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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
You don't have to be educated or connected to be wealthy How do wealthy people do it? Are they geniuses? Lucky? We tend to think something special must be going on because it looks like magic. But nothing could be further from the truth. Wealthy people have simply adopted six key, yet ordinary, habits ... and they do them extraordinarily well. Candy Valentino opened her first brick-and-mortar store at 19--no college, no connections, no money--and built it into a seven-figure business before most of her friends graduated college. Over two decades of success as a serial entrepreneur and real estate investor, she has labored relentlessly to crack the code of the super-wealthy, and in doing so, has unearthed six simple habits that directly contribute to those who become part of the self-made millionaire class. In Wealth Habits, Valentino reveals all six habits, and shows you how you can put them to work for you: * Long-term investing strategies * How to recession-proof your business * Ways to keep money out of the IRS' hands * What to teach your children about money * How to establish financial protection and security * The secrets to keep more of the money you make (so you can invest more) "Think and get rich" will only get you so far. It's time to do and become wealthy... and set yourself up for a lifetime of true financial freedom.
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Veröffentlichungsjahr: 2022
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Table of Contents
Cover
Title Page
Copyright
Dedication
Introduction
Who Am I to Help You Build Wealth Habits?
What This book Is Really All About
One More Thing Before We Start: How to Best Use This Book
WEALTH HABIT 1: Growing Your Way to Wealth
CHAPTER 1: How the BS You Hear Could Be Keeping You Broke
Your Brain Is not Pre-Wired for Happiness, Abundance or Wealth; It’s Your Job to Re-Wire It.
A Poor Mentality Will Give You a Broke Reality
CHAPTER 2: Four Common Beliefs Keeping You Broke
Broke Belief #1: Scarcity
Broke Belief #2: Future Condition
Broke Belief #3: Lack of Appreciation
Broke Belief #4: Being Around the Wrong People
Time for a Wealth Habit Quiz
CHAPTER 3: Seven Core Commitments to Make to Yourself
Build Your Belief
Be Persistent—Persistence Pays
Be Solution-Focused
BYOC—Be Your Own Champion
Create Your Blueprint
Be a Swift Decision Maker
Start Anyway
WEALTH HABIT 2: Learning Your Way to Wealth
CHAPTER 4: The Compounding Dividends of Self-Education
What Is This Concept of Self-Education?
The Million-Dollar Argument
One of the Most Important Concepts You'll Ever Learn
CHAPTER 5: The Four Crucial Lessons We Didn't Learn in School
Lesson 1: Play the Long Game
Lesson 2: Show Up Anyway
Lesson 3: Nothing Is Owed to You
Lesson 4: Learn the Power of Gratitude
WEALTH HABIT 3: Earning Your Way to Wealth
CHAPTER 6: The Secrets to Building Multiple Streams of Income
Earned Income
Passive Income
Portfolio Income
Secrets of Multiple Streams of Income
Average Returns, Guaranteed—or Above-Average Returns with No Guarantee?
Standard Practice
More Aggressive Investing
CHAPTER 7: The Three Reasons Why Owning a Business Is a Powerful Wealth-Builder
Three Wealth Pillars
Owning a Business Is a Key Wealth Habit
CHAPTER 8: Calling Out the BS in Business—and How to Avoid It
BS #1: Follow Your Passion
Find What Energizes You and What Drains You
BS #2: You Don't Need a Plan—Just Start!
BS #3: Do Everything Yourself
BS #4: Find Your Purpose
BS #5: This Next Great Idea Will Make Me Rich
CHAPTER 9: Yes, You Can Start a Business—Here's How
Nine Initial Steps to Starting a Business
CHAPTER 10: Real-World Business Lessons on Revenue Growth
Growth #1: Customer Acquisition—Increase the Number of Your Total Customers
Growth #2: Average Cart/Ticket—Increase the Average Transaction Amount That Your Customer Spends
Growth #3: Buying Frequency/Purchase Frequency (PF)—Increase the Amount of Times in Which Your Clients Buy from You
Growth #4: Raise Your Prices
CHAPTER 11: Become the Ritz-Carlton of Your Industry and Create Cult-Like Customers
WEALTH HABIT 4: Saving Your Way to Wealth
CHAPTER 12: It's Not How Much You Earn, It's How Much You Keep: How to Give as Little Money as Legally Possible to the IRS
A Brief History
Taxes Are Personal
The More You Know, the Less You End Up Paying
1. How Deductions (aka Write-Offs) Work
The Six Ps of a Proper Tax Deduction:
Now That You're Self-Employed, Meet Your Nemesis: Mr. Self-Employment Tax
2. Why Proper Bookkeeping Means Everything to Your Tax Bill
3. The Red Flags and Audits No One Wants
CHAPTER 13: Three Secret Tax Strategies That Sound Illegal (But Are Actually Totally Legal!)
1. A Tax-Deduction in the Playroom: Hire Your Kids for $12,000 per Year Each Tax-Deductible for You, Tax-Free for Them
2. Using the “Hummer Loophole” to Write Off Luxury SUVs
3. The Augusta Rule: Rent Your Personal House to Your Business, Deduct the Rent, and Pay No Rental Income Tax
CHAPTER 14: Trusts Aren’t Just for the Rich Kids Anymore
Ten Benefits of Trusts to Help You and Your Family
How an Irrevocable Trust Is Different
CHAPTER 15: The Brinks Truck of Your Finances—Security and Protection
Four Ways to Get the Security and Protection You Need
1. Protect Your Life with 6–12 Months' Worth of Income Saved
2. Protect Your Business with Key Policies
3. Protect Your Family with Life Insurance
4. Protect Your Income with Disability Insurance
CHAPTER 16: Give Yourself the Opportunity to Retire Early—and Rich
Retirement Plans for Business Owners
WEALTH HABIT 5: Investing Your Way to Wealth
CHAPTER 17: Real Estate Investing: The Hat Trick of Building Wealth
REI Way to Wealth #1: Property Appreciation
REI Way to Wealth #2: Asset Leverage
BRRRR in Real-Life
REI Way to Wealth #3: Tax Advantages and Savings
REI Way to Wealth #4: Flexibility
REI Way to Wealth #5: Cash Flow
CHAPTER 18: Recession-Proof Your Finances—and Your Life
Remember, There Is
Always
an Opportunity
High-Yield Savings Accounts and CDs
Minimize Living Expenses and Spending
Recession-Proof Stocks
Look at Recession-Proof Businesses
Treasuries
WEALTH HABIT 6: Giving Your Way to Wealth
CHAPTER 19: Contribution: Where True Wealth Lies
The Final Habit
Contribution Is the Key to Fulfillment
Where True Wealth Lives
Resources and References
Acknowledgments
About the Author
Index
End User License Agreement
Guide
Cover
Title Page
Copyright
Dedication
Introduction
Table of Contents
Begin Reading
Resources and References
Acknowledgments
About the Author
Index
End User License Agreement
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WEALTH HABITS
SIX ORDINARY STEPS TO ACHIEVE EXTRAORDINARY FINANCIAL FREEDOM
CANDY VALENTINO
Copyright © 2023 by John Wiley & Sons, Inc.. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
Disclaimer: Candy Valentino and her affiliates do not provide tax, legal, or accounting advice. The information contained herein is for informational purposes only, and is not intended to provide, and should not be relied upon for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
While all my experiences and the stories I share with you in this book are true, certain names have been changed to protect the identity and privacy of my friends and colleagues.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permission.
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Dedicated to rescue dogs everywhere, especially mine.
Your unconditional love has always made me feel like the richest person in the world.
Introduction
Have you ever bought a book about money, personal finance, or wealth and realized that it's basically pep talk with no actual advice? Pages and pages are littered with the same basic motto of “Believe you'll make money, and you will!” over and over and over again.
You get through the first 70% of the book thinking, “Surely it will get better eventually” without it ever getting better? By the end of the book (if you get to the end), you realize there wasn't a drop of practical advice on how to make more money, how to keep more of what you make, or how to become financially free.
If that's you, I feel you.
“Think and get rich” will only take you so far. You also have to “do and get rich” to actually become wealthy and be financially free.
You can't sit on your couch and think “I'll have financial freedom, I'll become wealthy!” and not actually do anything about it.
You don't need another book filled with a bunch of regurgitated fluffy talking points to be convinced you should build wealth—you already want it. What you need to know is how to get there.
Wealth Habits teaches you just that—the habits anyone can develop and use to build real, lasting wealth.
There are dozens of great books out there that will give you motivation, inspiration, and encouragement. That's great if you want to be pumped up and motivated but don't want the actual steps to become wealthy and build financial freedom. Wealth Habits is your road map—a book of actionable steps to get off the hamster wheel of “work to pay bills” once and for all.
Your thoughts and beliefs about money are a part of building wealth, but it is not the only part. Chocolate chip cookies need chocolate chips, but that's not the only thing they need. It's simply one part of the recipe, and you still need other crucial ingredients.
Who Am I to Help You Build Wealth Habits?
There are loads of books written by authors with PhDs, MBAs, and all the other letters in the alphabet—I don't have any of those. I haven't studied a specific topic for the last 10 years. I lived it—for my entire life—and have been applying it on my own for more than 25 years.
I was 19 when I started my first business, but my life experience up until that point was growing up in a little white trailer with my two teenage parents in a rural, blue-collar town with a population of 2,000.
It goes without saying that I didn't have a rich family to teach me lessons about money and building wealth—yet I still found my way to being financially free. And that's the exact reason why I know that anyone who picks up this book—regardless of what's in your bank account, regardless of where you live, regardless of the family you grew up in, and regardless of your current circumstance in life—can build wealth too. That includes you!
I've built several multi-million dollar businesses and have bought, renovated, and flipped countless real estate properties in multiple states, acquired residential and commercial rental properties, and built a multi-million dollar real estate portfolio—with no money, no degree, no corporate background, and no rich parents.
So often I hear from people looking for some flashy “magic bullet” answer. I can see them wanting me to tell them the “one secret” that will unlock riches for them.
Here's the “one secret,” the truth:
I didn't do anything extraordinary. I just did a lot of ordinary things. No magic bullet, no earth-shattering invention, no perfectly timed investment—just ordinary, normal things that anyone can do. Including you.
That's my secret to success, and it's the secret upon which this book is based.
What This book Is Really All About
This is not a flashy book. It's a gritty book. One that will teach you how to do those ordinary things really well to create, grow, and retain wealth over time. You can do the same by following the six proven wealth habits I developed and followed in my own ascent to wealth.
Here are a few things I'll cover as they relate to you creating financial freedom:
How the BS you hear could be keeping you broke.
How to develop multiple streams of income.
How to build a real business—and make more money.
How to pay less in taxes and keep more of what you make.
How to score with the hat trick of real estate investing.
How self-education pays financial dividends.
How to protect your finances and your family.
How to stop working and retire early—
and rich
.
How to recession-proof your life—and your investments.
How contribution creates real wealth—and the science behind it all.
Not only can you build wealth with these habits, but they are also crucial for protecting yourself, and your family, against the unavoidable twists and turns of economic and industry cycles.
One More Thing Before We Start: How to Best Use This Book
Before we begin, I want to give you a couple of tips on how to get the most out of this book. First, this isn't a book of concepts and ideas to ponder—it's a road map to creating financial freedom. The six wealth habits have separate steps and tools within each section and chapter. They can all be used together or can be followed separately.
There is going to be a lot of information, so if you don't quite get something on the first read through, reread that section or chapter because repetition is the secret to building any skill.
Wealth Habits is about your financial future, not your financial past. We will talk about all of the things to do now, not the things you did or didn't do. So if regret or shame pops up, drop them at the door so we can move forward toward the life you deserve.
For anyone who desires financial security and, ultimately, financial freedom—creating wealth habits is no longer a luxury. It's a necessity.
When you don't apply wealth habits, you run the financial risks that come from relying on the other (bad or ineffective) habits most Americans have that keeps them on a perpetual hamster wheel and, ultimately, broke.
These wealth habits are the not-so-obvious secrets of how the wealthy become—and stay—wealthy, which unfortunately isn't taught to the masses.
The good news is that it's not magic, it's not a secret, and it's not even complicated.
It's time to learn how to apply these wealth habits in your life and join the movement by taking control of your future and creating the financial freedom you deserve. Now let's get started!
WEALTH HABIT 1Growing Your Way to Wealth
CHAPTER 1How the BS You Hear Could Be Keeping You Broke
As I said in the Introduction of this book, “Think and get rich” will only take you so far. You also have to do and get rich to actually become wealthy and be financially free.
Wealth Habits teaches you the tools to build real, lasting wealth, but you can't start the journey toward financial freedom if you are dragging around BS beliefs about money and wealth.
Which is why this chapter is first. I can give you all the action steps to get wealthy, but I'd be doing you a huge disservice if we don't address your thoughts and your inherent beliefs first because that is the driver to key financial decisions we make every day.
Increasing your financial intelligence can solve many of life's problems. Without this kind of knowledge we are doomed to repeat the pattern of “work to pay bills.” And although there is a science to being wealthy, it first starts with an idea. An idea to change, an idea to stop running in the rat race, an idea to break through all of the BS passed down—or picked up—about money and start getting the education to build wealth.
But here's the thing, unless you grew up in a magical environment with wealthy parents who had financial wisdom—no one knows this stuff. So if you've ever beaten yourself up for making this decision or not making that decision—
“I shouldn't have sold that house.”
“I should have bought that stock.”
“I shouldn't have hired that person.”
“I should have left that relationship sooner.”
“I shouldn't have… I shouldn't have… I shouldn't have…”
—that stops today. You didn't know what you didn't know. And I get it. I was right there with you.
Growing up with blue collar, teenage parents, money was often scarce. And the conversation about financial literacy was nonexistent. I used to define “the rich” by anyone who had an upstairs to their house, a fireplace to hang Christmas stockings, or those who went on a beach vacation every summer.
I had a friend in school who I thought was the definition of “rich.” Her house had an upstairs and a basement, she had an in-ground pool, and she took vacations with her whole family. Both of her parents had degrees—one was a teacher, the other was in sales—and her dad drove a new Cadillac. You get the gist.
But if you look at someone else with more money than you, and it makes you feel less in any way, you’re getting caught in a scarcity mindset, which is a common, negative mindset about money. The perception that earning more or having more means that we have enough—or are enough—is a mindset even yours truly got caught up in my early 20’s.
Achieving financial freedom will only come from seeing wealth for what it is—attainable. It is having the understanding that wealth is available to you, too, as it will never be attained from the fear of scarcity. Scarcity and lack holds you hostage to where you are and keeps you broke in the process.
When our basic needs are met (currently estimated at $75,000 a year), studies show that making more money doesn’t buy incremental returns for living a satisfying life.
Regardless of how much money or how many possessions we have, the important part is how we relate to what we have—that is key in this first step.
Remember that what we appreciate, and what we focus on grows. But that which we fear and we focus on also grows. When our attention goes to what is lacking, we base our lives on the feelings of insufficiency, inadequacy, and incompleteness, and thus, we start to feel more of each.
We can set any amount of money in our heads—anywhere from $5,000 to $500,000—and imagine that if only we had that much more money—just that much more then we would then have enough, be enough, and be happy. But what we don’t realize is we once thought the exact same thing when we had $5,000, $50,000, or even $500,000 less than we currently do now.
As another example, suppose we establish that if you received a 10% pay raise, or earned 10% more in your business, then you’d have enough to be cared for and comfortable. And abracadabra! Let’s say you got that. Now imagine for a moment, that you find out that a coworker received a 25% pay raise or your friend who started in business at the same time as you increased their net income by 25%. All of a sudden, your 10% just isn’t enough.
No one argues that more money can reduce problems or minimize the financial stress and anxiety in our lives. But approaching the pursuit of more wealth from a posture of scarcity can create more stresses or worsen existing issues. This type of negative emotional stacking can actually keep you away from building wealth.
If you’ve ever experienced money-related stress—about the aspects of earning, giving, spending, saving, or losing it—you need to carefully examine the beliefs you have and take a look at your overall approach to money.
The key to a healthier, more successful approach is to appreciate what you have, while going after that which you truly desire. The way to live a truly rich life is by finding the intersection of appreciation and ambition.
Your Brain Is not Pre-Wired for Happiness, Abundance or Wealth; It’s Your Job to Re-Wire It.
The good news is you get to choose which emotions you want to experience the most. And because your unconscious beliefs drive your emotions, you first need to address the beliefs you have about money (Team Tony, n.d).
If you feel anxious around money now, you're always going to feel that way—no matter your success, how much money you make, or how much wealth you create.
Abundance is a mindset, a belief, a chosen perspective—it's not a dollar amount. Cultivate gratitude for what you have now, and everything you achieve will feel like an immense bonus. The truth of the matter is that more than 75% of the world lives on $2 a day. Your worst nightmare is their greatest possible dream.
Lack of appreciation for what you already have is the one thing that will not only make you truly poor, but it will keep you there.
Unconscious beliefs about money and the wealth habits you lack will ultimately keep you from the life you want.
There is science-backed proof of how the mind plays a role in your wealth and in your overall financial future. And this book wouldn't be complete without addressing its role in the big picture of building wealth habits. However, it's only part of it.
Online marketing and social media are full of coaches, gurus, and marketers talking about “money mindset” and “visualizing your abundant future.” All the while they rent instead of owning their house, just started their first business, or haven't built any assets. So, although this book is certainly not about money mindset—and more about the real tactics that create financial wealth and financial freedom—I would fail you and your goals if I didn't include it, because it does matter.
A Poor Mentality Will Give You a Broke Reality
I believe it was Jim Rohn who said, “You are the sum of the five people you hang out with.” So if you hang out with the Negative Nancies and Broke Bobs of the world, if you are friends with gossiping or broke people—those who live beyond their means and don't invest in themselves by building wealth habits—you too will end up adopting those behaviors.
Part of growing your bank account requires you to grow your mindset, change your beliefs, and develop new habits. I've worked with thousands of people, spent thousands of hours reading and researching, and it is undeniable the science and psychology of how your finances and the money that you have are directly related to your thoughts and emotions around them.
What you think about money, how you think about people with money, and the emotions you have tied to money will be a subconscious driver either toward or away from what you desire.
It is worth spending some time to become aware of the thoughts and the emotions directly tied to money for you because without self-awareness, your subconscious wiring will override your conscious desires and rational thinking, and those old thoughts and beliefs (which aren't serving you) will end up driving your actions, behaviors, and habits.
And here's the deal, there's no shame here. You're not alone. This is a huge piece for a lot of people. Some of the common fears around money are not having enough, looking stupid, appearing greedy, being exposed, and having guilt or even shame. You might feel guilty because you have more than your friends, or guilty that your money came too easily, or guilty that you desire more. You could feel shame realizing you avoid your finances, you spend too much, you buy stuff when you're unhappy, or that you simply don't have enough.
Negative emotions around money is something that needs to be addressed and changed because it creates a vicious, unconscious cycle that no matter how many of these wealth habits you practice, if you don't fix the negative, you'll keep coming back to those emotions, thoughts, and feelings around money, and it will sabotage your efforts.
Here's how it unfolds. Let's say you're sitting down and taking a hard look at your financial situation, and you're starting to create an investment plan. Just thinking about this increases your anxiety because you're afraid you're not going to face the reality, or you have nowhere near enough saved, or you're spending far too much. That anxiety then leads you to avoidance. You postpone it, you delay, you distract yourself with some shiny object in the moment, and then, because you're distracted and postponed the task, your anxiety drops, which then gives you a positive reinforcement for the avoidance of the behavior. And then you repeat this cycle over and over, instead of doing what you know you need to do.
The only way to break the pattern is to confront the dreaded task. You are stronger than the whims of your brain—know that. The way to break through is to continue to face the facts and move forward with the task. Your anxiety will temporarily increase. However, if you stay with it, it will steadily decline. You have to tolerate the short term pain to achieve long term gain.
No matter the family you grew up in, every family has its own psychology of money. What is talked about, what shouldn't be talked about, who is in control of the money, what responsibilities are assigned to whom. How important money is, what thoughts and beliefs they have about money or people who have money. The subject of money is where your family and childhood influences never end, until you end them.
Money stories are always a part of a family's identity, whether conscious or unconscious. Perhaps your father had a bad business deal and almost lost everything. Perhaps your mother was a brilliant businesswoman and her ideas were stolen, which then caused her to be cheated out of her financial freedom. Their beliefs and habits already exist, and they've been passed down to you. The goal is to identify the beliefs you have, and see if they're giving you the financial future you want. If they aren't, we're going to change them.
Regardless of what negative associations you've learned about money (and yes, they have all been learned), here's the truth: Money simply magnifies a person's virtues and flaws. So if you are a greedy, immoral person, obtaining wealth will magnify those bad traits. But if you're a good person, an honest, caring, and giving person—money will magnify those traits and give you the ability to help more people.
Money is simply something you exchange. Money is replaceable and replenishable.
Here is a scientific fact about money:
You can rewire your brain and choose a different script about how you think of money. Not figuratively, literally. While most of the neurons in our brain have been with us since birth, and age does take a toll, our brains still make new neurons. This process is known as neurogenesis.
As reported in Scientific American, a 2019 study published by the journal Nature Medicine looked at the brain tissue of 58 recently deceased people and found that the adult brain can indeed generate new neurons (Weintraub, 2019). Your cells in your body are also constantly replaced and made new. In fact, our entire body, every cell in our entire body, is new every six months, which means you can change your beliefs, your thoughts, or your body based on your habits and develop an entirely different structure. Your brain can rewire itself. Neuroplasticity, or the brain's ability to recognize and change itself throughout a person's lifetime, is a truly remarkable thing.
Research published in the journal Nature Neuroscience suggests a person's brain activity is as unique as their own fingerprints. To reach their conclusion, scientists used functional magnetic resonance imaging (FMRI) to create connectivity profiles, which allowed researchers to identify the brain activity of more than a hundred individuals (Finn et al, 2015). Learning about individual brain connections offered scientists incredible insights.
There is science, real data, that proves: regardless of what you've been told, regardless of the amount of debt you have or the income you currently make—you too can use wealth habits and change your financial future.
Now let's get to the next step…
CHAPTER 2Four Common Beliefs Keeping You Broke
Throughout this book, we'll be addressing the very tactical, tangible steps of wealth building, and I'll be sharing the specific necessary and actionable steps that lead to financial freedom.
Of course, there are lots of tangible reasons that keep you broke—overspending, not investing, racking up bad debt on depreciating assets—and you may be aware of those. But there are many intangible habits that come into play as well.
I can teach you all the tangible steps that will make you wealthy, but if we don't address a few of the intangible beliefs most people carry around with them, we'll be swimming upstream together.
The faster we break these beliefs, the sooner we can get on our way to building the wealth habits. So let's jump into it.
There are four common beliefs keeping you broke:
Broke Belief #1: Scarcity
Scarcity is a belief that wealth is limited, that you can run out of money or will never have enough. The term “scarcity mindset” was coined by the author Stephen Covey in his book The 7 Habits of Highly Effective People.
As discussed in a recent Business Insider article, “There are two main facets: the thought that wealth and opportunities are limited, and the fear that one will never have enough. A scarcity mindset can also come with an obsession with what one is lacking. This creates a tunnel vision of sorts, making it more difficult to move forward and achieve financial goals” (Yale, 2022). The article continues, “the opposite of a scarcity mindset is an abundance mindset—the view that there is limitless wealth and opportunity in the world” (Stinson, 2019).
You can overcome the scarcity mindset and shift your perspective to abundance by making small, daily changes.
Build Your Knowledge
Learning more and expanding your knowledge about personal finance, investing, and wealth building is a path toward empowerment as well. I disagree with the phrase you commonly hear, “knowledge is power.” Knowledge isn't power, it's potential power. It only creates power when you do something with it. Knowledge does, however, create confidence. When you have more knowledge about your finances, investing, and knowing how to build wealth, you're able to move forward more confidently.
Direct Your Thoughts
If you find you are getting less than desired results in any area of your life, ask yourself, “Are my thoughts about this based on fear?” If they are, then ask, “What do I need to do to shift my mindset to abundance right now?” The sooner you can gather all of the fear-based thoughts you have and rewrite the scripts on each, the faster you'll be on your way to living consistently in that abundance mindset.
Train Your Focus
The enemy of abundance is a narrow focus. A Harvard study found that when people focus intently on one thing, other possibilities right in front of them go completely unnoticed (Castrillon, n.d). It's further proof that what you focus on really matters. Opening your mind to focus to what's possible, instead of what's probable, creates the abundance mentality.
Choose Your Words Wisely
The language you use, what you tell yourself, what you say about others—all shapes your reality. Are you using language of scarcity or abundance? When you are engaged in conversation, notice what you are saying. When you find yourself talking to someone (or yourself) about something you can't have or aren't able to do (even when it's what you actually want), stop yourself and have the courage to say, “Thank you for listening to me, but I want to take that statement back because that is a scarcity view.” Then, say what is possible from an abundance mentality.
Celebrate Daily
Make it a point to track daily achievements. Oftentimes we don't see how far we've come or the amount of growth we've already had, so it's important to take time to celebrate the small wins. Just like wealth and investing, your achievements and success compound over time. It's why studies show that the greatest portion of your wealth will be made from age 50 to 60. Your knowledge, your wealth, your life experiences, and the data you accumulate over time, all compound and lead to greater returns.
Broke Belief #2: Future Condition
“Future condition” means how things will be or when things change in the future.
This is often an “if” or “when” scenario.
WHEN I have more money, I'll start investing.
IF I make more money, I'll save for my emergency fund.
WHEN I have a better job, I'll start a retirement account.
IF I knew more people, I could start a business.
WHEN I have more time, I'll learn more about building wealth.
When you feel like you don’t have much money, or much extra to begin with, investing may seem pointless. But starting anyways, and starting small, can add up to something truly worthwhile. Consider that few millionaires (at least none that I know) began their investing careers with huge amounts of money. Most people grow their wealth over a period of years at a (usually) slow but steady pace. By beginning slowly and using small amounts of cash, you can instill the habit of steady, regular investing. This is a consistent habit which will hopefully establish a large nest egg for your future.
The problem with waiting for something else to happen, some future condition, well, there are a lot of problems with it. But the bottom line is all of the reasons you can’t begin now are merely an excuse. You don’t need more money, a better job, or a different type of investment market to start investing now.
Investing is like going to the gym. You have to pick up that first five-pound weight if you ever want to pick up the 50-pound weight. You have to run the first mile if you want to run a marathon. Investing is the same. Start small, stay consistent, and develop the habit.
If you want to provide income for your future—5, 10, or 40 years from now—then now is a good time to start investing. Resist the urge of waiting, or looking for a pullback in the markets or particular stock when your goal is long-term financial growth. Waiting to time a market can actually cost you far more because long-term investing is a long-term game. Consider this: The 10% difference on your purchase price today won’t matter much in 20, 30, or 40 years when your original investment has grown tenfold!
And the secret to starting small with investing is this: Even if it goes down in the short term, investing is all about the long game. Staying focused and riding out any market dips is the secret to producing long-term gains.
The only caveat to this is if you currently have the Big D—and no, get your mind out of the gutter—the Big D is Debt.
The Rule of 7
What do you think keeps most Americans up at night? Is it an uncomfortable bed, a big meal too close to bedtime, or the latest horror flick? Nope, it’s actually debt.
According to the American Psychological Association, two-thirds of Americans consider that money (or the lack of it) is a major source of stress for them. Because this kind of stress is so common, it has been given a name: debt stress syndrome.
Some statistics from the Federal Reserve Bank of New York show that US household debt exceeded $14.56 trillion in the fourth quarter of 2020. This figure is $414 billion more than debt reported from the same period in 2019.
Other 2020 statistics, this time from the credit-monitoring service Experian, show the average US debt per household to be at $92,727, which is a 10-year high.
The Big D is not only stressful, but also can cause panic and chronic anxiety and lead to poor decision making—which all can be a living nightmare for those who are swimming in it.
Consider that not all debt should be as stressful. Some debt may merit the worry it causes, but other kinds of debt can assist you with setting up a financially secure future. Debt on real assets—businesses, rental properties—can lead to more cash flow and greater net worth, and could fall into the good-debt category.
Think of it this way: If a particular debt increases your net worth or has future value, it’s good debt. But if the debt simply gives you another payment to make and you’re left with something of less value than when you purchased it, it’s bad debt.
Recognizing good versus bad debt is easy. Does an item lose value the moment you purchase it? If so, that’s bad debt. It’s true that many of life’s basic purchases, such as clothes and cars, fall into this category. But do you really need that 85-inch smart TV to watch football? Do you really need overpriced shoes to wear to that event? Especially when it’s the exact thing that’s robbing you from creating wealth? Oftentimes, people spend a lot of money trying to “look rich” and “feel rich”, but that behavior is exactly what’s keeping them from ever being wealthy.
Here’s a good rule to follow for depreciating purchases: If you can’t pay cash for it, don’t buy it.
Bad debt is any loan, payment, or interest being paid on depreciating assets—credit cards, paycheck loans, cars, boats, or motorcycles.
And as if that’s not enough on its own, the amount of debt you have is always monitored against your income. Meaning, if you want to buy a house, or an investment property, your ability to get funding will depend on the amount of debt you have.
Take a moment to figure your debt-to-income ratio. For example, suppose that you earn $4,000 a month and have these regular debts to cover: a $1,300 monthly mortgage, $400 car payment, and $700 for monthly credit cards and other bills. Your monthly debt is $2,400, making your debt-to-income ratio 60%.
A debt-to-income ratio over 43% is a red flag for potential lenders who know that borrowers with a higher ratio are more likely to have issues with making monthly payments. Depending on your lender and other variables, you may not even be able to get a mortgage or secure funds if your ratio is above 43%.
If you have any amount of bad debt, you want to eliminate that before you start investing because there is no greater destroyer of your wealth than bad debt. That brings us to the Rule of 7.
The Rule of 7 is any debt that has an interest rate of greater than 7% needs to be paid before you start investing.
Historically, the average investment in an index fund such as the S&P 500 that tracks the market will yield average returns of 8 to 10% annually. Obviously there were some years when it was much higher and others when it was much lower, but 8 to 10% has been a consistent average over decades.
The Rule of 7 (RO7) uses this data to support that any debt over 7% needs to be paid before investing and any debt that is good debt that increases your net worth or debt with interest below 7% (mortgages, home equity loans, school loans, etc.) will make more in your investments over time than you'll save by paying down the debt on assets.
So using the RO7, what debt (if any) do you currently have that need to be paid off before you start investing? List them below with the highest interest rate to the lowest:
Once listed, add your balance and the current interest rate you are paying on each in order of highest interest rate to lowest. Start at the top and begin paying down the Big D. There is no greater enemy to building wealth than debt. Make sure you don't skip over this step before moving forward. Remember, it's not just what you think—or even read—that builds wealth, it's what you do.
Broke Belief #3: Lack of Appreciation
Often, we feel unappreciated because someone doesn't say the words. Whether it's your efforts at work, the attention you give in a relationship, or taking care of someone in your family—we can feel unappreciated when not acknowledged. Not hearing or feeling appreciated can then lead to resentment. Being in a state of resentment isn't just unhealthy, it blocks you from what you do want. So imagine being given the life you do have and still not appreciating it.
You may not have everything you want, but the fact is you already have far more than a lot of people in the world. Many people around the world live on less than $1 per day. More than half of the world population lives with less than $10 a day. So if you bought this book, you are already doing better than half of the people in the entire world. And although you may think for a moment that you have a lot to be grateful for, fixing a belief will take more than thinking something once. It will take consistency to change and rewire your focus.
The opposite of a lack of appreciation is gratitude.
Gratitude is beyond something we think about when we are given a gift or when someone does a favor. Gratitude is a practice until it becomes a way of life.
Before jumping out of bed or grabbing your phone to check your email, take two minutes to think about all of the things you're grateful for—a roof over your head, a free country to live in, food in your refrigerator, a job to go to, a family that's healthy—the list is endless.
I wake up every single day deeply grateful to see the sun shining, for air in my lungs, for a heart that beats without any of my own effort—the list is endless. You may wake up and be grateful for the sounds of your kids, a job you worked really hard for, a position/education you busted your butt to get, the clean water you drink, or the income you have.
When you focus on being in a state of gratitude, scarcity leaves and abundance is all around. And I promise you—the more grateful you are, the more abundance you focus on, the more blessings that come into your life.
I'm going to mention this a couple times in the book because it's worth saying more than once. Practicing gratitude is one of the most powerful and widely recognized tools for creating abundance and happiness. There are numerous studies on the power of gratitude for health and overall well-being—not just financially but emotionally, mentally, and physically as well (Stinson, 2019).
Take a moment and start this practice right now. If you choose to be, what can you be grateful for right now?
Broke Belief #4: Being Around the Wrong People
This isn't so much a belief as it is an action, but there is an underlying belief in it.
You may think your friends or your family aren't connected to your debt, your spending habits, or your beliefs about money—but unfortunately that's just not the case. Shopping sprees, lavish vacations, sporting events, fancy dinners—and sometimes you have to choose between hanging out with friends and paying the rent.
Your friends aren't necessarily evil, and they may not be trying to sabotage your budget or your financial goals on purpose, but financial peer pressure is real, and it's subtle. And with a world filled with people pleasers, or at least those who don't want to create conflict, it's human nature to want to fit in or go with the flow.
