When you think of life changing events, you probably think of meeting the love of your life or winning the lottery. For some, these events play a massive role in what they get out of life and for others, these events never come to fruition. While these circumstances are often the result of luck, there is a way to turn luck in your favor, especially when it comes to money and as such I want to share with you 7 money lessons that will change your life immediately!
Lesson #1: Money invested provides three forms of wealth
When you think about investing, your mind probably goes to one of two places. The first is towards asset classes like stocks and cryptocurrencies. The second, are the profits you aim to achieve. While it’s true that with the right investments you can make a ton of money, many people overlook certain benefits that are just as important as a massive bank account.
While it should be obvious, the first benefit of investing your money is of course to make more of it. I mean, would there really be any other reason to be putting your money at risk? What most people fail to realize though is that investing yields much more than just the profits that appear on your bank balance. Two rarely talked about forms of wealth that invested money can also provide are time and health.
Time is the one thing we all want more of but is impossible to obtain which means that we must enjoy the time allotted to us. Unfortunately, most people have to work crummy jobs that steal this time away from us 5 of the 7 days of the week. Fortunately, when you have enough money invested and no longer need this job, time instantly becomes much more abundant. And, you know what else will probably improve as you leave that job? You guessed it, your health!
Having the money and time to work out and eat right is a hack for living a good life. At the end of the day, without our health we have nothing and when you invest properly and realize appreciable returns, you will undoubtedly gain access to these two unspoken benefits.
Lesson #2: You get paid for your value not time
When I first started my career, I met a man who had been at my company for years. He was a nice guy but always complained about how the company gave terrible raises and if he didn’t have so many bills to pay that he would have quit a long time ago. Of course, this had me jaded about the company because as a recent graduate, I needed the money to kickstart my adult life.
Fast forward a year and when raise time came around, I found myself in a fortunate position earning a 25% raise. My colleague however, wasn’t so lucky and vehemently complained that his raise didn’t even meet the rise in cost of living.
You may be wondering why our raises were so different, especially because I was a new employee and he had been working at the company for years. Well, the difference was that every day, I put in effort to make the company better while he sat at his desk trolling people on Reddit and taking obscenely long coffee breaks.
The lesson in this is that it’s not about how long you’ve been at your company or how many hours your butt moulds the cushion in your seat. The real way to make big bucks is to continually add more value. This could be through saving your company money, making it money or simply bringing more expertise to the table year over year. This is what people pay for and as such this is what you need to provide.
Lesson #3: The best raise you can get is the one you give yourself
Now, I know I just talked about how I have gotten some pretty sizable raises in the past but here’s the catch, a raise is only as good as how much you were previously making. At the time I got that 25% raise, I was only making $40,000 a year and unfortunately, future raises were not as generous. In fact, my raises began to shrink into the single digits after a couple years and let me tell you that a 5% raise on $50,000 isn’t exactly going to change your life.
After getting my second piddly raise in a row, I said enough was enough and I promised myself that I would give myself the raise I knew I deserved by creating a new income stream. I did this via freelancing at first and eventually through YouTube and let me tell you it was the best decision I’ve ever made. Now, I control my raises and let me tell you, they make my old raises look like chump change!
Lesson #4: Being cheap is just as bad as overspending
While I am all about people spending money wisely, I also believe that there is a huge difference between being frugal and being cheap. When you’re frugal, you spend to gain a calculated benefit whereas when you’re cheap, you do everything possible to avoid spending money.
While I can totally get behind the former, I do believe that being cheap comes with many flaws and I’d be willing to go as far as saying that it’s just as pernicious as overspending. Now, this is a bold statement, so let me back it up by explaining why I feel this way. First, being cheap has a negative connotation. If you’ve ever been called cheap before then you know what I mean by this. Second, and more importantly, people who are cheap will simply never get ahead financially.
You see, the issue with being cheap is two fold. First, you are tying your financial success to a strategy that is rather futile in nature. Simply put, showering with your clothes on and making your coffee strictly at home aren’t going to make you wealthy.
Second, when you’re cheap, you will inevitably pass up on amazing opportunities to skyrocket your income. I’ve said it before that if you think education is expensive then try ignorance and this is because where you are now financially and where you want to be is only separated by the knowledge you presently lack.
For instance, the only difference between when I was making no money on YouTube and the $100,000 plus I do now is knowledge. However, that kind of knowledge comes with a price — a price that cheap individuals just aren’t willing to pay. As such, most cheap people will dwindle in financial mediocrity forever which basically leaves them in the same position as those who are poor managers of their money.
Lesson #5: To have money in the future you must live in the future
I’m going to be honest, I have no idea how people believe in psychics. I mean, do people actually think that a person can tell their future? I’ll admit that it would be cool to know in advance who you will marry or how many kids you’ll have but I believe it’s truly anyone’s guess as to where you will end up in life.
Now, to give these believers of the occult some credit, I can see why they would want to know their future. I say this simply because I know the power that living in the future can have on your financial success.
Take a second and think about where you would be financially right now if you had the foresight to see the potential of the internet 30 years ago? Or, as a more recent example, how would your life be different if you were an early adopter of Bitcoin?
You see, if you want to be rich, and I mean 8-figure rich, you need to live in the future and not the present when it comes to your money.
Unfortunately, most people are living in the current times with their money. They either earn it and burn it buying shit they don’t need or they save it and watch it collect a handful of pennies in return. If you ask me, both results are tragic and it’s only when you set your sights on the future that you can start to make meaningful financial progress in your life. So, how do you do just that? Let me explain.
Living in the future requires two things: education and conviction. Before deciding how to deploy your money for future wealth, you need to educate yourself on which vehicles will drive your money to the greatest heights. For example, you need to learn how to examine the growth potential of stocks or the viability of an up and coming cryptocurrency.
In combination with education is conviction and quite frankly, sticking to your convictions is the hardest part on your quest to get rich.
It’s one thing to learn about the different assets you can invest in but it’s another thing to actually stick it out through thick and thin. For example, I would be willing to guess that many of those who held Bitcoin back in the winter of 2017 when it was trading at $18,000 a coin, sold off when it started plummeting downward eventually hitting a floor of roughly $7,500. However, those who had conviction and stayed the course would now have seen their portfolios at three times the peak they were in 2017 so this is all to say that if you want to have money in the future, you need to live like you’re already there!
Lesson #6: Everything you know about retirement is wrong
Ask the average person what retirement entails and they will mutter things like turning 65 and quitting your job for good. While this is the retirement picture that’s painted in most people’s minds, retirement is actually much simpler of a concept when you peel back its layers. Retirement is simply having enough money to never have to work again.
Unfortunately, what this retirement figure needs to be is something that just about everyone gets wrong.
Many people believe that if they can amass a few hundred thousand dollars or even a million bucks in a few decades time then their retirement will be guaranteed. Sadly, this isn’t likely to be the case thanks to our best friend: inflation. Properly accounting for inflation in your retirement planning process can be the difference between living in comfort during your golden years or being shackled to your cubicle until your last waking breath and to drive home this point, let me share with you some figures that will open your eyes to just how impactful this economic force can be!
Right now, a million dollars is worth, well a million dollars. However 40 years from now, assuming an average inflation rate of 3%, would have your million dollars worth just $300,000. Now, I don’t care how frugally you live, that is nowhere near enough money to retire on. As such, to properly calculate your future retirement nest egg, inflation needs to be taken into account by projecting how much money you would need to retire off now in future dollars.
For instance, if you could reasonably afford to retire on $1 million today, you would need $3.3 million dollars 40 years from now if inflation averages out at 3%. Then, once you know what your goal figure is, the next step is to create a plan to arrive at this amount. Assuming you get an average return of 7% on your investments, this would require you to invest roughly $1,300 a month for the next four decades.
I know for some people, the thought of investing over $1,000 a month seems daunting but it’s better to know what you’re up against now than when you’re 80 and time has run out. Therefore, rather than following the trend of being politically woke, aim to be retirement woke instead by knowing exactly how much you need to ensure your golden years are financially secure!
Lesson #7: Never let your money get bored
In life, there are two things you never want to leave in a state of boredom, your girlfriend and your money because in either case, it’s just a matter of time before they leave you. Now, I’m not here to advise you on how to woo your partner so let’s focus our attention on what it means to let your money get bored.
Letting your money get bored is synonymous with leaving it in one location for an extended period of time and the worst manifestation of this is stashing all your cash in the bank. Now, don’t get me wrong, saving is an important part of wealth creation but you should only ever see stashing money in the bank as a pitstop before your money moves onto more fruitful endeavours.
Sadly, many people make this mistake and end up priding themselves in seeing their bank balance grow when in fact in reality, they are subjecting themselves to abysmal interest rates and backward financial progression.
Instead, it’s advised that you continue to move your money around over time. For instance, when you get paid, keep what you need and deploy the rest into the stocks of your choice. Alternatively, use that money to hire more employees in your business and then wait for the money to come back to you in the form of increased outputs and ultimately more income. Remember, money is a tool and a tool that’s left in your toolbox is of no real use!