As you change your money mindsets, you start to achieve financial success. What is financial success? Earl Nightingale puts it best when he defines success as…
Success is the progressive realization of a worthy goal or ideal.
Earl Nightingale
Likewise, financial success is taking action to help you to increase your financial wealth. It’s as simple as reading a blog article or book on investing. You can also listen to Podcasts from financial gurus who live and breathe finances. Or, it could just be paying off debts while putting some money towards investments every month. Better yet, you might have an idea to start your own business.
Yet, if your money mindset is negative and hard set-in-stone as mine were, then you’d stay stuck until you learn to shift them. I was stuck in a quagmire for 10 years before I shifted my limiting beliefs to achieve a simple goal: Take $10,000 out of my checking account and invest it.
It looks simple now, but taking that money and giving to someone to invest was one of the hardest things I’ve ever done. Every few years, I’d take a good, hard look at my checking account. I had some money sitting there, just doing nothing. I was so dumb financially I didn’t even put that money into a savings account. A financial adviser would be shaking her head right now, saying I was losing to inflation for those ten years.
That’s why you invest. You do this to hopefully offset the effects of inflation. If the money just sits in your checking account, you are literally losing money.
It’s about taking small, successive steps. In this respect, to be able to take any dollar amount and hand it over to a financial investment company so that they manage your money is financial success.
Build Assets, Not Liabilities
To achieve financial success, you must work on building assets, not liabilities. Assets are things which make you more money, even while you’re not working. On the other hand, liabilities cost you money.
Cars are good examples of liabilities. As soon as you drive a new car off the dealer’s lot, it has already depreciated in value. This is why I’m a fan of buying used cars. Let someone else take the depreciation. Cars require a high, yearly insurance bill to operate. Every year, you can expect to pay hundreds to thousands of dollars servicing or repairing your vehicles. They are liabilities because they cost you money, usually lots of money.
Assets, on the other hand, create money for you even if you’re not working. Investments into stocks, real estate, and businesses are examples of assets. They are sources of passive revenues. Imagine waking up a few hours after the market has already been open and seeing extra money in your accounts. Or, how about seeing extra money at the end of every month?
Your job is not an asset. It’s more of a liability because the moment you stop working, whether you have a choice or not, you stop making money. You have to spend so many hours every day at someone else’s building. Even if you’re able to fully work from home, you’re still giving up that most precious and nonrenewable of all resources: Your time.
Making money without having to actually work for it, all while enjoying life and doing what you want to do, is a good indicator that you have achieved financial success.
Getting Started Is the Hardest Part
Around the first of any new year, you can expect to find your local gyms packed with new years resolutioneers. Wait times for machines increase as clueless mass of newbies take more time than they should, chatting around the machines with their friends. They are doing what they have always done, which is to say their time in the gym is wasted. Then, as the month wanes on, you see those same people eventually stop showing up.
Is it any wonder that gyms are so profitable? They continue to collect to membership dues, which often require a commitment time of a year or two, from members.
It’s the same across the board in any area of personal development .Typically, you’ll find that only 5% to 7% of people who sent out to achieve a goal actually do it. The rest just fade quietly into the sunset. Or, it might take them many more years before they are finally in attaintment of their goals.
Why the low success rate?
You Have to DECIDE!
One of the major reasons why so many people fail to achieve financial success is that they never really decided. Think back to a time you really decided, not just when you where half-assed interested. You really decided. It felt different this time, right? When you decided–really decided–you felt it in the gut. You were committed instead of interested, too.
That’s what it means to really decide. Most of us were never taught how to make decisions. It’s something we have to learn as adults when we’re navigating the real world, especially for those of us who are not fortunate enough to be given stuff and have had to earn it. With every decision you make, ask yourself: Are you interested or committed?
Passing interests are how most people make decisions. For instance, you may be interested in investing money. Perhaps you are the the same position I was in just several years ago: You don’t know how to invest and the mere thought scares you. As a result, you’d get excited about the possibility of transferring money over to a brokerage account, where they can start to invest your money. Yet, that interest dies down a week to a month later, after you received the paperwork to start the transfer. Perhaps by that time you got nervous and wondered if you were making a mistake, gambling your money like that.
Decision Comes With Lifestyle Changes
Deciding to achieve financial success often means changing your lifestyle. Initially, it may mean giving up eating out every day for lunch during the workweek. Perhaps, you relegate yourself to just one outing a week. This means your lunches now cost you a fifth of what they did. That’s money you can invest. It also means giving up your social time with other people, which could be hard especially if you spend a lot of time in front of the computer.
When it comes to committing to a decision, it means uprooting your routine. Most people are happy with the same old thing, day in and day out. That’s why most people cannot handle change.
When you decide to achieve financial success, you have to be willing to give up certain things to have other things. It is hard to give up eating out every day for lunch. Start off by making small changes. You might give up one of the five lunch days, where you bring your own lunch into work and eat in the breakroom with new people. Likewise, rather than transfer $10,000 into an investment account in one shot, set up an automatic biweekly transfer of $25.
Making small changes like these are a lot easier to handle
Investing Is Actually Really Easy
As you shift your money mindsets with a series of small changes, you start to realize investing is really easy. It’s especially rewarding when you start to see returns on your investments. This reinforces your habits to invest even more money. If you’re not already maxing out your 401(k) retirement account, start by increasing the contributions by 1% every year, until you reach the maximum allowed.
It’s easier to make lifestyle changes around that 1% of reduced income spending, spread throughout the year. Likewise, if you get a raise, it’s easy to outright spend that money. Parkinson’s Law dictates that your level of spending rises to meet your level of income. So, reduce the perceived ability to spend by reducing that paycheck by a little every few weeks. Your future self will thank you when you’re enjoying life in luxury.
Investing in other people’s business is as easy as giving them some startup cash. You also come to some sort of agreement on how profits will be distributed. When you invest in stocks, it’s the same thing. You’re really investing in someone else’s business.
Real Estate Investments
There are many ways to invest in real estate besides the conventional method of buying a piece of commercial or residential property, then renting it out as a landlord. For instance, many stock investment companies offer real estate investment funds. Another way to invest in real estate for very little start-up cost is through companies such as FundRise are real estate investment trusts (REITs). They typically own income-producing real estate.
REITs are just like traditional in the sense that they go out, vet different properties as potentials for investments. These can be apartments, condos, hospitals, shopping malls, hotels, warehouses, etc. In this case, many people have money invested across the board rather than one person owning one property. This means you get a small percentage of returns. If a REIT invests in a new-construction apartment building, it can take several years before you start seeing returns.
REIT are like traditional, individual real estate investments. Your invested funds are typically not as liquid as they are with stocks and high-yield savings accounts. This means if you need to access your money in a hurry, you cannot. There are specific times of the year or even every few years when you can access your invested funds and liquidate them.
So you might say REITs are structured in such a way to keep you from liquidating your assets easily because some money is invested in projects which are already producing income while others take time to realize.
Start a Side Hustle
Start a side hustle and see if you can turn it into your main revenue source. This is called “building your own business.” You’ll have far more control working for yourself than you ever will working for someone else. In addition, you’ll enjoy a lot more freedom. I had a revelation years ago how silly it is to ask another grown adult (your manager) if you can take time off from work. It’s your time, and your time on this planet is limited. Why should anyone tell you how to spend it? Better yet, why should anyone tell you want to do?
Yes, they are paying you to do a job, and that’s the main reason. The point is you have a duty to bust out of this virtual prison. One way to do it is to achieve financial success through building your own business. So long as you have to rely on a job and someone else for money, this is not freedom.
Yet, most people who start businesses end up working many more hours than when they worked for someone else. Rather than being the owner of their own business, they are still an employee. They realize quickly that they are better off going back to work as an employee.
The real sign of a successful business is one where you can walk away, and it still generates revenue for you.