What I’m teaching others (and eventually my children) about money
If you’ve been at your job for a few years, five years, or even twenty years, and your boss loves you, but you’ve never received a raise or promotion, there’s a red flag you need to address. We should be taught how to read balance sheets, P&L statements, file our taxes, save and invest diligently, negotiate, lead and influence others in school. However, we’re not yet.
You know you should research salary information for your industry and initiate the conversation, but you really don’t feel like dealing with that communication or dialogue. You’re a hard and smart worker, and you tell yourself, that’s what really matters. Besides, you get along fine on your current salary. It’s enough to keep up with your current bills and mortgage. However, you need to improve your negotiating skills, relationship and knowledge of finances so you can secure better positions within any organization or business. Do not subscribe to mediocre thinking. You’re BETTER than that old paradigm and halfhearted programming.
This is an example of classic money avoidance, misunderstanding personal finances and not raising your lid on the topic of behavioral finance.
I’ve found on his website, Mr. Money Mustache is a proponent for both financial freedom and practicing frugality. I’m grateful to have learned these lessons and implemented the principles dating back 5 years now. For some money avoiders, the resistance to personal finance, finances in general, can get to a point where their financial life becomes a mess that’s impossible to ignore. Raise your hand if you know anyone like this.
If any of this is getting under your skin, good. Here are a few tips that can make dealing with your own finances and talking about money a little more bearable.
Recognize Goal Achievement is Better than Goal Setting
If you hate dealing with money, just — don’t. Deal with a goal and goal statement instead. Words are powerful, especially when their your own. When they are written down and acted upon, they are even more electric.
Your goal could be to buy your dream home. Or maybe it has to do with traveling abroad. Maybe you want to fund a scholarship, found a non-profit or start a new business venture. Whatever it is, figure out a specific plan for how you’ll fund it. You might need to save $50,000 for a down payment or pay off a $29,000 student loan so you can start saving for a $3,000 trip to Ibiza, Rome and Amsterdam. Put a date and number on your goal, and start thinking about the action steps you’ll take to make it happen (SMART goals can help with this). The more specific and real the goal, the better.
When you have a goal for your money, you’ll be more motivated to start doing money-related things like budgeting, being frugal, and negotiating, because now you have a reason to give a shit. Managing your finances becomes less about money itself and more about accomplishing and achieving the things that actually matter to you.
“Rule №1: Never lose money; Rule №2: Don’t forget Rule №1!” — Warren Buffett
Challenge Yourself but Have Fun
One way to make money feel more approachable is to turn it into a game. I know, I know — games are supposed to be fun, and personal finance sounds about as fun as finding out you need shoulder surgery. Then again, Monopoly and Cashflow by Robert Kiyosaki are pretty fun board-games to learn basic money and investing principles.
Gamifying your finances, however, can be an engaging way to learn about your own habits. You might challenge yourself, for example, to spend only $100 on restaurants for the month or to not eat out as much and actually remember to prep your food for the entire week.
Money challenges require discipline, motivation, and creative thinking no matter how big or small. When you nail these kinds of challenges, it can be fun, or at least rewarding — you see progress and want to keep going because progress equals happiness.
When you take on something like this, you’re less focused on the money and more focused on trying to win. No one likes losing, do you? Feeling like you’ve “beat” your finances, even in small ways, is exactly what money avoiders need. It’s a healthy competition and kick in the ass!
What You Say to Yourself Matters
Your language, and language around money, is unique. It might not seem like a big deal now, but words matter: When you regularly tell yourself things like “I can’t save money” or “I’m just bad at money,” it’s like giving yourself permission to ignore your financial situation. It’s reinforcing negative habits and negative self-talk, as opposed to building good habits and re-affirming positive self-talk.
A few years back at a business seminar I attended, an individual asked the small room he was teaching, “What was your first money memory?” Do you remember yours? For most individuals, it was a lack of money because that’s either: 1) what you experienced in your household or 2) what we were taught (or not) in school. In reality, it’s sad because that’s what society programs us to believe. There isn’t a lack of money in the universe. There’s just a lack of urgency on individuals behalf's to go out, put in the work, and actually acquire money ethically, legally and transparently.
If you’re a true money avoider, you may have been scanning this list saying to yourself, “I can’t do that. That one doesn’t work for me. Nope, I know that’s not going to work, because I suck at money.”
“Never spend your money before you have earned it.” — Thomas Jefferson
Try this exercise: For a week, pay attention to and write down some of your most common thoughts and statements around money. You might be surprised at how your language reinforces your behavior and self-talk.
Take the exercise a step further and look for replacements to those negative statements written above. Start with something simpler such as: “I might not understand money now, but I’m learning to be better with it.” Change your approach, change your money mindset and change your life. Success takes time.
Find Books, Blogs, or Podcasts You Enjoy
If reading about money bores you out of your mind, that can make you want to avoid it even more. There are hundreds, if not thousands, of personal finance books out there. Some dry, others with great stories, and some written very well. Ultimately, you have to read and find what works for you! An author’s voice and unique approach, rather than the advice itself, will be what sets a book or blog apart. So find voices and titles that speaks to you.
Ramit Sethi’s I Will Teach You to Be Rich is an irreverent, no-excuses take on personal finance. Tony Robbin’s Money Master The Game is another great book to help you master the 7 simple steps to financial freedom. Ray Dalio’s Principles: Life and Work is another on my list to read in 2019.
Or maybe a podcast works better with your schedule. Other recommendations: Anything by Grant Cardone is gold, Tom Bilyeu’s Impact Theory and Lewis Howes’s The School of Greatness are podcasts I always recommend to others because their guests have achieved results people are looking for in their lives.
“The best way to sell yourself to others is first to sell the others to yourself.” — Napoleon Hill
Sell Something or Be Sold
Money avoiders sometimes steer clear of dealing with their money issues because they feel powerless. One quick way to feel a little more in control is to make some money, even if it’s not a huge amount. Learning the skills of selling is a great place to start.
In other words, making money from selling something can give you the same endorphin kick you might get from buying a suit or a dress. People are always afraid of sales because of a bad experience they’ve more likely than not had in the past with a salesman or saleswoman. However, you cannot let one negative experience ruin the future trajectory of your life.
This part is fairly straightforward. Learning sales, and sales skills, can help to double and potentially triple your income. And who doesn’t love additional income these days, right?
Leverage the Right Technology Tools
These tech tools can also make it easier to manage money, and for money avoiders, that can be encouraging. If you’re in debt, for example, you might like a service called Shop Financial. They offer a sophisticated program called Debt Shredder which analyzes your debt and creates a plan to pay it off in record time. Additionally, Tally is another great resource for those in credit card debt. Through debt snowballing and debt avalanche methods, it offers a faster way to pay down your balances and a smarter way to organize your credit cards and these payments.
Robo-advisers like Acorns or Betterment help people get their feet wet with basic investing. For budgeting, you can’t go wrong with Mint, which helps track your finances by automating your budget. Microsoft Excel is great too but it has it’s limits. Deductr is a great expense tracking app for small to medium size business owners and independent business owners as well. It helps to automate expenses, track your vehicle mileage, and importantly, saves you time.
Point blank, people need a budget. If you don’t know where every dollar of your income goes then you’re in trouble. Personally, I write out all my expenses monthly and have Excel documents on this information too. If your expenses also exceed your income, well, you’re just keeping your head above water…don’t do that!
Take control of your finances. I found out a long time ago that you’ll either spend your whole life working for money or you’ll find a way to make money work for you. May those odds forever be in your favor.
Whichever platform you use, technology can take much of the legwork out of money management. Ultimately, though, the real work will come down to you: Being good with money has less to do with budgets, tracking, and spending and more to do with your mindset and your behavior. Make the right decisions because good intentions ultimately lead to good money actions for your present situation and for your future.
My Very Best,