Or maybe for you it means having the freedom to choose how to spend your time and live your life?
Whatever it is, I invite you to define it for yourself if you want to experience it one day.
Many of us were raised with limiting beliefs’ programming. This external conditioning implies that you are confined to a certain level of possibilities in your life that is restricted by things like your parents’ social status, your race, religion, education, country of origin, etc.
It is often so deeply ingrained in our minds that we often sabotage ourselves and have no idea that we have these “blind spots”! It’s really hard to think and live wealthy when your perception of what’s possible for you is defined by your past, or your current challenges, or others’ opinions.
The good news is that it’s a complete and shameful lie.
You are powerful by design.
You are only limited by your own imagination and beliefs’ system.
You and only you can make the decision to live your best life, to experience abundance and joy or… to complain and compare yourself with others who seem to have everything that you would like to have. Yes, it’s a matter of choice. (more…)
“In the long run, we shape our lives, and we shape ourselves. The process never ends until we die. And the choices we make are ultimately our own responsibility.” ~ Eleanor Roosevelt
Money is an interesting indicator of our state of mind. Emotions like paralyzing fear, envy, revenge, resentment, scarcity, hatred or bitterness usually reflect less than desirable state of financial affairs in our lives. On the other hand, emotions like peacefulness, kindness, contentment, appreciation, happiness, joy, love and serenity reflect the state of mind that is open to receive the abundance that Universe has for everyone…. Among many things, money is a language we use to express the best in us and the worst in us. (more…)
When my daughter was born, I was totally clueless how to raise her. I wanted her to be healthy, happy and successful but I didn’t know how to raise a successful child. I wanted her to get a great education, have good friends, and find the work she loves. Teaching her about money and financial literacy was not on my radar as a mother.
BIG MISTAKE.
Kids are sponges for new stuff. They are curious and open to learn all kinds of stuff! Many toddlers start reading and counting while in pre-school! Then we see our kids learning math and science, biology, history, and literature in their middle- and high-school. Most young adults study all kinds of subjects in college (for which parents often pay) but not how to be money-savvy adults.
Yes, they learn all kind of stuff except for how to deal with money. There is no basic financial education offered in schools or colleges. Yet, the sooner kids understand the Game of Money, the higher probability that they will succeed at this game as adults.
Further, most public schools and colleges prepare kids to become competent employees, working for employers. Kids rarely learn about entrepreneurship or the intricacies of starting and running a business. Most young adults have no clue that they have to pay taxes.
Become a Role Model
You, as a parent, have the biggest influence on your child’s attitude, self-image, and beliefs about money and wealth. If there’s a bad role-modeling of managing money in your family, kids often mirror it and only notice it once the struggle starts as they become adults. If they grow up with an expectation that money is scarce and is the source of struggle, problems, and pain – it’s likely that they’ll experience this in their life…unless you catch this soon enough and instill positive money beliefs and habits.
Most kids only see parents spending money when they go with them to a store or on vacation. Kids rarely see parents paying bills, saving, investing and donating money. Talking about money in an open and positive way is very rare. Yet it is imperative that you speak with your kids often about money, wealth and gratitude.
The Future of Economy Is Shifting
According to a 2017 study by Upwork and Freelancers Union, about 36 percent of the workforce in the United States is freelancing, either full-time or as a supplemental work to their fulltime job. If this trend continues, the majority of Americans will be freelancers by 2027.
Yet most public schools and colleges teach neither entrepreneurship nor personal finance. That’s why many millennials use credit cards to buy for cryptocurrencies so that they can become millionaires quickly.
And since we’re quickly moving toward entrepreneurial economy, the need for financial literacy becomes a necessity. Fundamental financial rules like SAVING (paying yourself first), BEING INTENTIONAL with your SPENDING (not spending more than you earn), AVOIDING high-interest consumer DEBT (not having balances on credit cards), and MAKING your MONEY WORK FOR YOU (by strategic investing) are not taught anywhere.
Some people are naturally money-savvy others learn the game of money the hard way.
But it doesn’t have to be that way!
Savvy money management is a skillset that can be taught.
Preparing Kids for the New Economy
The lack of financial education among young adults often leads to devastating effects on their lives later on. High-interest consumer debt and rate of default on student loans are an record high. According to a 2017 GOBankingRates survey, more than half of Americans (57 percent) have less than $1,000 in their savings accounts!
By becoming a responsible and savvy money manager yourself, you will model the healthy money habit to your kids. Talking to them about different aspects of money – from “abundance mindset” to the dual nature of money (energetic and physical forms), to fundamentals of managing money – will help them be better prepared for financial responsibilities later in their life. Make your money conversations with young kids light, fun and open; without projecting energy of scarcity, lack, and fear.
You may also find programs (locally or online) that offer financial education for teenagers. There are programs (outside of public schools) that cover both – personal finance and entrepreneurship. Some programs teach kids about every-day financial tools like using debit cards (instead of credit cards), planning their spending (of allowances), and maintaining the balance of a checking account. Other programs focus on instilling the abundance mindset so kids have understanding of financial security.
There are private programs that teach kids about entrepreneurship and business ownership – how to manage the cash flow and operating expenses, how to pay yourself and your employees, how to create a budget. The creators of these programs are often people who learned financial and entrepreneurial literacy at a young age. These teachers are aware of the importance of knowing the Financial Freedom rules and how their money habits affected the trajectory of their lives.
This experience can be very inspiring and empowering to your kids because not only they will learn about challenges and rewards of entrepreneurship, they will also witness pride and joy of becoming a successful business owner.
Guiding and Empowering Kids
We love our kids and want them to succeed in life. But do we always know what is best for them and how to help them? We often try to protect and advise them so that they won’t make costly mistakes. We try to ‘save’ them every time they ‘fall’. But does it really help your child to be afraid of making mistakes, especially with their finances? Will an overly protected child, who expects to be ‘saved’ every time, become a resilient, confident and self-reliant adult?
Most of us have learned lessons in life through trial and error, by falling and getting back up, by learning from ‘failures.’ Emotional maturity is built by continuous life experience. With this being said, your guidance as a parent must be mindful and sensitive to the child’s unique character traits, inclinations and talents.
Instilling a sense of confidence, self-love and personal responsibility in kids from a very early age is imperative. Making your children feel loved and accepted unconditionally — regardless of their achievements, imperfections and shortcomings — will make them feel lovable and significant. Empowering kids with proper financial education and an opportunity to explore, will help them build confidence and succeed in life.
Share your own lessons about raising a money-savvy child in the comments.
I recently saw the statistics that 60 % of baby boomers are more afraid of running out of money in their retirement than they are afraid of death. Millennials are buying cryptocurrencies, often using their credit cards, with hopes of become overnight millionaires.
Over 70% of businesses fail within the first 5 years because of cash flow problems.
From my personal experience and observations, awareness of your money habits, planning your financial future, and having financial discipline are the most critical factors for creating a comfortable retirement.
As Robert Kiyosaki once said, “It’s not how much money you make that matters most, but how much money you keep. How hard it works for you and how many generations you keep it for.”
Making a good living does not automatically put you in the “more than enough” or “affluent” category. Because it’s not just about how much you earn but also what you do with what you earn. Do I hear “Yes”?
Now let’s go over different ways you can choose to manage your competing financial priorities.
If you want to become financially independent, one of the most important skills you must acquire is managing your money intentionally, so that regardless of your current income, you become richer every month and every year.
How do you accomplish this?
By managing your competing financial priorities while saving and growing your money.
When it comes to managing your financial priorities, it’s a good idea to be aware of the three human biases that may affect you financial choices and decisions.
The Present Bias
As a human being, you are wired to take care of immediate needs first, making sure your essential requirements for food, shelter and security are met. So it’s understandable that when current, short-term financial needs and goals compete for your attention, saving for the future gets neglected. For example, when you focus on car and home repairs, your kids’ day-care or private school, or a new heating/cooling system, your long-term savings for big purchases such as education, financial emergencies, or retirement go to the back burner.
The famous Hierarchy of Human Needs by psychologist Abraham Maslow outlines the progression of human needs and human awareness as we ascend from meeting our immediate survival needs to the need to feel fulfilled and self-actualized.
We like to say: “Live in the moment”, right?
Right, but not when it comes to your money; with money you must be intentional.
Most people have difficulty envisioning distant events. It’s easy to envision, associate with and express immediate financial needs. This is something that financial professionals refer to as “the present bias.” The “present bias” makes you handle competing financial goals by assigning your highest priority to immediate needs and nearest goals, and overlooking the long-term financial priorities.
The Availability Bias
The availability bias is another mental pitfall when you are very comfortable with your current available income and assume that you will always have it. So, why bother thinking about long term financial goals?
While this bias pertains to all humans, it’s especially common among new entrepreneurs and famous sports figures, who often go through feast/famine experiences and some end-up in financial ruin. Many of the currently well-off folks treat their businesses or contracts as their piggy banks that are available to cover any and all desires.
The Busy-bee Bias
The busy-bee bias is very common among highly paid professionals who are so busy making money that they don’t make time to plan how they can grow it, let alone how they can make their money work for them!
These people rely heavily on the easily available information and often don’t do their due diligence on the accuracy of the advice and integrity of the source from which they receive their financial advice. As the result, they put more value on the easily available solutions rather than more strategic ones and end up disappointed.
The tendencies and biases I have mentioned often cause people to spend everything they are currently earning. They want to enjoy their money to the fullest while they can, or save and invest first for their family’s educational goals, rather than diversifying their savings across different financial priorities like planning their financial future, retirement, health-related needs, and creating financial independence.
More often than not, goals like buying a new car or a house, financing private school or college tuition for your kids, become top priorities relative to retirement or financial independence goals. However, you don’t want to burden your kids by depending on their financial support when you get older, right?
So, how can you manage competing financial priorities, the immediate and the upcoming ones? The solution may be as simple as asking yourself if the financial priorities you’re focusing on now are really the most important ones, given your overall goals in life, not only your immediate needs.
Here are two simple questions you can ask yourself:
What are my short and long term priorities in life?
What are my core values that help me experience more joy and fulfillment in life?
The answers to these questions will help you sort out your financial priorities.
For example, one of my core values is FREEDOM. I can be content driving an older car, leading a modest lifestyle and wearing stylish but not necessarily designer clothes and shoes. However, I am willing to do whatever it takes to achieve financial independence so that I can have the Freedom of Choice in my life.
Now, pause and write down answers to the two questions above.
Share your experiences in the comments. I would love to know how you manage your competing financial priorities.
And here’s the recording of the mini-class on this topic
Do you fight with your partner every time you talk about money?
Or do you have open, candid “money conversations” with your partner?
Or do you avoid talking about money with your partner so you can avoid fights and frustration?
Research has shown that couples that avoid fights about money, often end up having less wealth and not being prepared for a successful retirement.
No one wants to fight, of course. Howevere, money is the #1 thing couples argue about. And you probably heard that fighting about money is often an early predictor of divorce.
So, why would couples get sucked in into the argument about money when it causes so much stress, tension, and destruction?
While nobody wants conflict, avoiding communicating and working through disagreements with your partner can hurt the relationship and put your future financial security at risk.
I’ve met many women who shared their frustration about not being able to “talk money” with their partner in a constructive and candid way.
“I love my husband and don’t want to get into big arguments over money. So, I stopped talking about money with him all together. And now I have my secret money accounts.”
“I was sick of fighting about money. Now we both avoid these conversations.”
“We can’t ever agree when it comes to investing. He does his thing and I do mine.”
While many couples default to “not talking about money”, this solution usually comes back to haunt them.
Here’s why.
Men in a couple tend to have higher confidence and higher appetite for risk than women.
Because men usually have more risky investments and higher balance, women tend to keep substantial amount of cash in case of emergencies. In other words, to balance her husband’s high-risk investments, a wife often compensates it by keeping a high balance in FDIC-insured bank accounts, which provide safety but little or no return. This allows her to sleep at night and avoid arguments.
While it may work for some couples, this strategy may cost couples loss of opportunities in the end. If they invest $100,000 in a super-safe bank account earning 0.5%, rather than a conservative balanced index fund that may have earned 3.5%, they would have passed up 3% per year in earnings for each year the funds are invested.
On a $100,000 account, that’s $3,000 a year, and $30,000 over 10 years (not including reinvested dividends and capital gains.)
On the other hand, husband’s high-risk investing strategy may lead to significant loss of family wealth that he is trying to build by taking higher risk.
I believe, there are better ways to managing money as a couple than fighting over it or avoiding talking about money. Here are a few tips to get couples started on the road to creating wealth together:
Communicate
I believe in candid and transparent communication in the relationship. Have a candid ‘money talk’, be open about your concerns, and share your preferences when it comes to investing ideas. Don’t avoid ‘difficult conversations’ – find a way to have them in a constructive and respective way.
Work through your financial conflicts (rather than fighting about them or avoiding them altogether). If this seems daunting, you may consider talking to a financial planner, even if you are a do-it-yourself investor. If you can’t seem to work through financial arguments and have very different risk tolerance with your partner, get independent help to work through your differences and overcome communications’ challenges.
Set financial goals as a couple
Determine the return you’ll need to get on your investment in order to meet your financial goals. You may not need to take on additional risk to reach your financial goals. Calculate your annual lifestyle spending to determine what your rate of return on your investments needs to be, based on the amount you are currently saving. Don’t take more risk than you need, however, don’t be overly conservative either. Your investment returns must be adequate to meet your goals.
Set goals as a couple and develop investment strategies around those goals. For example, are you going to invest in the stock market? Rental real estate? In your growing business? If so, what percentage of your total assets you want to invest in each asset allocation?
If one of you wants to trade or invest in high-risk investments, limit the amount you allocate into high-risk investments and integrate these investments into your overall plan.
Compromise
I like to remind women that they should “pick their battles.” While some things are definitely worth fighting for, some things aren’t worth the argument. Your financial future is definitely worth fighting for.
When you have a “money talk”, listen to your partner, really hear his point of view when it comes to investing family money, and see if there is a way to find a common ground. Willingness to compromise is important for the healthy relationship. However, never compromise on your core values in life.
For example, if Freedom is your core value and you feel that your current employment is totally draining your energy and health, although paying you a very good salary, leap your way out of this situation even if your partner feels it’s wrong for your family finances.
When you force yourself to do something that you utterly resist, you compromise on something that is deeply important to you and can make yourself seek. Money is important, but your health and vitality are more important than money.
Dream together
Your money talks don’t need to be only about bills you have coming up and debt you need to repay. These conversations do need to take place, of course. But you can also share your aspirations that require you to save and grow you money – maybe a new house, or a trip, or a business that you’re passionate about. Whatever it may be – dreaming together, having common goals will help you get closer and inspire you as a couple to work toward your goals.
Do the “Five-Year Exercise.” If you only had five years to live, what would you like to do, have or experience?
Don’t overthink or censor yourself. Just start writing it down. If you are married or in a relationship, each of you should write your lists separately. Then, as a couple, choose what you’d like to do, have or experience, both together and individually. It’s hard to fight or argue about money when you are working together toward important goals. Don’t give up on your dreams!
Become Financially Empowered
Invest in yourself – let go of your inner blocks, become equipped with knowledge about strategic investing.Although having a MBA in finance might be nice, you don’t need it to be financially successful. Having a solid base of financial knowledge will take you a long way. Couples who both understand financial fundamentals, can make better financial decisions, especially when they make them together.
Besides, it’s quite likely that at some point you may be 100% responsible for your own investment and money decisions. Now is the time to upgrade your skills and knowledge about savvy money management and investing.
As excited as you may be about this idea, you need to recognize that there is an inherent risk in cryptocurrencies. This is a brand-new market. So, I want you to remember that the risk of a 100% loss is ALWAYS present in cryptocurrencies. That’s why I urge you to go small should you decide to invest in this space.
Investing $100- $400 is small enough to cause you only minor financial pain if one of your cryptocurrencies goes bust… But it’s still big enough to create real wealth for you if only few become a major success.
The smart approach is to build yourself a “basket” of different cryptocurrency plays. Some of them will become superstars. Others will be good winners. And a few will go to zero.
So, don’t go crazy!! Don’t invest all your investing funds in one particular cryptocurrency – diversify with well respected cryptos. Do your research. Join cryptocurrencies forums. Be calm. Be rational. Stick your toe in the water with just $100, or $200 in each of ideas you want to test. Get started, and see where the game will take you.
The blockchain technology is young… the cryptocurrencies market is young… and it’s changing every day. That might make you a little nervous. Usually, conservative, rational investors like to stick to known, stable, predictable investments. Warren Buffet publicly shared his distrust of this new digital money.
However, there is another side of the story. Blockchain is a budding new technology. It’s an exciting, massive new movement and a trend that you may want to be part of. After all, when you can get in at the ground level of such an opportunity (and I believe that we’re still at that phase), you have a chance to plant seeds for the life-changing wealth.
You can do that… while being smart about it. All that means is that you need to invest sensibly, start small, and avoid risking more money than you’re willing to lose.
I recommend allocating no more than 3-5% of your total net investing money in cryptos. In other words, of all the money you have to invest, only put 3-5% of that toward these investments. From there, you can take even smaller positions in each individual cryptocurrency.
Remember: It doesn’t take much to turn a small stake of $100, $500, or even $1,000 into the life-changing wealth.
As I write this post, the stock market in the US had one of the biggest day declines in the history (4.6% in one day), then turned around and jumped up the next day. Bitcoin price too fell below $7,000 from its highs of $20,000 in 2017. Does it mean that the cryptocurrencies are heading to the graveyard?
If you’re really interested in learning more about cryptocurrencies, sign up for my 4-day Masterclass “Bitcoin, Your Money and Building Wealth” and get a lot of specific details about investing in Bitcoin and other cryptocurrencies while managing your risk.
I want you to see the big picture of building wealth. Cryptocurrencies could be part of your portfolio but very small part. The key element to building lasting wealth is to diversify your investments.
