Write a New Money Story

Nobody likes to talk about money except financial professionals who do it for a living.  Even then they will talk with their clients about their money, and they’ll discuss the markets and different money strategies, but they will rarely discuss their own finances.

Money is a extremely personal and intimidating subject regardless of whether you have millions or minimums.  Because of this everyone is left to make up their own rules through trial and error and ad hoc learning.  (or maybe this is why it’s so intimidating, but that’s a chicken and egg story to explore later).

The ‘shoulds’ and ‘should nots’ about how to manage money are adopted over time and become our beliefs from which we make our money decisions.  But are these beliefs really serving us?  The problem is that once you have a belief about money you will hold onto it and are unlikely to question that underlying belief.  This means that you’ll make your financial decisions in line with your core beliefs – which have been adopted over time by ad hoc learning and trial and error – and may or may not be serving you.

A great example of this is the commonly expressed idea that all you have to do is ‘live within your means’.  Or said another way, ‘all you have to do is ‘spend less than you earn’.  But a subtle shift in perspective will accomplish the same thing in a way that actually increases your capacity with money, rather than reinforcing fear, scarcity and dependency.  This shift is ‘all you have to do is earn more than you spend’.

It’s only when you are faced with a significant financial situation that you’re likely even be open to new ideas that challenge your beliefs.  But, given the current economic climate it seems that people who have been intimidated to ask questions or to look at alternative views to solve their money issues are going to have to shift their beliefs quickly if they’re going to be able to navigate the changes on the horizon.

As we start the New Year, here are a two key financial areas that will challenge the conventional view of money.  These concepts are necessary to help create a paradigm shift in your thinking which will ultimately affect your plans and your results:

1.  Debt.  ‘Get out of debt’ teaching will sabotage our society; plus reinforce scarcity, inferiority and guilt.  The reason anyone wants to get out of debt is to use their money more effectively and ultimately so they have more money to spend and invest to create more wealth which creates more income which gives them more money to spend and so on and so on.

The goal is to have money to spend.  And spending money fuels the economy which is good for everyone.  This doesn’t mean that everyone should keep their unproductive debt or spend frivolously.  It means that to do a complete debt evaluation and create a debt management system, you have to develop a strategy to manage the current situation, then create income to fuel your lifestyle, and finally find out how to use this powerful tool called credit effectively to enhance your wealth.

Re-write ‘get out of debt’ and substitute it with ‘earn more income to support my lifestyle’.

2.  Retirement.  The concept of retirement is almost impossible today.  The idea of working then not working and living off your pension and your savings has only appeared to have worked for one generation throughout history:   the generation immediately following World War II.  It is virtually impossible to save enough to support your pre-working lifestyle in today’s economy.  And even if you do manage to do it, you will spend your working life wondering if you’ve saved enough and if you’re getting a good enough return on your money.  Then when you stop work you’ll be concerned with not losing what you have, or not having enough so that anyway you look at it, the concept of retirement in the conventional view is going to cause you to have financial stress.

The real plan is to become financially independent so you have enough income to support your lifestyle, whatever that might be.  This may or may not come from savings and in all likelihood is best to come from several different sources.

Re-write ‘retirement’ as ‘financial independence’ and start learning about ways to earn sustainable income outside of your job.

The biggest challenge you will find is that the commonly accepted language and strategies will all revolve around these 2 primary, seemingly sound, financial activities.  Financial professionals are trained to help their clients make investment and lending decisions and their products and services are primarily debt and investment products that are not about helping create sustainable income for life.  They can help you with income products once you have some money, but the fuel for your entire financial plan as well as for your life requires you to be able to create income that will fuel your lifestyle without you having to work 40+ hours a week until you die.  When you can take this approach your discussions with your financial advisors will open possibilities for different products and services and strategies where flexibility is important and rate of return is less important.

This means, that you will be a minority, but statistically speaking the minority is the group that ultimately has the wealth J  Happy Writing!

PS – There’s a ‘makeover’ underway at MoneyMinding.  Make sure you subscribe at www.moneyminding.com to get the new ‘Triumph Over Money’ report, and the be the first to hear about the MoneyMinding Makeover with mVillage special for only $10/month, or $100 a year!

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