Money is the most emotionally charged topic that nobody talks about. I mean, it is just not polite to walk up to someone and ask them how much money they make or inquire about their net worth.
Your relationship with money is likely based on your childhood, family experiences, personal events, movies, stories and other external factors.
Managing money is more about your mindset and behavior than it is about the numbers. The numbers are relatively easy to grasp. Your relationship or behavior with money, not so much.
While I will be covering the key behavior challenges with money and why the Path to Financial Freedom is challenging for most on April 23rd. Today I leave you with 3 mindsets that are seductive and ultimately will leave you wondering where all your money went.
It’s Cheap Money
At my bank today, you can get a 60 month car loan for 4.40%.
That seems like a small price to pay for buying a nice car to drive. Do we not love our cars and trucks? Americans love their cars.
Well, let’s do a little math. Over that 60 month period, for a $25,000 car, you will spend $2,896 in interest. If you took that interest and saved $50 over a 60 month period, with a return of 4.4% (modest), then you would have $3,233. That is a net swing of $6,129.
That does not sound cheap to me.
So, if you are thinking $2,896 is not much to pay on a car loan, well, you have the cheap money mindset.
(Real estate loans are usually the most positive aspect of “cheap money”, but remember real estate usually appreciates, unlike cars)
I don’t have time to………
Plan meals, so I will just eat out
Track my spending
Create a savings plan
Take care of my possessions
Meet with a Financial Advisor
Understand the tax benefits of investing in a 401K or other tax deferred retirement plans
Weed out the spending not aligned with your values
Take care of yourself (diet, exercise, stress management)
Dream, pursue work you love
If you do not take the time now, then you will not have time in the future, because you will still be working.
I Deserve It
If you work hard at a job you hate, trust me, you are more likely to play the – “I deserve it” card.
Guess what? You may deserve it. You may be able to afford it. But this mindset will result in accumulating stuff that brings short term gratification and spending more money on “things” to fill the void of grinding it out weekly.
Money, like staying in shape, is a long-term game. Most of us prioritize the immediate need for short term desires and gratification over long-term needs.
Your ability to create financial freedom relies on your ability to prioritize long term gains over immediate short-term pleasures.