Ten Lessons to Raise Financially Independent and Happy Children

Making mistakes and learning from them to grow stronger is the essence of life. Let your kids experience undesirable outcomes, mistakes and set-backs. They are the best lessons life has to offer. Expose them to small doses of discomfort and failure earlier in life and allow them to grow into bigger, better, stronger and most importantly independent, happier adults.

Isn’t it funny how humanity is wired: Babies don’t read a book or attend a classroom course to learn how to walk. No, they try and fail, fail more, fail harder, and then all of a sudden: Wow, look my baby knows how to walk!

The moment your little one starts taking off independently is probably one of the biggest moments for a parent. The parent didn’t “teach” the baby how to walk, it just happens and we are so damn proud seeing our offspring standing on their own feet!

The same procedure happens again when your little ones learn how to speak. The first time they open their mouths, it’s usually just random babbling until one day they say: “Mama” or “Papa”! Then, before you know it, they’ll be able to say things like “I don’t like vegetables!”. Kids are amazing, they don’t need extrinsic motivation. They figure out how to build their skills independently. Isn’t it amazing to see a young human being soak up all those skills by them self?

If it’s so simple, how come some adults seem to forget how to do exactly that??? Shouldn’t we as adults have become better at “learn by doing” with all the accumulated experience from our life?

So, what happens here? Once kids grow older, they tend to become more and more “socialized” and adapt to their environment. As a parent, you are [and have the power to remain] the most important influence on how they continue to learn, grow and “become” more. Though, some parents suddenly start to forbid their kids to play certain games: “you could get yourself hurt!” and become increasingly protective while others keep increasing the freedom their kids may enjoy as they grow older.

There might be a fine line on how much freedom is good or sufficient and it certainly depends on your child as well. Ultimately, while I’m not a trained teacher as such, I strongly believe there’s a correlation about how the kids who got more exposure to freedom will be able to grow up to become more self-sufficient human beings.

A new life is an unwritten book, help your child to write a good one!

The good news: Humans are naturally curious and designed as life-long learners!

“The biggest risk is not taking any risk… In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

– Mark Zuckerberg

What’s Your Job as Parent?

As parents, your job number one is to “raise independent adults” who should be able to navigate life and its full spectrum of ups and downs autonomously. That’s your job, your responsibility, your KPI so to say. Hence, in order to achieve this goal, shouldn’t we try to find ways to enable our kids to become comfortable with trying and failing, learning by themselves and discomfort in general. If we constantly protect our offspring from all the “bad things” then there’s a very high chance we’ll not be ending up with strong [enough], happy adults at the end.

Embark on this journey together as a team.

“As your dad, I’m supposed to give you two things… roots and wings. Roots which is knowing that you have the security of a family who loves you and wings, which is the confidence to do whatever you want.”

How to do it?

Building tolerance for discomfort and encouraging curiosity to try, fail, learn and succeed are most likely worth much more than hours of additional cram school exposure for kids. The older we get in life, the more discomfort we’re probably exposed to: rejection by a potential partner, accidents, being passed over for a promotion, traffic jams, delayed trains and flights, you name it.

Some of us have experienced people who where brilliantly successful at school but failed to amount to something later on in life as once they’ve left the protected environment they got “crushed by real life” so to say. In order to prepare your kids for life, help them build up resilience, gain confidence in their capabilities, plant the hunger for continuous trying no matter what and let them know that they can survive even big “mistakes” and learn from them.

1. Let them get a bad grade

Is getting a bad grade a good or a bad thing? Is losing money at the stock market a bad thing? Hmmm… it depends! It depends on what you learn from achieving lower results than expected. If a kid only gets good grades because the parents are constantly behind everything, then I would argue getting good grades all the time is a bad thing! Some parents force their offspring to study, check their work, over-edit their writing and by doing so, we take away the whole experience for the kid. Just imagine one day you may not be here anymore and can’t help, how will your junior do? Better to let them get a taste of doing worse now, then help them improving from there from the side lines. If we interfere too much, they won’t know how to manage situations of hardship in the future. If they learnt that lesson, they will also be able to adjust their behaviour in order to eventually earn money at the stock market (as well as other things) later on in life.

“When you fail, learn from it. There’s nothing wrong with trying again.”

2. Let them forget their homework, their stuff for gym class, their snack box

If you bail your children out whenever they forget something, they will not be properly incentivized to build their own systems of checking and ensuring if they’ve got everything, they need for school today, and for life later on. The more we help, the more we actually teach them that they can’t manage without parental supervision. This is not encouraging. Hands off from now on!

Not everything works out as planned in life. Get your kids ready to deal with it!

3. Let them run out of money …or even offer them a loan

Teaching your kids financial literacy should start way before they get their first pay-check. It must start with lessons on their own. Give your kids allowances with increasing intervals, start with weekly, then go bi-weekly, then monthly. Also, assist them with setting up a budget so they can plan and learn how to keep hold of some money themselves instead of spending it right away. If their budget includes eating out, simply offer them to pack lunch from home instead of giving in and bailing out.

Eventually your child runs out of money and keeps nagging and asking you for an immediate exceptional cash injection, there’s something incredibly powerful you can do: Offer a loan! Yes, a bloody loan. For my part, I was offered a loan by my father when I was just 8 years old. There was this toy I wanted so badly but I was short around $50. My father offered me an interest free loan. I had to promise to pay it back over time. While still remembering how excited I was to purchase my toy, I can never forget how it felt to pay off $2 weekly for the next six months while my sister kept receiving her weekly allowance. As a result, I started to dislike that toy and I never took out another loan until we purchased a home much later in life.

“Obstacles force you to grow. Smooth seas create weak sailors.”

4. Let them be late

As with money, time needs to be budgeted as well. Later in life, no one will wake them up and ensure they’re on time. If they can, let them wake up themselves – you can help by buying a nice alarm clock or radio for them for that purpose. Discuss with them what they’re supposed to do, how to manage it and then watch them try and figure it out. If appropriate, let them handle their way to school themselves. In case they’re late, make sure they have to pay for the taxi from their own money if required or ask a series of chores to pay you back in case you need to drive them to school.

Let your kid seize the day.

5. Let them miss an important deadline

If there’s something of great importance to them: Don’t keep reminding them over and over of an approaching deadline. Let your child miss certain small things and learn the consequences. Imagine they’ll only figure that one out as a young adult. I’m sure most of you have missed a deadline somewhen in your own journey. How did this make you feel? Most likely it made you angry and motivated you in some way to set-up certain systems to prevent it from happening again.

Make sure your kids have the same opportunity as you to learn this valuable lesson!

6. Let them use public transportation and eventually let them get lost and experience the pride of accomplishment when they don’t

This part is more or less applicable depending on where you live. Certain places have wonderfully safe and reliable systems of public transport. Others don’t. If you are comfortable with the public transport system and the respective age of your children: Let them venture out! Maybe ride with them the first time they try, but as their companion, not their parent. Let them tell you how to pay for the ride, where to get off and how to read the maps, test also to go to a place you haven’t been before together. Also try this in foreign cities while on vacation. Later, let them go on their own. There’s a huge sense of independence from navigating around the city for the kid and if they should ever get lost, they will learn even more from that.

As I approached six years, I was informed that kids below six are still allowed to ride the whole city for free. My take away from this snipped of information: Very soon I’ll have to pay! Hence, I wanted to take advantage of still being able to ride for free. Together with my little sister and my best friend we took off for an afternoon city exploration tour by bus. Somehow, we failed to inform our parents though. Our parents where so worried and oh-so relieved as we returned. To this day, we still hold precious and proud memories of that excursion.

It’s time to explore!

“Life shrinks or expands in proportion to one’s courage.”

7. Let them wear smelly clothes if they’ve missed the laundry basket or they didn’t do the laundry

The purpose behind this lesson is we want our kids to be self-sufficient when they leave home. At one point in time they’ve got to do their own laundry anyways, so why not have them help you with this chore. You’d be amazed how many young adults don’t know how to do this job themselves! Being able to do this, will not just let them appreciate this part of household work more if you do it but also let them grow into better room mates as a student and later on better partners in life.

“To succeed in life, you need three things: a wishbone, a backbone, and a funny bone.”

8. Let them be ashamed of themselves for doing something that was unkind or untruthful

Instead of rushing to console your child immediately after something bad happened, allow them some time to digest the situation. Also, let them go through the whole emotional firework inside of them, they should develop the skill to read their emotions and understand the full consequence of their actions or inactions. You can help by acknowledging your kids’ feelings but don’t let them get off the hook for what they did too fast. Help them reflect how their actions have caused the situation and how it makes them feel. Ask them how they plan to avoid a similar situation from happening again going forward.

9. Let them leave unfinished homework

Yes, that’s something you may consider doing. Your kid may look bad in school, but again, this is the whole point. I would argue that letting them miss homework for one time will be a much more valuable lesson than having the homework finished on that one particular day. Ensure they will feel the consequences at school for not having done their part. It might have been the last time you had to worry about their homework.

If the kids require internet access or other resources in order to finish their homework, and if you have set a cap on daily internet use, don’t bail them again by allowing more internet in case they’ve used it up already to surf for their private indulgences. This will teach them to use their resources more efficiently and they would have to tell that part to their teacher as well. Which would be embarrassing and therefore another lesson worth to go for.

10. Let them set a goal for themselves and don’t intervene if they aren’t’ going to achieve it

If your child has a big dream, help them break it down into smaller steps and show them what needs to be achieved first in order to make their dream come true. This could be anything such as learning a new skill, saving up to afford something bigger, achieving a certain grade in a subject, or getting into a certain sports class or team. You as parent can help them through a plan but let them try execute themselves.

When I was almost 14 years young, I wanted a TV in my own bedroom so badly. My dad quickly turned the situation around and told me if I could earn the money for the TV then he’d be fine for me to have it. Two weeks later I was distributing newspapers to 400 households two times a week, no matter if raining, sunshine or snowy weather, it had to be done. After three months of hustling I could finally buy my TV set. And yes, you may guess it already, a few months later there was buyer’s remorse as I felt how all those hours working went into that one thing there. I’m so grateful having learnt that lesson so early in life indeed.

You’re given this one life, what is it that you want to do with it?

“Goals are simply dreams with a deadline.”

Instead of telling the kids how to live their life, let them life theirs and coach them on the journey. Let them see. Let them do, try, fail and learn. Then, let them know how their actions or inactions have amounted to the final outcome of each and every situation. Praise the good stuff and also highlight room for improvement. Reflect on the bad stuff and encourage them to try again. Tell them how proud you are about their progress so far. Share with them your own experiences after they’ve had theirs [not before]. Tell them how proud you are to see them trying and not giving up on their dreams. In essence: Be your children’s coach, not their nanny!

“Imagination is the workshop of your mind, capable of turning mind energy into accomplishment and wealth.”

With that I’ll leave you to try yourself! Would be happy to read your own experiences as a child, a parent, teacher, advisor or coach on how you learned and grew bigger, better, stronger! Learning is a lifelong thing and I even believe the above lessons are not just applicable for children.

If you liked this read, pls don’t forget to share and like Financial Imagineer on Facebook or Twitter, you can click right here:

All the best and have fun passing your experience and knowledge to the next generation!

Matt

Why People buy Lottery Tickets instead of Creating their Dream Life?

Why people buy lottery tickets, when there’s almost zero chance they’ll ever win? Previously I thought the answer is obvious: They buy because they want the millionaire lifestyle right now! Instant gratification! Boom: Millionaire life. Now.

However, after giving it additional thoughts, this seemed not to be the complete truth.

Actually, people buy lottery tickets ritualistically because it gives them the permission to regularly fantasise about living the millionaire lifestyle. It’s like buying a movie ticket for your own inner mental cinema showing: “Me, the Millionaire”

Apparently having this fantasy playing in your “Kopfkino” is worth $2 a week to many fellow humans. In fact, a large majority of people show very similar behaviour with all kind of stuff such as weight loss products, get-rich-quick schemes and products, dating products, you name it.

Why not spend the money on a one-year gym membership and then daydream about losing weight while not actually going back to the gym?

How convenient! For a seemingly small amount of money you can instantly “buy” yourself a solution to calm your inner voice that’s constantly asking you to change something in your life: Like a lottery ticket.

Just imagine parking right here! They are mostly empty though… how come?

The main problem here is most folks attempting to consume their way to happiness will realize that after having bought their “feel-good” products and picturing what life could become: Instead of changing life itself – everything remains the same. And soon next purchase of happiness is needed. Like an addictive drug.

There’s no instant rich, no instant weight-loss and no easy way to success.

via GIPHY

How about yourself? Many people spend more time reading about getting rich, successful people or businesses, instead of attempting to build one themselves? Sure, we all need inspiration. But how to actually get started once you feel you got the right amount of inspiration?

Most people persistently complain about “not having enough money or time”. They worry about their lack of success, instead of focusing on their small victories and building on what they’ve already got.

Luckily: Most successful people, wealth and businesses where not “built” overnight.

Somehow, it’s quite logic, the bigger a dream you dream, the higher an ambition you have and especially the more impossible your plan seems, the more scared you might get that you could fail. Many humans somehow fail to see beyond their own worries, concerns or problems and panic as a result of fear-based decisions.

F-E-A-R has two meanings:

Forget everything and run

Face everything and rise

The choice is yours.

– Zig Ziglar

In other words: If something isn’t working after a few days, or weeks, they move onto something else. And then something else again, and on and on the cycle goes. Until at one point in time, guess what, they buy their next lottery ticket once again and break the chain of trying – by giving up.

How to break this apparent inevitable downwards spiral?

Let’s get to work!

The key to change is simple, but not easy: Slowly reduce and then replace consumption with creation. Instead of daydreaming about getting rich, start earning more, saving more and learn how to invest and making money work for you. Instead of going to restaurants, start cooking more at home. Instead of reading more, start writing more. Instead of buying craft-beers, start brewing yourself! Need veggies? Plant them! Haircut? Learn how to do it yourself. Make it a habit to keep learning and doing.

“Stay afraid but do it anyway. What’s important is the action. You don’t have to wait to be confident. Just do it and eventually the confidence will follow.”

– Carrie Fisher

Like anything at the beginning, it might feel awkward and you might not get immediate success or satisfaction.

However: Keep at it! See it as a transformation. Important is that you’ll take the first steps and that you keep going.

As you keep learning, doing, creating – whatever it may be – you’ll feel how your skills improve day by day. If you just improve 1% day over day, imagine how much better you’ll be in a years’ time, two years’ from now, in a decade! It’s the law of compounding! Your wealth will grow, your self-cooked food will get better, your haircuts will start to look better, your writing will get more appealing, you will get more confident and have more fun. And one day you might be able to do stuff you don’t even dare to dream as of now.

Besides: Creating value to the world is so much more satisfying than mere consuming stuff or ideas other people created.

Ultimately, you’ll gain mastery from doing. It takes time and repetition. The better you get at doing something, the more enjoyable creating will get. The more value you can add to the world, the more ideas will be pushing you from the inside – asking you to get realized.

You will transform into an idea-machine: An Imagineer!

Eventually you can’t leave your home anymore without a notebook to write down your new ideas as they come and hopefully you can’t even wait to start and keep doing again. Once you wake up, you’d want to jump out of bed to get back doing and you’ll be filled with a new kind of energy and deep satisfaction.

Believe it or not: Humans are born to be imaginative creators!

Not lottery-ticket buyers.

For most of human history there were no lottery-tickets.

In a way, it was only the occurrence of the industrial revolution that started to change how we humans spent our days. Thanks to increased productivity, corporations suddenly found themselves drowning in too much supply and not enough demand.

They had to find ways to convince us we need more; they improved marketing in order to let an increasing amount of people believe they need to consume more in order to “keep the economy going”. Unfortunately, many bought into this lifestyle.

Most surprisingly is that especially nowadays, where most of us are fully aware of this bombardment from advertisers, we still let them do it and give them evermore of our attention – the new currency of the 21st century. We let them into our lives, our homes, our screens and they know more than ever before about us. Just think about the big data-collectors on this planet.

The problem is that we believe we can fill our inner emptiness by consuming the right products and services. However, we can NEVER get ultimate satisfaction by simply consuming more. Actually, the opposite is true. The more we consume, the more we tend to experience stress and anxiety. The more we consume and possess, the more our possessions possess us – mentally, physically and emotionally.

All my things, what a mess, what to do?

It takes time to realize that the solution to this problem is on the other side of the equation: We’re so into this consumer mindset that we forget our inherent urge to create. At least for me, the solution is to consume less and create more. If we spend more time creating, we will automatically spend less time consuming. This saves money, builds skills and experience and leads to a happier life.

“The cost of living is dying.”

Find one thing that will add value to your life, your family and the world – and let’s start creating it! Step by step. Doing so will provide you much more satisfaction than purchasing a lottery ticket and just dreaming about another, better life while your actual life, your time passes by.

For myself, acquiring new skills, applying them and creating has and always will be an essential part of my life. Even though I can afford to have my hair cut, I bought an electric haircutting machine, I love to cook myself, learnt how to brew my beer, paint the walls in my home, started an indoor herb garden and much more. Your life does not get better by chance, it gets better by change. So, stop wishing, start doing.

The only limitation is your fantasy…

What would you love to be able to create?

Would be happy to read more about this in the comments!

Happy creating!

Matt

Disclaimer: I must admit having bought lottery tickets myself – and will buy again in the future. It’s a fun thing to fantasize and hey, I choose to be called Financial Imagineer. While I enjoy the fantasies, I don’t build my “wealth building strategy” solely on lottery tickets and will not be too disappointed by not winning. Should you have won the lottery already and wonder what to do now, please look no further and read here. There are too many horror stories and horrifying stats about lottery winners getting rich quickly and losing everything again.

Who Wouldn’t Want to Be a Millionaire: 6 Life-Winning-Lessons From a “Who Wants to Be A Millionaire” Contestant

What would you do if you received a $ 1 million jackpot? How does it actually feel to receive a windfall? What to do with it and how could it impact your life in the short, medium and long run?

Let’s first think about what you could possibly do with a large financial windfall?
– splurge (Sir? The Lamborghini in same gold as the Maybach?)
– take a sabbatical and travel to exotic locations, sipping martinis all day long
– travel to Vegas (all or nothing)
– re-invest in lottery tickets
– buy a house and/or pay-off your mortgage
– invest all into Vanguard ETFs and draw an annual $40,000 forever (Trinity study, 4% withdrawal rate)
– keep calm and carry on

Here’s what a Financial Imagineer would do with a $ 1 million windfall:

Keep calm and carry on!

 

Keep calm and carry on!

You find this hard to believe?

Looking through all the above options, this clearly appears to be the most boring choice. But hey, I’ve got a rather personal story for you guys today. Let me explain.

Once upon a time, I won a windfall myself.

I wanted to be a Millionaire.

We write the year 2001, my most crazy side-hustling days: During daytime, I was usually studying business administration and economics. Frequently, after sundown, you’d find me baking up to 200 pizzas each night at the first pizza home delivery franchise in my hometown. Saturdays, you’d find me advising clients at a bank counter and Sundays I’d be running the local polling station in our village.

Some wondered if I’d ever catch some sleep.

One evening, I was sitting on our couch watching the Swiss edition of “Who wants to be a Millionaire” on TV3. Somehow, none of the contestants ever seemed to make it past the first 10 questions. It got boring and frustrating. It quickly became painful for me to keep watching. I knew and appreciated the show from abroad and generally liked it because you usually learnt something while watching – infotainment. The entertainment value of the local version was rock-bottom. This tickled a nerve.

Instead of applying the ordinary way, I sent a feedback letter asking them to invite more suitable candidates in order to improve the infotainment value of their show. Little did I know that my written rant would be read and acted upon. Before I knew it, we – my then girlfriend and myself – got invited to participate as contestants at the TV show “Who Wants to Be a Millionaire”.

Turn sound on, click “play” and listen as you read on!

We spent the two weeks prior to the recording with extensive preparations. Since nobody could every finish reading Wikipedia (back then it was the Microsoft Encyclopaedia on CD Roms), we started feeding our brains with compressed wisdom using books like “The Knowledge Book: Everything You Need to Know to Get by in the 21st Century”. We also played the computer game of “Who Wants to Be a Millionaire” over and over again in order to get into shape and learn how we’d react if under pressure and what mistakes to avoid.

Ready Player One

Two weeks later it was showtime.

We entered the TV studio. The recording started. Game on. First question. Bam, I got on the hot seat. From there, everything went incredibly fast. And after less then 2 hours in the TV studio I was fortunate enough to have won a large windfall for the first time in my life.

How much did we win?

Actual screenshot from Swiss TV3 (2001)

We cleared about $125,000.

I was young, 21 years young to be exact, ran out of all three jokers and decided to call it a day. It felt surreal.

A short moment later they ripped the cables and microphones off me. There are still some blurred memories of me having shaken the show masters’ hand. My knees were soft, somehow it felt like flying on cloud number 9 to the back of the stage.

All of a sudden somebody tipped my shoulder, they pulled me back to reality.

A pen was handed to me and I was asked to clear the paper work in legalese. I signed. Sign-off here, sign-off there. Besides confirming how much we’ve won, the TV station asked me to also sign a non-disclosure agreement: We were not allowed to reveal the outcome of the show to ANYONE until the show was aired. It took another two weeks until my episode was on TV.

We went home.

Stealth wealth mode.

Swiss banking secrecy.

I knew the drill.

The Aftermath

In hindsight, this was probably the most awkward AND best situation I could ever have asked for. It was stealth-wealth practice. Maybe you have also read articles about how most lottery winners can’t handle a windfall and end up broke. I had time – time to think about how to win at life – despite having won a small fortune.

Here I was. Glowing in the inside. Ice cold on the outside. Poker face. Not allowed to talk about my experience of just having won a windfall. Pretending nothing has happened and going back to my normal busy life.

Some of my friends and colleagues knew that I participated on the show. Of course they asked all kind of questions. I played along and didn’t bother to talk too much about the show anymore for two weeks. I was back to “business as usual mode” and kept hustling. Literally the very next day, I was baking 200 pizzas again as if nothing happened. Many assumed that the show didn’t work out for me. At all.

Two weeks later, the TV show finally aired.

As the news spread, some colleagues wondered why I still show up at work and continue to bake pizzas until midnight, continue to advise banking clients on Saturdays and still rely on public transportation instead of buying a car.

What does a 21 year old do with a six-figure bank account?

First thing: I went to the ATM and printed an account statement for the record.

Nice, but now what?

The Splurge

It was a real honor for me as a young BA and Economics student to invite our family and selected friends for a restaurant celebration meal with drinks. Thereafter, we also splurged about $500 for a short break to sunny Spain, paid our taxes (ouch) and most importantly invested ALL the remaining into boring mutual funds.

That’s it.

Nothing else.

About two months later, we were back to normal and carried on with our lives.

Did my life change at all after that event?

Hell yeah it did!

Not immediately, but slowly.

The Transformation

Having had the extra cash aside, I slowly realized how much power came with it. Power over your own time and life. While most of my university classmates couldn’t wait to have their employment papers signed, I was dreaming to learn more, explore and discover the world.

Explore, Dream, Discover

With a fresh Masters Degree in my pocket, I took off on a 3 months backpacker trip to Central America. Learning Spanish, exploring a foreign culture and another way of life was extremely refreshing and eye-opening.

On my trip, I passed through New York, Toronto, then Bocas Del Torro in Panama, Turrialba in Costa Rica and many other exciting places. The scuba-dive course was $200. Spanish lessons came at $15 half a day including free coffee and internet. A night in a hostel was $7. Arroz con pollo $2 and cerveza for $1. The ultimate luxury dish, fresh caught lobster, butterfly style, set me back $5. Beautiful.

Bocas del Torro, Panama, watertaxi to Red Frog Beach (2003)

Conclusion: I learned a new language. Price tag: $3,000 and 3 months of my time.

It came with fun, adventure, new friendships and unforgettable memories. Actually, back in high school I sucked at learning languages! Now, without the pressure, I was enjoying it! Muchas gracias!

On the flight back home I got sad that this “graduation trip” is over. Then it dawned on me: While I was away, my investments more than fully covered for the trip already. Passively.

Bazinga!

“If you don’t know where you are going, you might wind up someplace else.”
– Yogi Berra

This experience taught me that I enjoy getting lost in other cultures, eating stuff I’ve never tried before and exploring how other people live on this planet. My logical conclusion therefore was to double dare myself and set an even more ambitious target: learning Chinese. In early 2004 I left home again. This time to live and work in Taiwan, thanks to AIESEC.

I stayed in Taiwan for almost three years, worked for three different companies, learned Mandarin Chinese, and got to know my future wife. A whole new world opened itself: The Chinese hemisphere with all its opportunities.

Badaling, the Great Wall of China (2005)

In 2007 we – my beautiful, loving wife and I – returned to Switzerland. To say the least, the newly acquired Mandarin Chinese language skills and the cross-cultural awareness opened the door to a promising job covering Chinese speaking clients.

“Time is more valuable than money. You can always get more money, but you cannot get more time.”
– Jim Rohn

Don’t just invest your money, make sure that you also invest your time.

6 Life-Winning-Lessons

1) Keep Calm and Carry On.

If you win the jackpot, receive a windfall or get a huge inheritance: Keep calm and carry on. Circuit-break your natural busyness and stop the rat-race for a moment. Don’t adjust your lifestyle right away. You got all the time in the world to adapt slowly. Invest into buying time!

Make it a blessing, not a curse.

2) Take a Break and Celebrate Your Windfall.

Commemorate your big moment. Spend something but don’t splurge.

“The more you praise and celebrate your life, the more there is in life to celebrate.”
– Oprah Winfrey

3) Dream and Plan for the Long Term. Imagineer your life!

How many people have the opportunity to do this in life? How could such a windfall help you learn new skills, grow and have fun at the same time? Having/ taking time to reflect about life is extremely valuable. We all have different dreams. What is yours?

“A human being always acts, feels and performs in accordance with what he imagines to be true about himself and his environment. For imagination sets the goal ‘picture’ which out automatic mechanism works on. We act, or fail to act, not because of ‘will’, as is so commonly believes, but because of imagination.”
– Maxwell Maltz

4) Invest the Money and let Compounding do its Magic.

Imagine $125,000 invested in equities, growing at an annualized 10% for 20 years: $125,000 could have grown into  $1 million by itself by late 2021!

How to become a Millionaire if you didn’t win the full million at the show?

“The stock market is designed to transfer money from the Active to the Patient.”
– Warren Buffett

Become a successful navigator of the seven capitalistic seas!

Use a GPS and/or read up if needed.

5) Do a Real World MBA

In 2016 Tim Ferriss’ published his book “Tools of Titans”. One chapter is called “How to create a Real-World MBA”. His idea is quite straightforward:  Instead of spending a fortune and a couple of months of your lifetime on a MBA and simply “learning” theoretical stuff in classrooms from reputable PhD theoreticians and professors who use big words and fancy powerpoint slides but never left their campus themselves, you might as well use the same amount of money and start-up a company or create even better and more exciting learning and growing opportunities. Apparently exposing yourself to real-world experiments and experiences shapes you stronger than learning theoretical stuff from books alone. “Tools of Titans”. Great read.

From 2001 onwards I’ve bought time and invested in improving skills of all kind on an ongoing basis. This has not only kept my life interesting and adventurous but also brought me financial returns and lasting contentment later in life.

6) Give back

You can give back and share in many ways. Some people prefer to give money through donations or on a one-off basis. Others prefer to directly share their time and experience. This could be done through volunteering, mentoring/coaching or even with a blog. Ever since my windfall, I’ve done all of the before mentioned. It feels good if you can support and help others!

We make a living by what we get, but we make a life by what we give.
– Winston Churchill

Final Conclusion:

If you are lucky enough to win a windfall: Keep calm and carry on. Celebrate, but don’t splurge. You may not be able to stop time, but you can stop the rat-race and “buy” time. Dream and imagineer your future. Invest in your skills, your passion, life quality, memories and fun. Why? Because it will shape you and your loved ones in ways you could never have imagine before. Dreams are everything – technique can be learnt.

“You cannot advance if you cannot visualize the end from the start.”
– Nabil N. Jamal

What’s your dream? What’s your perfect life? Imagine the perfect day, all the people you’d like to see and have fun with, the passions you’d like to chase as well as all the places you’d like to go. What’s your dream and how do you plan to get there? Writing down your dreams is the first step!

Inspire all of us by leaving a comment below or on Twitter and Facebook.

Leave your comments below or on Twitter and Facebook!
Leave your comments below or on Twitter and Facebook!
Leave your comments below or on Twitter and Facebook!
Leave your comments below or on Twitter and Facebook!

Sweet dreams!
Financial Imagineer

 

Disclaimer:
This blog doesn’t finance itself, please be made aware that the product links used above are affiliate links for which Financial Imagineer might receive a compensation.

The Power of Planning: 8 Life-Changing Ideas to Set Yourself for a Financially Successful 2018

 
Set challenging targets for 2018. Plan to push yourself out of your comfort zone. Try new things, learn new skills, keep pushing yourself forward, change and enrich your mind and your world. Embrace change. Be not afraid to make mistakes. Nothing is perfect from the beginning. Whatever it is, family, love, art, work – life itself. Do something new, something you’re scared of doing. Dare to allow yourself to make mistakes. Only this way can you grow!

To reaching new heights and making dreams work in 2018!

In a life well lived, each succeeding day becomes better than the last. Each day, each year, each experience does not stand alone. It cannot be separated from what has happened before or what may happen later. Yesterday determines today and today helps determine tomorrow. Decide and plan your tomorrow today. Do not stick to business as usual, don’t be a play-it-safer, a creature of the commonplace or a slave of the ordinary.

If you want to have an extraordinary life, you got to get rid of your ordinary one first.

Same procedure as every year James?

If you are aiming for a journey towards financial independence: Dream big, plan ahead and get started. Life is busy. Time flies. Organize your life. No one cares about your success more than you do yourself. And surprise: It’s not all about a budget, saving or investing.

1. Re-Imagineer Your Relationship Infrastructure

Your social environment defines who you become. Did you know that you’ll become the average of the five people you hang out the most with in your life? Therefore: Ensure that you surround yourself with people sharing your vision for financial success!

You become the average of the five people you hang out with.

Do you spend enough time nurturing relationships that matter? Do your current relationships bring you closer to where you want to be? Do you actively reach out and try to connect with people that are already living a life you’d like to live yourself? How do you manage toxic relationships that drag you down? Is the bulk of your current relationships meaningful and enjoyable?

Find five people within your social network that are living the life you dream about, increase engagement with them and learn from and with them. Grow together! Re-imagineer your trusted circle. Engage also in social media online groups such as Choose FI on Facebook.

Your network is your net worth. How do you value your network? Well puttygen , if you don’t value it, cultivate it, nurture it, it becomes worthless. If you do value it, it becomes priceless.

If you’re looking for a new start in 2018, this is where to get started!

2. Commit Yourself to Lifelong [Financial] Learning

If you want to grow, you got to keep learning and expose yourself to new experiences. Make expanding your mindset your new habit – embrace ongoing learning. Learn one or two new skills in 2018. This could be anything you believe could add value to your immediate life. Learn how to cook, how to write, how to invest better, how to start a business, anything that brings you forward and closer towards your goals! The most important thing is to get started and keep going so it may become one of your habits.

Make it a habit to read three blog posts a day – http://rockstarfinance.com/ already did the job for your pre-selection by posting the three best personal finance posts every day! Listen to good podcasts on your commute to and from work.

Simply: Create an environment that won’t allow you to escape your new habits anymore. Set yourself up for success.

Jerry Seinfeld has a great way to make new behaviours a sticky habit. Get yourself a big wall calendar and hang it on a prominent wall. For each day you got to do your newly self-assigned task, e.g. to write or to read, take a big marker and make an X over that day. After a couple of days, there will be a chain of Xs on your wall and you will feel a sense of accomplishment. Keep at it and let the chain grow longer. Your only job now is to NOT break the chain! After a couple of weeks you can put the calendar aside as you’d be living your new habit.

Education is the key to unlock the golden door of freedom. Never stop learning, because life never stops teaching. Education, therefore, is a process of current living and not a preparation for future living.

Bonus tip: For myself, I always carry a notebook and pen with me to write down new ideas as they pop up, some people also use online tools such as Evernote. Do this right after you’ve had an inspirational chat, listened to a podcast or finished your three blog posts a day.

Commit yourself to lifelong learning. The most valuable asset you’ll ever have is your mind. Don’t starve it and feed it well.

3. Set A Net-Worth Target

Humans are simple, they usually pay extra attention on what is being measured. Hence, measure financial success, and I assure you will pay attention to it. Start tracking your net-worth, set-up an excel and define a net worth target for you to reach in the next five years, by end of 2018, 2019, 2020, 2021 and 2022.

Goals are simply a dream with a deadline.

What is your current net-worth? Well, you basically add up all your assets and deduct your liabilities. Track the value of your cash, your investment account, your real estate, your business and deduct your loans, your mortgage and any other outstanding liabilities. The resulting balance is your net-worth. Aim to grow it.

When people calculate their net-worth for the first time, some will add their furniture, a car, an impressive DVD collection and assign highly subjective dream valuations to it. Don’t be like these people. Only consider your tangible assets with a objective market value for your net-worth calculation.

Net-worth can be grown by increasing your assets, by decreasing your liabilities or by doing both at the same time. Define by how much you aim to grow your net-worth in 2018 and get started.

Wealth is not money, it’s capacity for quality of life.

4. Activate Your Assets

Look through your list of assets – as in step 3 – and try to find any assets that are currently idle and could be put to work harder in order to help you achieve your net-worth target easier. This could be a large chunk of cash, gold or other unproductive assets, an extra room or two in your home, an extra parking lot, assets in your retirement account not invested efficiently or many other things that I might not have listed in this paragraph.

An asset is something that puts money in your pocket, a liability is something you still got to pay for or that costs you holding it. Hence, you better check if there’s any idle parts in your overall assets that you could activate or reconfigure. Any idle asset that you could activate today will start adding money to your pocket tomorrow and lets you achieve your financial targets earlier and easier.

You got a huge home? Rent out one or two rooms in your home! You got a parking lot but no car? Rent out your parking lot! Reconsider your current retirement account investments and make sure your current assets are put to work in an efficient manner. Many people will be surprised to find potential for further optimization in this area. Activate your assets!

A related area could also be to optimize your debt. Maybe you could pay-off high interest liabilities with lower interest loans and streamline your liabilities part as well. Sometimes I meet people who take up a car-loan but could have borrowed for much cheaper against their home or their portfolio.

In case you like to explore this topic further, you might also enjoy reading my post “Your Gravity Defying Money Bazooka”.

5. Increase your earnings

Are you making as much money as you’d like to? No? No problem: Everything is figureoutable! If you’re not making enough money [yet], then you need to get more creative. The majority of our fellow human beings rely on their salary for a lifetime. That’s not wrong, but it decreases their chance to attain financial independence dramatically. Did you know that the average millionaire has somewhere around seven different sources of income? In case you’d like to earn more money, don’t just focus on your job alone. Explore, dream, discover!

The most helpful tool I’ve come across for this step is Rich Dad Poor Dads Cash Flow Quadrant. The Cash Flow Quadrant is comprised of four quadrants. You might want to view this short video for further clarity before we move on.

E stands for Employee – Human Capital, no leverage

People that “have a job”, they sell their time and are “compensated” with money. Whatever value they create or contribute is absorbed by a company and they are “rewarded” with a salary for their efforts. As you will shortly see, this is unfortunately the poorest quadrant of them all. It offers no leverage and you can’t stop working without loosing your income immediately. Active, linear income with time constraint.

S stands for Self-Employed – Human Capital, no overhead

People in this quadrant “own a job”. They are self-employed and can cut-out paying for expensive offices, bosses or other stakeholders involved in the E quadrant. Hence, they can earn somewhat more money against their time. However, it’s just another version of the “time against money” game since if a self-employed stops working, no income is flowing back to them. Somewhat more money, but still active, linear income with time constraint.

B stands for Business – Human Capital with leverage

People in this quadrant “own a system”, the system allows other people to work with them and hence, they have a leverage component in terms of manpower. The system and its people work for the owner. The key to building a sustainable business system is to have useful, unique and hard to copy products, solutions or services combined with a great branding. Franchise systems can also be considered. In order to be successful, people need to transition from a job-mentality to a business person mindset. They need to learn how to hire and motivate the right people and how to keep all stakeholders involved happy over time. This quadrant is still a rather active one, but offers leverage from the peoples’ as well as the capitals component. Owning and managing a business is more risky than holding or owning a job. Therefore governments around the globe incentivize them with tax benefits people in the E and S quadrant don’t have.

I stands for Investors – Financial Capital with leverage

Last but not least, the investor. The big difference of this quadrant is that investors invest their financial capital instead of their human capital. In other words, they send money to work. This quadrant is therefore the only truly passive income quadrant. The active part comes from choosing the right investment cases and reviewing existing investments once in a while. Investments can be made in businesses, the capital markets as well as in real estate. This quadrant offers you unlimited upside potential but also bears most risks due to the volatility of the markets.

A common way towards Financial Independence is to slowly emerge from the E quadrant towards the S and B quadrants while constantly feeding the I quadrant on the side over time. Don’t just diversify your investments, also diversify your streams of income. Evolve from the E and S quadrants and start unlocking the B and I quadrants for yourself. In case you like it on the safe side: You can still hold your job while taking the first steps into these new fields! Don’t chase seven rabbits until you learn how to catch one.

I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts.
– John D. Rockefeller

6. Multiply your streams of [passive] income

There are different forms of income. In step 5 you’ve seen that there are active and more passive forms of income. You can either sell your time for money or create systems such as a business or investment strategy to provide you with income. Most people start the wealth building process with an active form of income: salary.

Your salary: A nice looking flow of income. What if someone stops or diverts the flow?

Get started on this path and as your active income grows, open up and invest into passive streams of income.

First step: Make a list of all your current streams of income.

Salary
Interest [cash, bonds, mutual funds, ETF]
Dividends [stocks, mutual funds, ETF]
Capital Gains [real estate and capital market investments]
Side-hustle 1
Side-hustle 2
Rental income [apartments, rooms, parking lots]
Business
Any others?

As you look through this list, categorize the income streams into active and passive streams of income. Also make a triage in terms of how much return on investment you could possibly obtain by shifting your focus and/ or more capital into each respective source of income. Now, figure out how much additional resources such as time and savings you could possibly boost every month and define into which income streams you’d be investing your time and money going forward.

As the CEO and CFO of YOU Inc., it’s your job to focus on increasing your passive streams of income, especially where your expected return on investment is the highest. In order to learn more and get your streams of income from more independent sources, try to diversify into several streams of income as long as the administrative effort is manageable.

Imagine: If you’d be a publicly listed stock, would you invest in yourself?

Unlock the power of unstoppable multi-flows of income!

If you don’t find a way to make money while you sleep, you will work until you die.
– Warren Buffett

7. Reduce your expenses

Live below your means. Avoid lifestyle inflation. Do not keep up with the Joneses, rather try to keep up with the Mustachians.

Did you know Warren Buffett is still living in the same home he bought for USD 31,500 back in 1958. He managed to avoid lifestyle creep and smartly reinvested his savings instead of upgrading his residence. Amongst other reasons such as being patient, sticking to his strategy and reinvesting his profits, this allowed him to “early retire at 25” and focus on his true passion: Investing instead of selling stocks. Eventually, this helped him to unlock the magic of compounding interest and lead a happy, self-determined life.

Warren never thought of a $5,000 couch simply as a $5,000 couch. He calculated that $5,000 in today’s dollars multiplied with 7% annual performance over 50 years would represent an opportunity loss of $5,000 x 1.07^50 = $150,000. Now imagine, how much a new car, that expensive dress or a designer bag will actually cost you in tomorrows’ dollars. On top of that, such stuff will all end up as trash.

Warren is smart and successful. Be more like Warren.

Constantly throwing money at new experiences or more stuff is also not a recipe for lasting happiness and contentment. Don’t get me wrong, you don’t have to live like a caveman. But I’m 100% confident almost everyone can cut back their expenses and reinvest the difference in order to snowball their wealth up faster. Economize somewhat, simply spend less on housing, cars, eat out less often, keep your desire to acquire in check and off you go!

8. Pay yourself first – automate your investments

The majority of people simply spend their whole pay-check and only in the rare and special case some cash remains after a month, this might eventually get stashed away. Why not do the opposite and pay yourself first instead? Did you know Mustachianism comes from MUST-STASH!?

“Treat your savings account like just another bill. It has to be paid every month or there are consequences.”

Define how much to stash away every month! Right after you’ve received your pay check, pay yourself first. Best is to have this transfer automated! Stash this cash into your savings or even better investment account. By doing this, you will not be tempted to spending away your saving portion and you will start getting used to making ends meet with whatever amount is left in the bank account after having paid yourself. Another habit is created!

After you paid yourself first – get this surplus invested and make it work for you. Invest whenever your money is ready, invest regularly, best is to have investing automated as well so you don’t have to actively make an investment decision every single month and end up suffering severe decision fatigue. Once you pay yourself first and the investment part is put on auto-pilot, you’re set for a financially successful 2018 and beyond!

Looking for more reading material on these topics?
Click here.

What are your Financial New Year resolutions? What are your net-worth targets? Which skills would you like to build? Leave your comments below or on Twitter and Facebook!

Remember: Failing to plan is planning to fail!

To reaching new heights and making dreams work in 2018!
Financial Imagineer