Scared of Money?

Do you have a fear of money? The more I see people talk about money, the more I see how SCARED we are of it. How we let others poison our views of money. And how easily we use negative words to describe it.

Here’s an email I got from someone who read my book, I Will Teach You To Be Rich. What do you notice?

Money stresses me out. My parents didn’t teach me anything about it and I’m very dependent right now. I did a year of nonprofit and made about 10k after taxes and it was miserable, so I figured if I can pull that off for one year then I can make it work. And I did! But I don’t know if I’ll hit it this year (it’s a bit depressing and a big source of anxiety). I think time is the name of the game though, the career is moving forward, hopefully, game sales will kick in passive income. For the “rich life” I’m a simple person. I want enough money to be able to travel. I want to own a dog. I want a kitchen with an island. I want to have a nice desktop and a nice coffee table. My partner doesn’t want to own a house but I kind of do. Since I don’t have a full-time job outside of my freelancing which is currently in a drought period, I don’t have really ANY money, averaging about $250 a week.”

My response:

“Good stuff. Great to meet you. Now I want you to look at your email and count the number of times you use negative words to describe your life/money. How many do you count?”

His response (notice the skepticism):

“Ha, I can’t tell if this was an automated message or not but you got me there!

Now, can you rewrite that entire email to be POSITIVE instead of negative? This guy didn’t even notice his reflexive negativity with money. It’s become like a dull toothache, something he gets used to. And since negativity is his worldview — the “lens” through which he views everything — I guarantee it’s an invisible “drag” on his entire life. I asked him to rewrite his email to be POSITIVE instead of negative because sometimes, it takes someone pointing out your pattern to shake you out of it.

When I talk to people about money, here are the most common words they use to describe it:

  • “Anxious”
  • “Stressed”
  • “Is it too late”

So many of us make day-to-day money decisions, never understanding the “invisible scripts” that actually guide these decisions. And in America, money is driven by FEAR.

FEAR that we’ll never have enough. FEAR that we can’t make more of it. And FEAR that someone will judge us for our spending — or even what we want to spend on. People say “Money changes people,” in disgust, as if it’s a bad thing. Money should change you! It should let you dream bigger, it should let you live an easier or more adventurous life, and it should let you bring others with you. But you can’t do that if you’re stuck thinking about money as a source of anxiety and fear.

An interviewer recently asked me what I would change from my 20s. I said, “I would have more FUN. I was too rigid. But the times where I had the most fun and I was the most successful was I just loosened up and tried a bunch of new things

With money, try these different approaches:

1. Know That You Can Trust Yourself

Know that you can eat at a really nice restaurant once for the experience — and truly enjoy it — but trust that I’m not going to trip and fall and end up going there every single week. You can also use credit cards without overspending (follow the systems in my book). You can pay off your debt and stay out of debt. You can become Rich and do good. Trust yourself.

2. Know that you can create more money

You can negotiate your salary — or find an entirely new job. You can start a business, even if you don’t have an idea. You can build your network to sidestep people with 10 years’ more experience than you — and get perks you’ve never dreamed of. All of those things can dramatically increase your income. Above all, your money is not a fixed pie that you have to exhaustively guard and protect. You can also expand the size of your pie.

3. Stop being afraid of waste

In America, one of the biggest no-nos is WASTE. Oh no! Ramit, if I start spending more on the things I love, I might “waste” some of my money! How do I “KNOW” that your book will solve my exact, highly specific problem that I worry about every day of my life? If it doesn’t, I’ve wasted $10!!!! Scammer!!! Oh no! Ramit, what if I hire someone and they don’t handle my SEO, my WordPress uploads, design all my graphics, triple my conversion rates, write my entire email funnel, and create a new webinar system? I might have Wasted the $13/hour I tried to pay them!!

If you spend your entire life worrying about waste, you miss a simple fact of life: In any system of sufficient complexity, there will always be waste. Yes, you should take measures to control it, but you should also accept that there will be a certain amount of waste — and move on! I know that I’m going to buy courses and attend conferences that won’t be perfect for me. I know I’m going to eat at a restaurant that’s unmemorable. I know I’m going to make bad hires. SO WHAT?

In my book, I wrote this:

Play offense, not defense. Too many of us play defense with our finances. We wait until the end of the month, then look at our spending and shrug: “I guess I spent that much.” We accept onerous fees. We don’t question complicated advice because it’s given to us in a language we don’t understand. In this book, I’ll teach you to go on offense with your credit cards, your banks, your investments, and even your own money psychology. My goal is for you to craft your own Rich Life by the end of Chapter 9. Get aggressive! No one’s going to do it for you.

3 things we noticed from people who don’t worry about money

Over the past month, we’ve been digging into the tactics and mindsets of the wealthy to find out what they do once they’ve “checked all the boxes” and mastered the basics of personal finance. How do they get to that enviable position where they never have to worry about money again? What do these carefree people know that we don’t?

They do three things above all:

1. They are prepared for everything

Most people just assume improbable events don’t happen, but technical people tend to view risk very mathematically … The tech preppers do not necessarily think a collapse is likely. They consider it a remote event, but one with a very severe downside, so, given how much money they have, spending a fraction of their net worth to hedge against this … is a logical thing to do.

Maybe you’re not ready to drop a few million on a bunker in rural Kansas, but that doesn’t mean you can’t be prepared for the future. In speaking to our students who worry about money, I’ve noticed that a lot of people are afraid of unpredictable things that might happen in their future. Some people refer to these as “the things you don’t know that you don’t know” or “unknown unknowns.” Here’s how one student described his fear:

What worries me isn’t job loss. What worries me is the million other things that could pop up. What’s hiding around the corner that I don’t know about?

This type of fear can be incredibly powerful, because your imagination runs wild with worst-case scenarios. It’s like when you are walking down the stairs into a pitch black basement of a rickety old house. It’s terrifying. Anything could be lurking in those shadows.

But there’s a simple solution: Turn on a light.

You can do the same thing with your finances. Instead of being afraid of “unknown unknowns,” you can shine a light on your financial future by learning from people ten years older than you who can tell you exactly what to expect.

2. They protect the money they already have

Ever see a news story about a rock star or athlete going bankrupt and wonder, “How is it even possible to lose that much money?” ESPN’s documentary Broke investigated the phenomenon of very rich athletes going completely broke. The statistics are shocking:

According to a 2009 Sports Illustrated article, 60 percent of former NBA players are broke within five years of retirement. By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress.

One of the primary causes of financial problems for these athletes was not extravagant spending. It was mostly due to bad investments, ranging from real estate to restaurants to car washes. It’s an interesting cautionary tale because one of the most common questions I get from students who have “mastered the basics” of personal finance is “How do I make my investments grow faster?”

As your wealth grows, you’ll find the investing opportunities start to grow as well. Instead of just a “boring” target date fund, now you can buy real estate, invest in start-ups, and take sizable positions in individual stocks. At a certain level, the world of hedge funds and private equity start to open up as well. It’s tempting to throw your money at these exciting opportunities and promises of outsized returns and it’s easy to develop an obsession with growth and moving faster.

I find this fascinating, because the research I’ve done revealed that the most successful wealthy people have the opposite approach. Instead of asking “what can I gain?” their #1 question is “how can I avoid losing money?” For example, Warren Buffett has two rules of investing:

Rule 1: Never lose money. Rule 2: Never forget rule 1. So what does this mean for you?

This is more a matter of mastering your own psychology than any new tactic or fancy asset allocation. But we’ve also spent enough time studying the psychology of personal finance to know that being a 100% disciplined monk with your investments is near impossible. No matter how much you read about the merits of basic index investing and why stock picking never works, there’s still a little voice in your head saying, “Yeah, but what if I find the next Amazon stock? I’d be a millionaire in five years!”

Here’s what we recommend: instead of suppressing that voice in your head, embrace it. Take 5% of your portfolio and put it aside for whatever crazy idea you have for making your money grow faster. Invest in Bitcoin. Buy $5,000 in Tesla stock. Invest in your cousin’s car wash if you want.

Do whatever you want, because while you might lose that 5%, you can sleep well at night knowing 95% of your money is still safe and protected.

3. They don’t do it alone

Normal people with ordinary financial needs don’t require an advisor. That’s why we tell most people it’s not worth their time. But once you’ve conquered the basics, then the basic rules no longer apply. Here are a few scenarios where it DOES make sense to pay an advisor:

  • When you have a lot of invest-able assets (~$1MM+) and have much more to lose if you make a mistake.
  • If you have complex situations (imagine having three kids, planning for college, and buying a house at the exact same time).
  • When you just want a second set of eyes to make sure you have everything done right and aren’t missing anything.
  • When you’re short on time and want to pay for convenience (e.g., you can hire a bookkeeper who you forward bills to and who pays them for you).
  • When you run your own business, an accountant is a no-brainer who can “cover your ass” and also look out for things you don’t know about.

Is hiring an advisor expensive? Yes, of course. But ask yourself, how much is constantly worrying about your finances costing you?

If you’re looking at getting help with your finances from a professional, then we recommend beginning your search at the National Association of Personal Finance Advisors (www.napfa.org). These advisors are fee-based (they usually have an hourly rate), not commission-based, meaning that they want to help you, not profit off their recommendations.

What else can you do to stop worrying about money?

If you’re still not sure you’ve done everything right with your finances, you can implement the 10 year saving strategy. The 10 Year Strategy involves asking people ten years older than you what they wish they’d saved for, and starting to save for that. Sounds obvious, but it requires admitting that despite your superior financial abilities, you’re still going to have the same expenses as everyone else. Young people love to pretend we’re going to be millionaires, work from the beach, and somehow magically make money and have low expenses all our life.

Here is what will happen to you as you get older:

  • Yes, you WILL have a nice and very expensive wedding (even if you’re a hypocrite and think you’ll have a “small, beautiful” wedding)
  • Yes, you WILL have kids and want to buy them nice stuff
  • Yes, you will need things like family health insurance and life insurance and homeowners’ insurance and family vacations and other things that you can’t predict right now because you’re not in that life situation

So reach out to someone older than you and ask them what they wish they’d saved for. I guarantee their answers will be surprising.

What are you going to do today?

If you’re not earning more than you spend, automating your money, and maxing out your accounts, that can be your first goal. If you’ve done all that and are looking for the next step, try implementing the 10-Year Savings Strategy.

One more thing: You can’t just scoff at this for being too easy and do nothing. You have to consciously choose:

  • I’m going to do this within the week
  • I’m not going to do this because I’m going to do another strategy within the week
  • I’m not at this stage yet…I’m going to pick up your book (or another book, or just do it) and get there

Note: There is no #4 (“I’m not going to do this at all…I’m just going to do nothing”) because that is a cop-out.

Get it done.

Article Credit: https://www.iwillteachyoutoberich.com/blog/scared-of-money-why-how-to-overcome-your-fear-today/

Published by SULV Foundation

Build and Repeat is our Mission and Purpose, we strive to make the world a better place while creating inter-generational wealth.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: