Your Money Mindset
Money Mindset
Your money mindset is how you think about money in your life. Here are key elements of a healthy money mindset:
Have Respect - to respect your money is to respect yourself. Most of us trade our time, talent and or labor in exchange for money. We literally give up our human life energy to obtain money. To waste it or be flippant about your money happens either out of ignorance or lack of self-esteem.
Protection First - You must create a foundation of financial security before you embark on developing and building your wealth models. It doesn't do a lot of good to start saving and investing if one life event can wipe you out. Protect your current wealth and your future wealth potential from major medical, critical illness, disability, death, lawsuit and casualty.
Obtain Financial Knowledge - Knowledge is what we learn. It is "correct belief" about how things really are. Information is not knowledge. Knowledge is what you KNOW to be true and real.
Apply Wisdom - having wisdom is the ability to apply knowledge in your everyday life with discernment.
Identify Your Values - identifying your personal values will go a long way toward helping you make better financial decisions that align with what is important to you. Take time to think about the values or principles in your life. As the saying goes - decisions are easy when you have principles. The make financial goals that align with those values.
Have a Holistic View - see the "big picture" of the entirety of your financial life plan. Insurance, Assets, Liabilities, Taxes, Retirement, Estate Plan, and Cash Flow all interweave together and each impacts the other. Understand these relationships and how to synergies for a comprehensive plan that coordinates all these domains.
Go for Optimal - Most financial planning focuses on investing monetary units in a hypothetical investment multiplied by some rate of return over time to achieve 'X' goal. The problem with this is that there isn't really all that much about that formula you control. The monetary unit loses purchasing power over time and the rate of return isn't guaranteed and so this linear formula is nothing more than a hope trip. In fact, using high rates of return lull people into a false sense of security about the future so they might not save as much as they should. Alternatively, planning for optimal results in all your financial decisions will mean you are doing the best you can with what you have - you are efficient as you can be.
Look for Leverage - in a world of declining interest rates, quantitative easing/loose money policy, market volatility, political instability, aging population, reduced benefits and out of control government spending (debt and deficit) you will need your money to work harder than ever before. You need your dollars to do the work of many. You need more value out of every dollar. Get leverage where you can.
Harness Velocities - cycle your money through strategies that create velocities on your money - income to buy assets - assets to create cash flow - cash flow to buy passive income, capitalize to create liquidity - own your own debt to collect your own interest and on and on. How many velocities can you create.
Create Balance - It is important to strike a balance between living for today and saving for tomorrow. Have you ever known anyone who lived too much for today and never had financial success? Ever know anyone who worried too much about their tomorrows and saved every penny - living a joyless "just in case" existence only to leave this world and their wealth behind? Balance Life and Legacy for a healthy relationship with money.
Have No Short Term "Bad Debt" - it is hard to get ahead paying 18-21% interest on consumer debt. This debt reduces your current cash flow and destroys future wealth potential which creates stress and anxiety. If you have bad debt - create a plan to eliminate it but don't sacrifice protection or emergency savings to do so.
Keep Housing Costs in Check - don't be "house poor" by carrying rent or mortgage payments in excess of 25% of your gross income. By keeping your housing costs below (the lower the better) this benchmark you'll be in a better position to protect, develop and grow your wealth models.
Live a Budgeted Lifestyle - give your money a name and a place in your financial plan. Track your cash flow through Protection (insurance), Assets, Liabilities and Lifestyle. If you do it right, you can be fully and properly protected, saving and investing appropriately, have no bad debt and live in reasonable housing giving you psychological permission to spend what is left with no guilt or anxiety. Do the work - then play!
Be Coachable - don't let traditional thinking or conventional wisdom based on the past keep you from making good decisions based on knowledge, math and science about how money really work. Have an open mind and learn HOW to think. Don't be told WHAT to think. Understand that the biggest obstacle to success is YOU - your behavior, fears and lack of Knowledge! You cannot know what you don't know. A good coach can point out your failure paths and blind spots and help guide you. A good coach will put themselves in your shoes with your money but their knowledge and experience and help you make really good decisions so you can win the game of money! A good coach will hold you accountable to the values and goals you internalize so you can be the best version of you that you can be!
Keith Kail - Founder
Financial Excellence Coaching
For 1:1 coaching services email: keith@myfinancialexcellence.com
The first discovery coaching session is FREE!
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