3 Things to Do Now In Order to Get Your Financial House In OrderApr 05, 2021
How You Can Avoid the Struggle!
When I set out to write the international bestseller The Top 10 Reasons the Rich Go Broke, it was on the advice of good friend and author of Rich Dad, Poor Dad Robert Kiyosaki.
At the time, I never imagined the success it would bring. So many people have found this book to be insightful, revealing, and even convicting.
It’s really not about the rich, though; it’s about us. You and me. Regular, average men and women who struggle financially. Okay, I may not struggle financially, but I become so immersed in the struggles of my clients that I feel their pain.
And I hate it.
The book touches on some key factors that most of us have in common. Consider that we live in the wealthiest nation in the history of the world, at one of the most prosperous times ever, and from the outside it should look like everyone has the ‘good life,’ that no one in this country has want or need.
But that’s not reality. The reality is most of us are struggling. Big time. In fact, a stat I point out continually highlights this (and it needs to be repeated over and over and over): in 2018, 78 percent of full-time working adults were living paycheck to paycheck. Just five years earlier, that number was 73.
Even as the Stock Market was pumping up at all time highs and jobs were being created and people were reveling in a new era of prosperity in this country, more people who struggling just to survive from one paycheck to the next.
It took me a long time to discover the reasons for this, but when I finally did, the revelation was groundbreaking. Possibly earth-shattering.
The Traditional Financial Approach
Most of the financial advice, counsel, books, and so on are what I call ‘Below the Line’ tools. Debt repayment schedules, cash-only spending, and so forth can certainly have a place, but at the end of the day, those things, that information, has been around for decades.
It’s nothing new. And if it worked, the numbers of people struggling financially would not continue to climb. But it is.
So when I was interviewed by Kim Kiyosaki, financial expert, serial entrepreneur, and Robert’s wife, we talked about why so many millions of people continue to struggle financial, despite the unprecedented wealth and opportunity in this country and around the world.
Many Reasons, One Denominator
There are certainly plenty of ‘reasons’ the rich go broke (and many more why middle class people lose everything), but they all boil down to one common thread: beliefs.
Broken beliefs involving money are the root of almost all financial pain and suffering. I created a simple model that explains the problem and how it impacts us. It’s called the B.E.A.R. Trap.
The ‘B’ stands for Beliefs. Our poor beliefs about and around money. They could involve feeling like we’re not good at math or that the system is rigged against us or that $100 more on the credit card for something we really, really want isn’t a big deal, or a number of other examples.
That broken belief leads us to make excuses for why we consider doing something, like buying that new 80-inch stunning TV with the cinema quality sound system when we’re still renting our home, our car’s making a weird sound, or we can’t come up with $400 for an emergency expense, should one arise.
The ‘E’ is for Excuses. Those excuses we make justify our ‘A’, or Actions. We go out and spend money on something we don’t need because we’ve already created a reasonable sounding excuse to do it, all based on that broken belief.
In the end, we deal with the ‘R’ or Results. Stress because there’s $1.26 in our checking account, barely $100 in our savings, and we just ran out of milk four days before our next direct deposit paycheck gets dropped into our account.
The results can also mean being unable to cover our rent on time, pay the utilities on time, and incur late fees and charges. It could mean strain on our relationships and financial stress can lead to an increased risk of some serious health issues, like heart attack or stroke, just to name two.
It’s an Epidemic
Currently, we’re dealing with a global pandemic, but we’re also facing a growing epidemic of financial pain and misery. Most people are one unexpected emergency expense from being broke. Bankrupt. Financially ruined.
The government is a poor role model when it comes to fiscal responsibility, and though it can print up money from thin air to send $1,200 to people, there really is a piper to pay in the end.
Our country is sitting on now $26 trillion in debt, and that doesn’t even include liabilities, like Social Security and public pensions. Total liability in this country is estimated to be over $90 trillion!
It’s no wonder people are completely clueless financially. We watch the federal and state government bodies over-promise pensions, raid Social Security to pay for pet political programs, and then have the Federal Reserve print money from nothing, and we wonder why we think we can do the same.
Eventually, the bill’s going to come do. We won’t be able to pay. And there won’t be anyone around to bail us out.
Think things are tough now? Just wait a few years. It’s coming. And that’s why it’s so important for people to get financially healthy and sound now.
Don’t misunderstand me when it comes to my book: it’s not just the very rich who are highlighted in those 10 stories. It was also people who were well off enough that they should have been able to enjoy retirement, people who built a business from the ground up, but made bad choices and lost almost everything.
SEE: The 8 Things You Must Get Done NOW!
Women Are Especially Vulnerable
For good or bad, whatever your political ideologies, we still live in a patriarchal society. That means men tend to take charge when it comes to finances in a marriage.
Too many women take their spouse’s word that everything’s okay, that they are financially fine. They have no idea, but when something happens (he suddenly passes away or the house is foreclosed on or whatever), they are caught completely by surprise.
There’s no excuse for that. But the beliefs are built in, and they are usually instilled a long, long time ago. By parents, by teachers, by society … it doesn’t matter where they come from … they lead to excuses like, “My husband takes care of that stuff” or “I don’t understand any of it” or “I just don’t want to know.”
Our school system has failed us. Badly. It doesn’t prepare us for our financial future. We graduate high school or college and have almost no education on saving, checking, balancing a checkbook, interest rates, compounding interest, and so on.
Men and women really need to take charge of their financial future and it all begins with understand what their beliefs are, where they came from, and how they impact the decisions they make.
Taking Charge in Good Times
With COVID, lockdowns, and shuttered businesses, this is not a ‘good time,’ but to look at Wall Street numbers and read the news, you’d think we were living the best life.
So, in light of that, let me explain a few things that you might want to do now in order to be prepared for when these supposed ‘good times’ fall apart. And they will.
1. Get organized.
Most clients I meet with are disorganized when it comes to their financial records. Shoeboxes stuffed with paperwork and nothing is in order.
Get organized. I provide a great organizational document on my website you can download for free right here.
2. Think about your beliefs about money.
I’ve witnessed many people get very emotional when they finally uncover their beliefs about money. It can be rattling, unnerving. But the more you know about these beliefs, the more aware you’ll become regarding what choices you make in the future.
3. Review your finances regularly.
I’d say to do this at least once a month. If you’re single, sit down and go over all the details of your earnings and spending.
If you’re like most people, you’ll notice a number of expenses you didn’t realize added up to be as much as they are. It’s the little $4 latte here, the $3 candy bar there, or $20 secret pleasure that adds up.
By the end of the month, you may be stunned to realize you spent $385 on nothing. But, you’ll be more aware of those purchase choices in the future.
If you’re married, be certain to go over all this with your spouse. Together. Avoid accusations. Simply address any issues in a calm, reasoned manner. That way you can avoid the trap of blaming one another.
If you start on this road, you’ll be leaving the superhighway millions of people are on right now: the one that leads to only one place: Pain Island!
John MacGregor is an international best-selling author, global speaker, and financial mentor to thousands of people worldwide. For over 26 years John has been assisting individuals with their personal financial needs using paradigm shifting techniques and strategies so people can finally live the life they deserve to live. Check out John's website for a variety of free resources so you can immediately start your journey to financial freedom and peace of mind.