As a life-performance coach and strategist, I work with my clients to develop some essential disciplines that impact life in every area of influence. One of the disciplines is financial literacy. If you don’t’ develop a reasonable perspicacity of money and how it works, even if you learn how to make it, you will struggle to magnify its impact on your life and those you seek to impact. There are multitudinous principles and rules that govern how you handle money. Making money requires a specific skill set and focus, but keeping it and leveraging it optimally requires an entirely different set of skills and principles. The absence of the second set of skills is why more than 72 percent of NFL player are broke within the first three years of retirement.
The skills I want to share with you today are considered non-financial principles; however, they are essential to becoming great with money. Here of five of those non-financial principles.
When Socrates said, “to know thyself is the beginning of wisdom;” he hit the nail on the head. Socrates also said that an unexamined life is not worth living. Self-awareness provides the understanding of self that helps you understand your level of risk aversion. Everyone has a risk threshold; however, not everyone understands what it is about them that creates this aversion. When you learn what triggers your buying responses and what triggers your fears about spending and investing, you will begin to develop systems that will guard against impulse spending and hyper-fear when investing.
The ability to effectively manage your thoughts, behaviors, and actions are essential to being a good steward of your money. We live in a world driven by consumerism and debt. We operate in an economy that is debt-based, meaning that it is driven by people overspending. If you don’t develop the ability to control your spending impulses, you will find yourself always behind the eight ball. Those who have mastered money are great at resisting the proclivity to react to the impulse to make unnecessary purchases.
Keep up with the Joneses has become one of America’s favorites pastimes. To gain complete control of your finances, you must have the confidence to bypass any urge to compare yourself to anyone else. These comparisons create illusions of shortcomings you don’t even have. They also drain you of time and energy that could be better placed in building a solid financial future for your family. Great money managers cultivate an authentic self-concept that facilitates a wealth of self-confidence that allows them to live by a simple but powerful truth: Who they are as a person extends far beyond what they buy.
4. See the Big Picture
One fallibility that is common among those who struggle with their finances is the inability to see the big picture. In many instances, this is because they are in survival mode. They consistently focus on their current issues — causing them to make decisions that will not produce efficacious results down the road. To be good with money, you must have an endgame, and you must be able to keep that endgame in mind. For example, a person who has an endgame of reduced or eradicated debt will focus on paying down student loans, saving for retirement, resisting the accumulation of credit card debt. When you continually look at the big picture, it assists you in making wise decisions with your money. Focusing on the big picture will place financial security ahead of the momentary elation you experience when you buy that shiny new gadget.
5. Develop Patience
Unless you hit the lottery or launch a startup that instantaneously goes public, you will have to exercise patience as you move toward financial security. It is well-founded patience that will allow you to resist the desire for immediate gratification when those buying impulses kick in. Patience will also stand guard when you are considering investment strategist — creating the capacity to take a long-view perspective on a substantial amount of your investments. While there are exceptions to the rule, the way you build wealth is a dollar at a time. There will definitely be times in which you can double down and leverage your efforts, but you want all of your risks to calculated. The lack of patience will make you an easy target for get rich quick schemes.