Taking Charge of your Life
Commit to being a lifelong student of money and finance.
The road to financial success is never-ending. This does not mean, of course, that you will never achieve it; it means that once you've achieved financial success, you must continue to work hard in order to keep your achieved wealth and make it grow. The best way to do so is to become as learned as you possibly can in the ways of money. However, this is not an education that ever comes to an actual conclusion in the way high school or college concluded. Rather, studying about money is going to be a lifelong pursuit of yours, at least if you want to be successful throughout the entire course of your life.
Some of you may wonder why it is so important to pick up "money" as a lifelong, part-time course. Well remember, the subject of money does not remain static. For example, tax laws are always changing, laws pertaining to credit are changed and updated regularly, and there are always new and different investment opportunities that come to the forefront and that will demand your consideration. These are just a few examples; I could list many more, but you get the point. Your education in the ways of money will never be "complete," so you should adjust your thinking accordingly.
One of the things I suggest is spending time pursuing financial papers and periodicals. (Congratulations, if you are reading this, then you have already begun - keep it up.) For daily financial reading, I like the Investor's Business Daily.
Additionally, there are a variety of other ways you can seek to be a student of money. Many local schools offer courses in basic money management to the general public, and as these are usually taught by Certified Financial Planners and other similarly credentialed financial professionals, they can be an excellent resource for you. The only caveat I'll dispense about these courses is that sometimes the instructor may use the class as a platform to dispense his opinions about how to invest, or even as a means of adding clients to his procedure. Therefore, you will want to pay close attention to the information imparted, and be sure to weed out those bits of information that seem less to be standardized financial knowledge and more financial propaganda.
One thing to remember is that as your wealth accumulates, you will actually have to spend more time, not less, watching your money. Admittedly, this is a nice problem to have, but it is an issue nevertheless. If you begin now to study money as a second language, you will find it to be a much easier course to take when the size of your estate has grown nicely and your attention to it becomes of paramount importance.
Identify Destructive People and Vales in Your Life, and Eliminate Them
We're all familiar with them, people who just seem to represent the lowest common denominators of human existence. I'm not necessarily speaking of hardened criminals, but rather, folks who live in such a way that their lives are based in and around the procurement of negative energy. An easy example is a person addicted to drugs or alcohol. People with these addictions have a tendency to drag down those around them. Behavioral science has shown that when upstanding people are intermixed with those who are less so for an extended period of time, it is more likely that the decent folks will sink to the level of their counterparts than the other way. There are a variety of theories as to why this is the case, but chief among them are that a) it simply requires less effort to sink down than to rise upward b) generally speaking, the activities in which the less honorable folks are frequently engaged are admittedly very appealing at an instinctive level c) peer pressure always seems to be much more effective at getting people to do less socially acceptable things than it does getting them to do things that are socially acceptable.
We can debate the issue of whether or not these people have an "illness" or have simply chosen to give in to weakness and temptation. Unfortunately, you do not have time to engage in such debate. All you have time for right now is to identify whom these people are and expunge them from your life.
The same applies not only to the people around you who personify destructive values, but also to the values themselves as they may exist in you. Let's face it; none of us is perfect. And some among us may be quite imperfect. Do you recognize within yourself any of the destructive behaviors and values that you notice in others? There is that little part of our hearts within each of us wherein truth lies and remains immutable, and if you look to it, you may well find that you possess some of these same values or behaviors.
Your job is to purge them from your life by whatever means necessary. However, you will find that regardless of whatever specific mechanism you select to remove them, the underlying means is going to be discipline. I have found few things in life that are worth having can be obtained minus good, solid discipline.
Adopt, and Adapt to, a Lifestyle of Organization and Discipline
If you seek to revamp your life and become a student of money, you will likely have to make some important changes to the way you conduct yourself on a day-to-day basis. Most of us are very disorganized people. Even if we are organized in certain aspects of our lives, we remain exceedingly disorganized in others. If you have a stable job and family life, you are likely organized to a great degree already, but it is surprising the extent to which even people who fit that mold are still quite unkempt with respect to important parts of their lives.
Your goal is to get organized, and to do so you have to get disciplined. Discipline is a common thread that runs throughout so much of what we do that is positive. The reason discipline is so important is because so much of what is "bad" or unhealthy also happens to be very appealing at an instinctual level. As a result, we find that we must steel ourselves to the task of keeping from involving ourselves in those activities. There really is no trick to being disciplined, as far as I'm concerned. You simply have to have or develop the type of personality that has as a significant component, the characteristic of self-discipline. Ultimately, it is up to you to want good things in your life enough to do what it takes to procure them. That is the true source of discipline. For example, if you want to be a great athlete, you have to be willing to work long and hard to achieve that goal. No motivational speaker or any other "cheerleader" is going to instill the requisite discipline within you if you are unable to instill it in yourself.
Engage in a Regular Program of Physical Exercise
This may be one you weren't expecting. After all, what in the world does exercise have to do with money management? The answer is a lot more than you think.
The truth is exercise is not much beneficial to managing money as it is to the brain and mind. In order for you to think clearly and to keep your mind in the best shape possible to deal with your new regimen of financial planning activities, you must do everything possible to keep your intellect razor-sharp. I have found exercise to be an essential component to the maintenance of long-term mental heath and brain function, and research backs me up. While there is a variety of ways the enhanced function of the brain is well-served by exercise, I am going to provide you with three excellent and proven ways.
Exercise has been shown to have a direct effect on the brain's function. Most researchers believe this has to do with the chain reaction effect of exercise and its relationship to blood and oxygen. As the body participates in exercise, the amount of oxygen in the bloodstream is increased, as is the rate at which blood flows to the brain. It is believed that both of these particular reactions are responsible for the brain's highly positive response to exercise.
Exercise has also been shown to have a positive influence on stress. The elevated level of cardiovascular fitness that results from exercise makes it far less likely that you will take the day-to-day stresses of life as "hard" as you might otherwise, and it also means that you will bounce back much quicker from those you do suffer.
Exercise has been shown to be a great help in both fighting depression and raising self-esteem. With respect to the former, excise raises the levels of adrenaline, dopamine, serotonin and endorphins in the brain, and as a result, has been shown to produce some of the same effects as the use of well-known antidepressants such as Prozac and Zoloft. With respect to the latter, we can even rely on common sense to connect the dots for us. Exercise results in a healthier, better-looking you, which in turn boosts self-esteem.
The bottom line is physical exercise is every bit as important to a healthy mind as mental exercise. As you prepare to embark on your new lifestyle, be certain to include a regular regimen of physical exercise along with all of your other efforts.
The Amount of Money you have is Less Important than How it is Managed
One of the great misconceptions about building wealth is that you have to have a substantial sum of money to begin with in order to one day achieve financial independence. While it is certainly true that the more money you have at the outset of your dedication to financial matters can go a long way to helping you achieve financial success more quickly, that is only true if the money is managed properly. There are countless stories out there of people who have won the lottery or have otherwise been the recipients of a windfall of some sort, who have ended up penniless because of the way their fortunes were mismanaged, either by themselves or by others to whom they entrusted their funds. Conversely, there are even greater numbers of true-to-life tales of people who ultimately built not-so-small fortunes on the backs of meager salaries earned for years, doing so by applying sound money management principles to their limited incomes.
The point is, the way in which you manage your money is a greater determinate of how financially successful you eventually become than how much money you have in the beginning of your efforts. There is an excellent book I read some years ago called "The Millionaire Next Door," by Thomas Stanley and William Danko, published by Simon and Schuster Inc. The book is essentially a literary dissection of America's typical wealthy, and it reveals some things that many readers find to be very surprising. In a nutshell, the authors uncover that a majority of the garden-variety millionaires in America live very modestly, so much so that on the surface they appear to be no different in terms of lifestyle than anyone else of truly modest means. They live in middle to upper-class homes; they drive vehicles that are certainly nice, but by no means "off the charts" in terms of luxury. In fact, one of the most popular vehicles owned by millionaires in this country is the Ford F-150 pickup truck!
The secret to their success, by and large, is essentially all of them live well within their means. As a result of not extending their paychecks to their outer limits in order to meet current expenses, they have been able to put a significant sum of money into a variety of investments over the years, and the payoff has been terrific. I want you not only to learn this lesson, but also to live this lesson. In my travels across the country, I have personally met run-of-the-mill, self-described working "stiffs" who have amassed huge investment portfolios, and physicians who struggle to make ends meet. The difference between the two seems to come down choice of lifestyle, and more generally, the way each chooses to manage their money.
Build Your Own Brain trust of Doctors, Lawyers, Accountants and Other Professionals
I have just finished explaining to you that it is not necessary to have a great deal of money to begin with in order to achieve financial independence down the road, and it's true. There are countless numbers of stories of people who, on the basis of modest incomes, nevertheless obtained tremendous financial success by living well within their means and investing their "leftovers" in a regular, prudent manner. Having said that, it does not mean there is no value to being, or even having a close relationship with a professional person of means.
For starters, such people are among the wealthiest of society's earners. Accordingly, they have to make the smartest decisions with respect to their own money. For example, people like this are usually the ones who are solicited for new investment opportunities, opportunities that may remain unknown to the rest of us. Additionally, people like this usually have significant investment portfolios of their own that require expert management and supervision, and whether they have learned to provide that management on behalf of themselves or have found some good people to assist them, there is a lot you can learn by "hanging around" such people. This is especially true in the area of taxes.
It is no secret that higher-income folks in America can feel Uncle Sam's bite far worse than anyone else if they're not careful about how they manage their tax-related affairs. Maintaining an association with friends or acquaintances who happen to be professionals like these will prove to be highly beneficial to you when it comes time to get serious about managing your own tax situation. What's more, doctors, lawyers, accountants, etc., are often self-employed, and the self-employed in America have to be more careful than the rest of us when it comes to managing their tax situations.
Another advantage to building a circle of associates like these has to do with what each do for a living. Don't you have to go to the doctor from time to time? How about a lawyer? Even if you're not someone who finds himself running afoul of the law on a regular basis, there will still be many occasions over your lifetime (particularly as you begin to grow your estate, make real property purchases, etc.) when having a lawyer as a friend or acquaintance may have tremendous value. Accountants of course make wonderful friends because who knows more about the aforementioned subject of taxes than an accountant? The point is that not only do such people bring a general respects for money and affluence to the table, they are each highly valued professionals who can bring a great deal of assistance, knowledge and information to just about anyone.
I want to make something perfectly clear. I am not suggesting you maintain an association with professionals for the purpose of "using" them for their knowledge and expertise, be it on behalf of their individual professions or on behalf of their financial management abilities. The fact is that when we decide on whom to include as friends and close acquaintances, we use a variety of criteria. Yes, we want people who have similar interests and tastes, but we alone want them to have certain values systems (there is that word again) we hold near and dear. We want our friends to be smart, honest, hardworking, disciplined and generally very decent people. You will find that most upwardly mobile professional people will come from good families, families that instilled many of these vales within them that they have managed to retain and even solidify as they forged their way through school, their professional pursuits and building a family of their own. In short, professionals will likely reflect the same values we want to see in ourselves, and, as it stands to reason, you can expect to be the recipient of much of the positive energy folks like these dispense.
Originally published in James Dicks: Buy*Sell*Hold magazine.