Financial Wisdom

I have been receiving so many comments about my recent blogs on finances.  I was surprised this topic would be of such an interest since I primarily write on relationships.  However, maybe this is a cornerstone relationship; our relationship with money.

As a mother, as well as a business executive, I am concerned by the lack of financial education our children receive in school.  Many of today’s youth have credit cards before they leave high school, yet they have never had a course in money management or how to invest money, let alone understand how compound interest works on credit cards.

The world has changed, but education has not changed with it.  Children spend years in an antiquated educational system, studying subjects they will never use, preparing for a world that no longer exists.

It is foolish to assume the education the school system provides will prepare your children for the world they will face upon graduation.  Each child needs more education.  Different education.  And they need to know the rules.  The different set of rules – the rules to create financial independence.

I don’t care how many computers they put in the classroom or how much money schools spend.  How can the education system teach a subject that it does not know?

I can’t afford it.

How can I afford it?

One is a statement; one is a question.  One lets you off the hook, and the other forces you to think.  When you say, “I can’t afford it”, your brain stops working.  When you ask, “How can I afford it?” your brain is put to work.  Be fanatical about exercising your mind, the most powerful computer in the world.

Proper physical exercise increases your chances for health, and proper mental exercise increases your chance for wealth.  Laziness decreases both health and wealth.

People really do shape their lives through their thoughts.  I don’t work for money.  Money works for me!

Opportunities come and go.  Being able to know when to make quick decisions is an important skill.

Deep down you may be terrified of taking risks.  You really wanted to win, but the fear of losing was greater than the excitement of winning.

True learning takes energy, passion, a burning desire.  Anger is a big part of that formula, for passion is anger and love combined.

The word ‘emotion’ stands for energy in motion.

Be the master of the power of money.  Don’t be afraid of it.  And they don’t teach that in school.  If you don’t learn it, you become a slave to money.

Retirement does not mean not working.  It means that barring unforeseen cataclysmic changes, we can work or not work, and our wealth grows automatically, staying way ahead of inflation.  It means freedom.  The assets are large enough to grow by themselves.  It’s like planting a tree.  You water it for years and then one day it doesn’t need you anymore.  Its roots have gone down deep enough.  Then, the tree provides shade for your enjoyment.

Your greatest wealth is your financial education.  If you are prepared to be flexible, keep an open mind and learn, you will grown richer and richer through the changes.  Intelligence solves problems and produces money.  Money without financial intelligence is money soon gone.  If you want to be rich, you need to be financially literate.  Seek to master financial literacy.

Rich people acquire assets.  The poor and middle class acquire liabilities, but they think they are assets.  Assets put money in your pocket.  A liability is something that takes money out of your pockets.  Spend your life buying assets.

Keep your asset column strong.  Once a dollar goes into it, never let it come out.  Once a dollar goes into your asset column, it becomes your employee.  The best thing about money is that it works 24 hours a day and can work for generations.  Keep your daytime job, be a great hard-working employee or a solid, responsible business owner, but keep building your asset column.

Financial aptitude is what you do with the money once you make it, how to keep people from taking it from you, how long you keep it, and how hard that money works for you.    A person can be highly educated, professionally successful and financially illiterate.  These people often work harder than they need to because they learned how to work hard, but not how to have their money work for them.

Many great financial problems are caused by going along with the crowd and trying to keep up with the Joneses.  Occasionally, we all need to look in the mirror and be true to our inner wisdom rather than our fears.

I hate the word “can’t”.  If you want me to do something, just say, “I don’t think you can do it.”  Get out of my way…it will get done.

Schools are designed to produce good employees instead of employers.

When it comes to money, high emotions tend to lower financial intelligence.  Money has a way of making every decision an emotional one.

When I want a bigger house, I first buy assets that will generate the cash flow to pay for the house.  The rich get richer because their asset column generates more than enough income to cover expenses, with the balance invested in the asset column.  The asset column continues to grow and, therefore, the income it produces grows with it.

The rich buy assets.

The poor only have expenses.

The middle class buys liabilities they think are assets.

Rich people buy luxuries last, while poor and middle class tend to buy luxuries first.  The income generated from the asset column pays for the luxuries the rich buy.

McDonald’s today is the largest single owner of real estate in the world, owning some of the most valuable intersections and street corners in American, as well as in other parts of the world.

Ray Kroc’s profession was selling hamburger franchises, but his business was the accumulation of income-producing real estate.

Don’t forget to mind Your Own Business.  Too many people spend their lives minding someone else’s business and making that person rich.  Start minding your own business.  Keep your daytime job, but start buying real assets, not liabilities or personal effects that have nor real value once you get them home.  A new car loses nearly 25% of the price you pay for it the moment you drive it off the lot.  It is not a true asset, it continues to cost you to keep and use it.

Keep your expenses low, reduce your liabilities and diligently build a base of solid assets.  For young people who have not yet left home, it is important for parents to teach them the difference between an asset and a liability.  Get them to start building a solid asset column before they leave home, get married, buy a house, have kids and get stuck in a risky financial position, clinging to a job and buying everything on credit.  I see so many young couples who get married and trap themselves into a lifestyle that will not let them get out of debt for most of their working years.

A real asset business is one that does not require my presence.  I own them, but they are managed or run by other people.  If I have to work there, it’s not a business; it becomes my job.

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