The True Characteristics of Money...
Perception vs. Reality
Financial Freedom Step # 1...
Realistically Assess the Current Situation
Few people fully understand the characteristics of money. Because they have many misconceptions about money and finances, they end up in a poor financial condition. Sadly, many do not even realize where they realistically stand and have no idea how to improve their condition. The first personal finance step to achieve financial freedom is to realistically assess the Current Situation. Here is the reality: - Many experts believe that 90% of divorces are rooted in financial problems
- The life savings of the average 50 year old is $2,300!
- The average American works 20% more today than 20 years ago and has 32% less free time
- 48% of 4,126 male executives surveyed saw their lives as “empty and meaningless” despite years of professional striving
- In 1980, U.S. household debt stood at 65% of annual disposable income … today it is 100%
- Current bankruptcy rates, per capita, are higher than during the Great Depression
- In the last 4 years, more Americans declared personal bankruptcy than graduated from college … 1.4 million!
- It seems … our high standard of living has not led to a high quality of life
Let’s take a look of two extremes of people and their understanding of the characteristics of money…
The Country Preacher Who Fully Understood the Characteristics of Money
Ron Blue, an author and financial planner from Atlanta, was approached by an 80 year old retired pastor, who wanted his counsel, because he was admitting his wife to a full-time nursing care facility and wanted Ron’s help in making sure his finances were in order.Ron sat down and asked the man some questions and discovered that he had been a pastor his entire working life, serving in mostly remote country churches. In his entire career, he had never earned more than $8,000 per year. With the high cost of nursing care, Ron was concerned. He then asked about the man’s debts and assets. What he heard will never be forgotten . . . The man said he had no debts, because he never wanted to miss paying his bills, and for assets, he listed the following: In his wife’s name there was $250,000 in cash, CD’s and money market funds. In his name, there was $350,000 in cash and cash investments, and in addition to the $600,000, when he had retired 20 years earlier, he had purchased some stock that was now worth $1,001,063. Ron simply said, “You do not need my help … I need yours!” This man knew how to achieve true financial freedom. So the question is, how did this happen? When so many people who make a lot of money and have considerable earning potential are deeply in debt and in financial trouble … how could this “poor country preacher” be so financially secure? Obviously, the amount of income had little to do with financial freedom!
The “Successful “ Dentist Who Didn’t Understand the Characteristics of Money
The story of the successful dentist is one where the dentist made a lot of money and spent lavishly on those things that would cause others to view him as successful ... cars, homes, vacations, clothes, etc. He made everyone think he had achieved financial freedom. However, the debt he had accumulated got so overwhelming that when he crashed they put him on a debt repayment plan that would take him past his 100th birthday to pay back. The point being the contrast between reality and the perception people had of what success and financial freedom looked like.
One of the Key Characteristics of Money…
The “Law of Guaranteed Wealth”
Following the law of guaranteed wealth can help you achieve financial freedom. The law of guaranteed wealth states: If someone consistently and for a long period of time always spends less than they make, then they will be building savings every year which will continue to grow and will result in wealth. The definition of wealth is accumulating assets and growing your ownership (in a purely financial perspective).
What is the Foundation of the Law of Guaranteed Wealth?
The foundation is character … character is revealed in the “5 Jewels of Financial Health”… - Contentment
- Patience
- Self control
- Discipline
- Generosity
The Formula for Financial Health is similar to the formula for a healthy, successful athlete:
Body + Desire + Training Methods + Daily routine + Courage = Healthy Physical Condition
Money + Desire + Knowledge/Information + Discipline + Courage = Healthy Financial Condition
Post this to the bathroom mirror!
We cannot make real progress in improving our financial health … until we have a realistic understanding of our current condition … and set some goals for improvement .
So, what do we do now?
Commit to live by “The Law of Guaranteed Wealth” and to start to pursue “The 5 Jewels of Financial Health”.
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© Copyright 2001 and 2007 Dave Briggs
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