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3 Practical Tips for Changing the Way You Think About Money

3 Practical Tips for Changing the Way You Think About Money

It’s no secret that the super-wealthy think about money in a much different way than the rest of us.

Money is something they have plenty of, have seemingly little problems acquiring, and aren’t afraid to spend.

From the outside looking in, it’s real easy for us to say that their mindset of wealth is a by-product of the amount of money they have. But, what about before they became filthy rich?

While some of the super-rich were born into fortunes, many had to acquire their wealth on their own and battled countless setbacks. There’s a countless number of self-made millionaires in the world today. Many of whom started their stories in households whose average income was at, or below, the poverty level. One such person that immediately springs to my mind is Robert Herjavec.

Robert Herjavec immigrated from Yugoslavia with his family at the age of 8. Arriving in Halifax, Canada, it’s said that they arrived with $20, a suitcase, and no understanding of the English language. Robert’s ambition and determination lead him to becoming an extremely wealthy businessman who’s boasted business sales that reach as high as 9 figures. This determination and business savvy has allowed him to acquire a massive, personal fortune.

I’ve always had a keen interest in studying the mindset of the wealthy and, in this post, I’d like to share with you 3 tips that I’ve learned that will help you change the way you think about money, so you can get more of it.

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1. Think of Money as a Tool, Not a Result

    For many of us, money is viewed as a result. Something we gain for going to work. Something we lose when it’s spent.

    We use it to pay our bills and maintain our lifestyles, but rarely do we actually think of money as a tool. It’s simply something we have to acquire in exchange for our time and energy. To the average person, the acquisition of money is a zero-sum game.

    One of the most prominent differences between the mindset of the wealthy and the rest of us, is that they simply do not view money in this way.

    Pretty much every successful person that I’ve ever studied has had a mindset that views money as nothing more than a tool. A tool to be used to acquire and do more of what they really want. The best venture capitalists in the world understand this concept better than most. Their success is dependent on their ability to view and use money as a tool for investments.

    Here’s a quick example to better illustrate this idea:

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    Let’s say you have an extra million dollars lying around and you decide you want to finance a new car. The car payments average out to be about $800 per month.

    Most people would simply buy the car outright or just start making the payments out of the extra million they have lying around.

    But, those with a mindset for wealth, who view money as a tool, might do something as simple as this: Place the million dollars in a savings account that yields a 1% return and then use the $833 per month accumulated interest to pay for the car.

    Instead of spending money on the car and taking away from that extra million, the wealthy get to keep their million dollars and get the car too.

    While a very crude example, it effectively illustrates the difference in how money is viewed and used by those with a focus on wealth. When we start to view money as a tool, that allows us to grow our wealth and do more of what we want in life, we’ve come one step closer to having a mindset of prosperity.

    2. Focus on Prosperity – Not Debt

    This goes back to a basic principle of personal development. Focus on the solution, not the problem.

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    Many people get stuck focusing on paying off their bills and debt. It’s such a powerful theme in their lives that all their attention, in regards to money accumulation, is centered around paying bills and reducing their debt.

    While it’s great to pay your bills on time and reduce your debt, you can’t let it distract you from creating wealth. This is why you hear so many financial advisers tell people to set up an automatic debt payment plan and to just start focusing on savings, prosperity and growth.

    I think Bob Proctor, from The Secret, said it best:

    “Most people have a goal of getting out of debt. That will keep you in debt forever. Whatever you’re thinking about, you will attract. You say, “But it’s get out of debt.” I don’t care if it’s get out or get in, if you’re thinking debt, you’re attracting debt. Set up an automatic debt repayment program and then start to focus on prosperity.”

    Law of Attraction aside, that is great advice. Simply for the fact that it emphasizes taking your focus away from the problem and on to the solution. Your bills still get paid, but your mind is now free to focus on prosperity and growth.

    3. Don’t Put Money on an Emotional Pedestal

    If any of you are like me, and have grown up without a lot of money, you may have developed some pretty strong negative emotional stances concerning money.

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    Money was always viewed as a source of stress. Something that directly dictated whether or not I was going to have a good day. I used to feel strongly (and still do, at times – it’s a work in progress) that my personal self-worth was directly related to what kind of clothes I was wearing, what kind of car I was driving, and how nice my apartment was. All of this pointed right back to how much money I had in my bank account.

    Money should not be such a major thing in our life that it is able to dictate our emotional state or determine our own self-worth.

    This closely relates to the first tip that I listed. If we’re able to view money as nothing more than a tool for us to wield, we become the ones in charge of our lives – not the money.

    If we’re emotional about money and allow it to dictate our mood, how can we ever begin to use it effectively as a tool? I mean, you don’t get emotional over a vacuum cleaner, do you? Emotions will cloud our judgement and cause us to make poor choices with our money.

    The wealthiest people in the world will tell you, “Don’t get emotional about money.” While this is sometimes easier said than done, it’s very solid advice. Learning to take money down from that emotional pedestal and put it in our hands, where a good tool should be, is a key step for moving our mindset towards that of wealth creation. And that puts us in the driver’s seat.

    Featured photo credit: Growth of Money on Napkin via Shutterstock and inline photo by Philip Taylor PT via Flickr (CC BY 2.0)

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    Last Updated on June 6, 2019

    The Average Retirement Savings and How to Save Wisely

    The Average Retirement Savings and How to Save Wisely

    Are you on track for retirement?

    If not, don’t worry, I’m not sure either. I save each month and hope for the best.

    Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

    But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

    If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

    What Does the Average American Have Saved for Retirement?

    Saving for retirement is tricky.

    Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

    Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

    Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

    Here are the average savings Americans hold by age bracket:

    20’s – $16,000

    During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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    Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

    30’s – $45,000

    At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

    Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

    40’s – $63,000

    This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

    50’s – $115,000

    During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

    60’s – $172,000

    By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

    Ways to Save Money on a Tight Budget

    The sad reality is that most Americans aren’t saving enough for retirement.

    Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

    First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

    Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

    Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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    How to Save Money Each Month

    By this point, you know the average amount of money you should have saved for retirement based on your age.

    But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

    Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

    Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

    Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

    Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

    Top Money Saving Challenge Tips

    To prepare for your financial future and not be another statistic you need to be different.

    How?

    By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

    Automatically Contribute Towards Retirement

    If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

    Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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    Use the Right Tools to Know Where You Stand

    Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

    When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

    Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

    Bring in Experts to View Your Blind Spots

    If you have too little or too much money saved, you should consider hiring financial experts.

    Why?

    You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

    Regardless of the reason, getting help may help improve your financial situation.

    Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

    Speed up Your Retirement Contribution

    After learning how to manage your money well, the next best thing is to earn a higher income.

    You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

    By starting a side-business.

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    This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

    The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

    So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

    Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

    Reach Financial Freedom with Confidence

    What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

    My guess is that you’d feel happy and relieved.

    Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

    For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

    If you do, you’ll save money and pay debt faster.

    Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

    Featured photo credit: Huy Phan via unsplash.com

    Reference

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