Marc Ang gives a pep talk about some financial basics, such as saving money, not spending more than you have and focusing on your financial goals; based on a real life example of a successful retiree, Carla. Having financial basics are key before you even think about insurance and investing and keeps you from being a slave to your finances.
Why do some people rise up from poor backgrounds? While others stay poor for the rest of their lives? Some who grow up with a silver spoon, but end up with a plastic one by the end of their lives?
It’s math, but it’s also your financial frame of mind and having financial goals.
I was sitting with a new client yesterday, Carla (not her real name), a retired entrepreneur in her 70’s. During the process of her estate and financial planning, we got to several nice conversations about how she rose up as an immigrant from Central America who came to this country speaking no English, and was able to buy to multiple properties she now splits her time between.
Her story fascinated me, but I found some key takeaways:
1. Setting Financial Goals: She was willing to do what it takes to be productive.
When you learn the value of a dollar, everything builds from a good foundation and lead to financial goals. I’m a firm believer that everyone needs to hit rock bottom before they shed the entitlement that is a cancer to life in general. Carla, though educated in her home country, took a job as a maid for an older lady when she was young. That lady who hired her saw Carla’s work ethic and desire to learn, and subsequently taught her the business Carla would end up building and running for 4 decades. This business would provide a great life and retirement for her husband, 3 children and 8 grandchildren.
2. Having a Financial Frame of Mind: She didn’t focus on what she didn’t have, but instead on her many blessings.
In stark contrast, I had a client I let go of this year, who by all accounts and measures, should have been out of debt in a matter of months due to an inheritance that came her way. I remember the negativity and her constant desire to complain about people being against her and how she was a victim. I thank God I walked away from that situation. Carla displayed none of these traits and was always thankful and grateful, even despite being in a troubled marriage.
3. Keeping Focus: She didn’t try to keep up with the Joneses.
We got to some nice discussions about the important of focus and in a lot of ways, tuning out the noise around you. If you are making decisions to look good to others, you are following other people’s arbitrary moral compass. What really do you stand for? I remember a certain work environment I was in (on the other coast), where people probably thought I was completely weird for driving an old pickup truck (which I drove for 15 years). However, I didn’t have a huge car payment or insurance, I got to have a vehicle in the New York City metro, while my colleagues were burning money to live in $4,000/month shoeboxes in Manhattan. Slave to jobs, they clearly were bored in and hated. Carla was the same way. She had her own financial goals and invested in what mattered to her (real estate), not what looked good to others.
4. Taking Action: She was consistent in her efforts.
Develop good habits from a sound foundation and you will not be a slave to your finances. Who cares if you’re low income and living in a rough neighborhood? If you save money, you’re actually better off than most people who live in the rich neighborhoods. And pretty soon, you will be out of that neighborhood.
You should only spend what you need to spend, while saving and building a nest egg. But most of people’s problems are on the expenses side. They can’t stop spending money, like a drug, whether it’s shopping or drinking, because they’re using it as a distraction. Ask yourself why you’re spending and maybe in that questioning, you can find a cost-free substitute.
Start Now – Change Your Financial Frame of Mind to Fit You
Don’t be a slave to your finances. Be the master. Do you. Be you. Set financial goals and stand for something or you’ll fall for anything that is sold to you.
Marc Ang (Mangus) is a financial planner based in Claremont, CA, focused on spreading the gospel about responsible, educated and smart financial planning.