing in “real stuff.” If I had listened to him back then, I’d probably be a kazillionaire today.) Looking back, here are the top five things I’ve done that have changed my finances forever. 1. Stop being impulsive I used to buy things without planning on it. Even when I’d go to “just take a […]
Accountability doesn’t always work. If you’re saying: “I’ll need you to be on top of me or it’s not going to get done.” It won’t work. That means you’re not ready. On the flip side, if you say: “I can do it all on my own — I don’t need you at all.” That won’t work either. That also means you’re not ready. But there’s a sweet spot between those two opposite attitudes. And here’s how it sounds: “I can do this. But I need accountability for the dips and the tough parts.” That means you’re ready. And that’s where accountability works. P.S. This applies to weight loss, getting fit, reaching a business goal, and of course, taking control of your finances.
I love being silly and telling cheesy jokes. To prove it to you, here’s one: What’s Forrest Gump’s Gmail password? 1forrest1 Get it? Run Forest run! 1forest1! Lol! 😆 Contrast to daddy jokes; finances are dull and boring. To most of us, there’s nothing exciting about budgeting or spreadsheets. And to make things worse, most of the financial pro’s our there are as dry as doorknobs. But it doesn’t have to be that way. You can find humor and silliness in anything you do — and, yes, that includes balancing your chequebook. That’s what James Cunningham did. His financial literacy program, Funny Money, has gotten thousands of high school kids (hard to get interested in anything that’s not an iPhone) to become totally engaged in learning important money lessons. And that’s a valuable lesson for me and you. Us adults, magically morph into distractable teenagers just thinkin’ about our finances. We’ll answer “important” work emails, do the dishes, and watch paint dry just to avoid dealing with our money. So how can do you infuse fun into your finances? The truth is, we all have different senses of humor, and you’ll have to develop your own way. But to give […]