Tuesday, February 3, 2015

Personal FInances Part 2

The buzz around “the water cooler” today whether you did or didn't watch the Super Bowl last night is the final play of the game ending with a Patriots’ interception and winning the game 28-24.  It was a good game, close game, many highlights, and incredible athletes displaying their talents.  In addition, another talent was on display with the singing of America the Beautiful, the Star Spangled Banner, and then the half time show.   Not to mention all the people “behind the scenes” for the 4+ hours.  AMAZING!  What is also “behind the scenes” is the time, energy, dedication to detail, improving one’s craft, team work, and passion to do whatever it takes to “get the job done” whether it was the cameramen and women, the trainers, equipment people, sportscasters and writers, plus a long list of others. We can debate that final call, debate the deflating the footballs “scandal,” debate the way certain players deal with the media, debate authenticity of media sports interviews etc. etc. all we want.  What we can’t debate is that, in this country, we have opportunities to pursue our dreams and opportunities to reach those dreams when we work hard, when we’re focused, when we don’t make excuses, when we don’t give up, and when we take responsibility to do what we, as individuals, need to do to get the job done.  I, for one, feel very blessed to have those same opportunities though I’m not a pro athlete, or a famous singer, or well-known sportscaster.  What about you?

On to this week’s blog, Part 2 focuses on our personal finances.  Five or six years ago, Jon and I attended a weekend seminar through T. Harv Eker and his book The Secrets of the Millionaire Mind.  It was an amazing weekend with so many “ah ha” moments, but with solutions behind all the learning and growing.  In our 30 years of marriage, we had tried budgets, writing all expenses down, and other approaches.  Nothing seemed to work, at least for any length of time, and definitely didn't have a long term effect on our finances.  After that weekend, however, we committed to “the jar system” which has totally changed our lives as well as the lives of our children who also adopted this system.

In his book and in the workshop, Eker discusses our “money blueprint.”  “What is a money blueprint?  As an analogy, let’s consider the blueprint of a house, which is a preset plan or design for that particular house.  In the same way, your money blueprint is simply your preset program or way of being in relation to money.”  “Your financial blueprint consists of a combination of your thoughts, feelings, and actions in the arena of money.  So how is your money blueprint formed?  It consists primarily of the information or “programming” you received in the past, and as a young child.”  “The primary sources of this programming or conditioning includes people such as: parents, siblings, friends, authority figures, teachers, religious leaders, media, and your culture, to name a few.”     (pg. 18)

We all come with our own blueprint.  Is it a blueprint based on lack or abundance?  What about your spouse?  Does he/she come from a blueprint of lack or abundance?  Over the course of your life to this point, whether you're single, married or divorced, how do you view money?  There is a lot of “how to” books, articles, financial planning support etc. etc., but what’s the bottom line for you with your personal finances?  Eker contends that the “real problem can’t be changed in the ‘printout,” the physical world; it can only be changed in the ‘program,’ the mental, emotional, and spiritual worlds.  Money is a result, wealth is a result, health is a result, illness is a result, your weight is a result.  We live in a world of cause and effect.”  “The lack of money is never, ever, ever a problem.  A lack of money is merely a symptom of what is going on underneath.  Lack of money is the effect, but what is the root cause?  Until reading The Secrets of the Millionaire Mind and also attending the workshop, I had no idea the impact my blueprint and other money experiences tainted my actions surrounding money.  I wasn't a spend thrift, I was able to do much of what I wanted to do, but a closer scrutiny brought to light things I hadn't paid attention to and could, in the long run, be harmful to my long term financial security.

We all have a thermostat in our homes.  We know that the “only way to permanently change the temperature in the room is to reset the thermostat.”  Eker writes, “In the same way, the only way to change your level of financial success ‘permanently’ is to reset your financial thermostat, otherwise known as your money blueprint.”  “You can try anything and everything else you want.  You can develop your knowledge in business, in marketing sales, in negotiations, and in management.  You can become an expert in real estate or the stock market.  All of these are tremendous ‘tools.’  But in the end, without an inner ‘toolbox’ that is big enough and strong enough for you to create and hold on to large amounts of money, all the tools in the world will be useless to you.”  “It’s simple arithmetic: Your income can grow only to the extent that you do.”  (pg. 44)

Hopefully, you are already thinking about your own money blueprint and your financial thermostat.  You will find, in reading this book, there are numerous “ah ha” moments, times to put the book down and reflect over your own financial experience – good and not so good .  You will come away with a much clearer picture for yourself.  Finally, Eker contends, “Until you show you can handle what you’ve got, you won’t get any more.”  “We are all creatures of habit, and therefore the habit of managing your money is more important than the amount.”  (pg, 147)

“To control money, you must manage it.  Money is a big part of your life, and when you learn to get your finances under control, all areas of your life will soar.”  So how do you establish this habit that will be different than all those you have tried in the past?  Enter the concept of the Jar System.  You will want to read more specific details in the book, however the gist of this system is to create a variety of “jars” each with a specific purpose.  Each month, or when you get your paycheck, the following percentage is distributed into the various categories:

1.   Necessities (your monthly expenses eg food, mortgage, utilities, phone etc.)  50-55%
2.    FFA (Financial Freedom Account) Put 10% of every dollar you receive, after taxes, into this fund.  The money is only used for investments and buying or creating passive-income streams.
3.    Play “One of the biggest secrets to managing money is balance.  On one side you want to save as much money as possible so you can invest it, and make more money.  On the other side, you need to put another 10% of your income into a “play” account." It’s essential you don’t discount the importance of this “jar.”  Jon and I have ours set up in a way that we have a total monthly amount. Individually, we get a designated amount to spend as we want – no questions asked.  The rest of the total goes into a savings account.  This one, in particular, has had the biggest, positive impact on what we do and when.  (Ask me for more details.)
4.   LTSS (Long term savings for Spending) 10%  This would include setting money aside for insurance, automobiles, car needs eg tires.  By setting aside money for these expenses ahead of time, the money is there when you need it without panic.  You can have as many of these as you need.  If you're saving for new furniture, new carpet, etc. set up a LTSS for individual needs.
5.    Education 10% Whether you’re going to school, wanting to go back to school, wanting to take a personal development workshop etc. this account helps you put a priority on learning and growing.
6.    Give 5-10% I love this!!  Rather than a once a year donation, you can actually plan ahead with a variety of organizations and amounts you want to give   It’s not, like in the past, if you have money left over then you can donate.  NO!  Giving is key to living a grateful life.

“If you manage your money following this program, you can become financially free on a relatively small income.”  “Whatever money you have, begin managing it now.  DO NOT wait another day. We gave this book to our children, and they have, in turn, set up their own “jar system.”  It has been a life changer for all of us. Children who receive an allowance, get money as a gift, or have a job, this system works VERY well for them too.  (With a few adjustments.)

This book “reveals the missing link between wanting success and achieving it.  Have you ever wondered why some people seem to get rich easily, while others are destined for a life of financial struggle?  Is the difference found in their education, intelligence, skills, timing, work habits, contacts, luck, or their choice of jobs, businesses, or investments?  The shocking answer is:                        NONE OF THE ABOVE!”

If any of this week’s blog strikes a chord for you, get the book The Secrets of the Millionaire Mind by T. Harv Eker or listen to it on CD.  I have reread this book on a yearly basis since we first heard about it as there are so many reminders.  Feel free to contact me if you’d like to know the specifics of how we set everything up so it’s that now it's routine/habit.  The biggest benefit is the lack of stress over money, we have money to do things even when it’s last minute, and we’re not only balancing saving but also playing. 

Here’s to a healthy financial mindset.


Quote for the week:  “The difficulty lies, not in the new ideas, but in escaping the old ones.”    John Maynard Keynes

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