Breaking Free from the Chains of Debt: A Comprehensive Guide to Financial Liberation

The Burden of Debt

Debt can feel like an invisible anchor — dragging us deeper into anxiety with every passing day. It disrupts our sleep, rattles our peace, and makes our future feel uncertain. That creeping dread of collectors at the door, or calls that spike your heart rate — it’s not just financial pressure, it’s emotional captivity. And believe me, I’ve walked that grim path. I’ve stood in those shoes, breath short, eyes wide, wondering how to escape the downward spiral.

The Investment vs. Debt Dilemma

Over the years, I’ve explored the enduring debate: Should you pay down debt first, or should you start investing? I’ve written on this subject several times, striving for objectivity. However, I’ll confess — I lean toward investing. It’s a bias shaped by my personal journey, by my relatively stable financial foundation. But I also understand that for many — especially those living paycheck to paycheck — investing isn’t even part of the conversation. When you're overwhelmed by bills, garnishments, or just trying to keep the lights on, building a stock portfolio is far from realistic.

In such circumstances, what’s truly needed isn’t a debate — it’s a lifeline. A concrete, proven way out.

The Hidden Gem in Alberta: Money Mentors

During a recent search for real solutions, I stumbled upon an extraordinary resource right here in Alberta — one I believe every struggling individual should know about.

Money Mentors

Money Mentors is more than just a credit counselling agency. It’s a beacon of hope for Albertans facing financial storms. Founded in 1997, this non-profit organization has been instrumental in helping thousands reclaim their financial independence. Their mission is simple: educate, empower, and elevate individuals out of debt and into stability.

But what sets them apart?

Exclusive Provider of the Orderly Payment of Debts (OPD) Program

Money Mentors is the exclusive provider of Alberta’s Orderly Payment of Debts (OPD) program — a government-endorsed initiative designed to consolidate unsecured debt into a single monthly payment. This isn’t just debt consolidation — it’s structure. It’s managed. And most importantly, it’s backed by the Government of Alberta.

The OPD program helps individuals pay off their debts within five years — at 5% interest. That’s right — 5% interest. Just one payment, manageable and transparent.

Why I’m Passionate About Money Mentors

Let me be crystal clear: I am obsessed with the work Money Mentors is doing.

Why? Because for the first time, I have a real answer when people ask, “What do I do about all my debt?”

I’m not a licensed financial advisor. I can’t legally restructure someone’s debt. But what I can do — confidently and without hesitation — is point them to Money Mentors.

They provide:

• Free Financial Counselling: Personalized guidance tailored to your circumstances.

• Debt Management Solutions: Including the life-changing OPD program.

• Educational Resources: Practical, digestible financial education for long-term success.

• Money Tips and Tools: From budgeting templates to workshops and webinars.

More Than Just Advice — A Community

One of the things that struck me most about Money Mentors is the compassionate approach. They aren’t a faceless agency spitting out numbers and spreadsheets. They listen. They understand. Their coaches and counsellors are trained not just in finance, but in empathy. They’ve heard it all, seen it all — and helped turn it around.

Whether you’re dealing with maxed-out credit cards, payday loans, or mounting collection calls, they have resources designed to support, not shame.

Debt Doesn’t Define You

Let me say this loud and clear: You are not your debt. Your worth is not measured in overdue statements or credit scores. And there is absolutely a path forward.

If you — or someone you care about — is weighed down by financial stress, don’t wait until it gets worse. Take that first step. Make the call. Visit the website. Sit down with someone who can map out a real, actionable plan.

Money Mentors could be that pivotal turning point — the moment everything starts to change.

Final Thoughts: From Desperation to Empowerment

Debt is daunting. But with the right tools, it’s not insurmountable. Empowerment begins with education. Recovery begins with reaching out.

If this article speaks to you, if you see yourself in these words — don’t just nod along. Act. You’re not alone. And with organizations like Money Mentors lighting the way, you don’t have to walk this path in the dark.

Your financial future is worth fighting for. Start today.

https://moneymentors.ca

tel:1-888-294-0076

Unlocking Wealth While You Sleep: Mastering the Art of Time Leverage

Time is money

By Peri Scott – Reimagined and Expanded Edition

Introduction: The Paradigm Shift From Wage-Earning to Wealth Building

When the average person whispers to themselves, "I need money," their instinctive reflex often leads them to one conclusion: "I’ll get a job." This linear thought process is rooted deeply in the societal norms established since the Industrial Revolution. The concept is simple—trade time for money, hour by hour, paycheck by paycheck.

But herein lies the dilemma. Time is finite. Each of us is granted the same 24 hours a day—no exceptions. So how do magnates like Warren Buffet, Elon Musk, or Oprah Winfrey accumulate exponentially more wealth than the average wage earner?

The secret lies not in working harder, but in working smarter—through the strategic leveraging of time.

Chapter 1: The Tyranny of Time and the Illusion of Hourly Wages

Time as a Non-Renewable Asset

No matter how industrious or intelligent a person is, they cannot purchase more time. The ultra-wealthy do not possess a secret 25th hour in their day. What they do have, however, is an acute understanding of how to extract value from their past hours through assets that continue to yield returns long after the effort has ceased.

The Hourly Wage Trap

When your income depends entirely on your physical presence or real-time labor, you are ensnared in a dangerous paradigm. The moment you cease to work, your income halts. It’s a treadmill many never escape. Passive income offers a release valve.

Chapter 2: Breaking Free Through Parallel Income Streams

What Is Parallel Processing for Income?

Think of your income potential as a computer processor. A single-core CPU can only handle one task at a time, just as a traditional job ties your income to one task—your labor. But a multi-core processor, akin to multiple income streams, allows for simultaneous processes, creating exponential efficiency.

You don’t need to be physically present for every dollar earned. Through strategic asset acquisition—be it property, digital products, or dividend-yielding investments—you create revenue generators that work even as you sleep.

Cloning Your Effort

Imagine duplicating yourself. One version of you is at your current job. Another is collecting rent from a property purchased last year. Yet another is earning dividends from stocks you bought five years ago. You’re no longer a single income engine—you’re a network.

Chapter 3: Passive Income Through Real Estate – A Case Study

The First Property

Consider this practical example. You accumulate enough savings for a down payment on a rental property. You dedicate weeks to market research, due diligence, and tenant screening. Once you secure a reliable tenant, the rental income begins. This property doesn’t just sit there—it pays you monthly, without demanding your daily attention.

Yes, there will be the occasional repair or tenant change, but the time-to-income ratio shifts dramatically. You’re no longer exchanging each hour for a dollar. You’ve built a financial engine.

Scaling the Model

Now, replicate this process. Acquire a second property. Then a third. With each new asset, your compounded income grows. What you’re doing is investing time once and earning indefinitely.

This is the very essence of time leverage.

Chapter 4: The Distinction Between Earned and Passive Income

Earned Income: The Slippery Slope

Earned income—wages, consulting fees, freelance payments—is reactive. You work, you earn. You don’t work, you don’t earn. The risk? Burnout, time constraints, and a ceiling on growth.

Passive Income: The Liberator

Passive income, conversely, is proactive. It’s income derived from assets: real estate, intellectual property, investments, and automated businesses. The more robust your passive streams, the more liberated you become from the time-for-money trap.

But beware: not all businesses are passive. If your enterprise cannot operate in your absence, it’s merely a glorified job.

Chapter 5: Dividend Stocks – The Quiet Income Revolution

Invest in Productivity Without Lifting a Finger

Dividend stocks represent one of the purest forms of passive income. By investing in publicly traded companies, you stake a claim in their profitability. These businesses operate day and night, managed by skilled professionals, while you earn a slice of the profits.

The beauty? These earnings are often taxed at lower rates and require no effort beyond the initial investment and occasional portfolio review.

Compounding Returns Over Time

Reinvest your dividends. Allow the miracle of compound growth to magnify your returns. Over years, this can lead to exponential increases in passive income, further reducing your dependency on active labor.

Chapter 6: Peer-to-Peer Lending – Banking Without the Bank

Democratizing Credit and Earning Interest

Another underutilized passive income strategy is peer-to-peer (P2P) lending. Platforms allow you to lend directly to individuals or small businesses, bypassing traditional banks and earning significantly higher interest rates.

Though not without risk, with proper diversification and vetting, this method can yield stable, hands-free income.

Chapter 7: The Reinvestment Cycle and Financial Momentum

The Snowball Effect of Reinvested Earnings

As your passive income grows, so too does your ability to reinvest without touching your principal income. This creates a cycle where your wealth begins to build itself, rolling forward like a snowball gaining mass and speed.

Each reinvested dollar adds another cog in your wealth-generating machine. Time, once spent earning initial capital, now pays you back in perpetuity.

Shrinking the Upfront Time Cost

As your assets multiply, the amount of time you need to trade for capital diminishes. Eventually, the returns from your investments outpace your ability to spend them, granting you ultimate financial autonomy.

Chapter 8: The Mindset Shift – From Linearity to Legacy

The Danger of Linear Thinking

Most individuals operate on a one-dimensional timeline: work equals money. This thinking is not only limiting—it’s corrosive to financial freedom. To transcend it, you must adopt a multi-dimensional view of time and value.

Invest Time Like Currency

Every hour should be viewed through the lens of return on investment (ROI). Will this hour produce more hours in the future? Will it birth assets that continue working long after your involvement ends?

Legacy thinkers build today for dividends tomorrow. They plant trees not for shade today, but for forests tomorrow.

Chapter 9: Time Freedom – The Real Wealth

The Real Currency of Life

If given a choice, would you accept $10 million or regain the vitality of youth? Time is the only currency that, once spent, cannot be replenished. Passive income offers the ability to purchase time—freedom from schedules, commutes, and cubicles.

With true time freedom, you gain the ability to pursue passion, creativity, family, travel, or even just peace.

Redefining Success

In this new paradigm, success is no longer defined by how busy you are but by how unnecessary your presence is to your income stream. If you can step away for a month, a year, or longer, and still sustain or grow your wealth, you’ve achieved mastery.

Chapter 10: Your Blueprint to Begin

Start Where You Are

You don’t need a windfall inheritance or an Ivy League degree. Begin by saving aggressively. Educate yourself. Pick one stream—real estate, dividends, online business—and build. Then reinvest. And repeat.

Resources to Accelerate Your Journey

• "Financial Freedom" by Grant Sabatier – A masterclass in transforming income to independence

• "Unscripted" by MJ DeMarco – A no-nonsense guide to breaking societal molds

• Top 5 Personal Finance Books – Curated by Peri Scott to ignite your wealth-building mindset

And, of course, delve into my own writings, forged through three decades of hard-earned wisdom and distilled into actionable strategies.

Final Thoughts: The Legacy of Leveraged Time

Time is the single most equitable resource in existence—yet how we use it determines our financial destiny. By shifting your perspective from trading time to investing it, you begin to transcend the limitations of the conventional work model.

This is more than a wealth-building strategy—it’s a life philosophy. A transformation from reactive living to proactive creation. A reclamation of time.

So ask yourself: Are you spending your time… or investing it?

Choose wisely.

Unlocking Financial Literacy: Why Investing in Books is a Game-Changer for Your Education

The difference between the rich and the poor is knowledge

In a world where the perceived value of books often takes a backseat to digital distractions, it's easy to overlook the profound benefits of reading. Have you ever considered how one book, costing a fraction of formal education, could unlock new horizons in your life? Imagine the potential for personal development through books, offering affordable learning that rivals even the most prestigious institutions. As you journey through the pages, you're not just reading; you're investing in your financial literacy and personal growth. Together, let's explore how these pages can empower YOU to take control of your finances and transform your life—because the impact of books on life is truly priceless.

The Power of Books in Education

Books have long been the cornerstone of education, offering a wealth of knowledge at our fingertips. In this section, we'll explore how the perceived value of books has shifted, compare affordable learning through books to formal education, and discuss the lifelong journey of reading and education.

Perceived Value of Books Today

In our digital age, the perceived value of books has undergone a significant transformation. Many now view books as outdated or less relevant compared to online resources and quick-fix solutions.

However, this perception overlooks the enduring power of books. A single well-chosen book can provide in-depth knowledge and insights that far surpass the scattered information found online. Books offer a curated, comprehensive approach to learning that can't be replicated by skimming articles or watching short videos.

Moreover, the tangible nature of books encourages focus and deep engagement with the material, fostering better retention and understanding. As we'll explore, this makes books an invaluable tool for personal and financial growth.

Affordable Learning vs. Formal Education

When it comes to education, the cost of formal institutions can be staggering. Books, on the other hand, offer an incredibly cost-effective alternative for learning.

Consider this comparison:

Aspect	Books	Formal Education
Cost	$10 - $50 per book	Thousands per course
Flexibility	Learn at your own pace	Fixed Schedules
Specialization	Choose specific topics	Broad curriculum
Lifetime Access	Yes	Limited Enrollment

While formal education has its merits, books provide an accessible path to knowledge that can complement or even replace traditional learning in many areas, especially in personal finance and self-improvement.

Reading and Education: A Lifelong Journey

Education doesn't end with a diploma. In fact, the most successful individuals embrace learning as a lifelong journey, with reading at its core.

Books offer the flexibility to explore new topics, deepen existing knowledge, and stay current in rapidly evolving fields like finance and technology. They allow you to learn from experts and thought leaders across the globe, all from the comfort of your home.

Continuous learning through reading not only enhances your skills and knowledge but also keeps your mind sharp and adaptable. This ongoing education is crucial in today's fast-paced world, where staying informed can lead to better decision-making in both personal and professional spheres.

Books as a Tool for Personal Growth

Books are more than just repositories of information; they're powerful catalysts for personal transformation. In this section, we'll delve into how books drive personal development, their impact on life transformation, and their role in building financial literacy.

Personal Development Through Books

Books serve as mentors, offering guidance and inspiration for personal growth. They provide diverse perspectives and experiences that broaden our horizons and challenge our assumptions.

Reading regularly can:

• Enhance critical thinking skills

• Improve emotional intelligence

• Boost creativity and problem-solving abilities

• Increase empathy and understanding of others

Moreover, books on personal development often offer practical strategies and exercises that readers can immediately apply to their lives. This hands-on approach accelerates growth and helps turn knowledge into action.

Impact of Books on Life Transformation

The right book at the right time can be a catalyst for profound life changes. Many successful individuals attribute pivotal moments in their careers and personal lives to insights gained from books.

For example, Warren Buffett credits much of his investment philosophy to Benjamin Graham's "The Intelligent Investor." This single book shaped Buffett's approach to value investing, ultimately leading to his extraordinary success.

Key ways books can transform lives:

• Providing new perspectives on life's challenges

• Inspiring career changes or entrepreneurial ventures

• Offering strategies for improving relationships

• Guiding personal finance decisions

By exposing us to new ideas and possibilities, books can spark the motivation and provide the knowledge needed for significant life transformations.

Value of Knowledge in Financial Literacy

In the realm of personal finance, knowledge truly is power. Books on financial literacy offer invaluable insights that can significantly impact your financial well-being.

Financial literacy, the ability to understand and effectively use various financial skills, is crucial for making informed decisions about saving, investing, and managing debt. Books on this topic can demystify complex financial concepts and provide practical advice for building wealth.

Key benefits of financial literacy through reading:

• Understanding investment strategies and risk management

• Learning to create and stick to a budget

• Developing long-term financial planning skills

• Gaining insights into tax optimization and estate planning

By investing in financial education through books, you're laying the foundation for a secure financial future. The knowledge gained can lead to better financial decisions, increased savings, and ultimately, greater financial freedom.

The Art of Money Management: Why Managing Money Matters More Than Making It

In the pursuit of financial success, we often fixate on the wrong target. There's a fundamental difference between making money and managing money—a distinction that can determine whether you end up financially free or perpetually struggling, regardless of your income level.

As Warren Buffett wisely noted, "It's not about how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for." This perspective shifts our focus from income generation to the more crucial skill of money management.

The Money Management Crisis: A Modern Epidemic

Most people follow a predictable pattern: they make money, then promptly spend it all—and often more. There's a pervasive belief that lifestyle should expand in lockstep with income, creating a financial treadmill that leaves even high earners perpetually broke. This phenomenon, often called "lifestyle inflation," is one of the greatest obstacles to building wealth.

The statistics paint a sobering picture. According to the U.S. Bureau of Economic Analysis, the personal saving rate in February 2025 was just 4.6%, down from previous decades when Americans routinely saved twice that amount. This means the average American is saving less than a nickel from every dollar earned, creating a precarious financial foundation.

Perhaps no example illustrates this crisis more vividly than professional athletes. These individuals earn staggering sums during their careers, yet their financial outcomes tell a cautionary tale:

• 78% of professional athletes go broke within three years of retirement

• 60% of NBA players face financial trouble within five years of retirement

• 75% of NFL players find themselves in financial trouble within two years of retirement

• An estimated 40% of professional soccer players go bankrupt within five years of retirement

• 16% of retired NFL players go bankrupt

These statistics from the SMU Journal reveal a profound truth: earning money isn't the solution; keeping it is.

The psychology behind this phenomenon is fascinating. When we purchase something, our brains release dopamine—a "feel-good" chemical that makes shopping a pleasurable experience. Research published in the Journal of Psychological Science found that when we're sad or stressed, we're more likely to spend money on things we don't need, essentially trying to "buy happiness."

Social media has intensified this problem. A 2019 survey by Charles Schwab found that about 35% of Americans spend more than they can afford simply to impress their friends. As Terri Kallsen of Schwab notes, "While trying to 'keep up with the Joneses' is not new, social media and FOMO (fear of missing out) have intensified the urge to spend."

The Simple Formula for Financial Freedom

If you're looking for a "how to make millions" guru, I'm not your guy. I'm just a regular person with a regular income. But I manage my money well and am obsessed with putting my money to work.

This all starts with one simple tenet: "Spend less than you earn and invest the difference."

If you can master this principle, you're 80% of the way to financial freedom. As financial advisor Suze Orman puts it, "The key to money is to stay invested." This straightforward approach works regardless of income level because it focuses on the gap between earning and spending—a variable everyone can control.

Consider this mathematical reality: A person earning $50,000 annually who saves and invests 20% ($10,000) will ultimately build more wealth than someone earning $200,000 who saves just 2% ($4,000). The power lies not in the income but in the saving and investing rate.

Compound interest—what Einstein allegedly called "the eighth wonder of the world"—transforms modest, consistent investments into substantial wealth over time. A 25-year-old who invests just $200 monthly with an 8% average annual return will accumulate over $620,000 by age 65. This mathematical certainty works for everyone, regardless of income level. The key is starting early and remaining consistent, allowing time to amplify your returns exponentially.

Redefining Financial Freedom

What exactly is financial freedom? Some would say it's mansions, yachts, and private planes, but I propose a much simpler definition: making enough money from investments that you don't have to work if you don't want to.

Financial freedom means your time is your own to spend as you please. It has nothing to do with "lifestyle"—that's a personal choice that differs for everyone. But if you can maintain your preferred lifestyle without having to "earn" money, then you are financially free.

As Margaret Bonanno eloquently stated, "Being rich is having money; being wealthy is having time." This perspective shifts our focus from accumulating possessions to gaining the ultimate luxury: control over our time.

Consider the story of Pete Adeney (better known as "Mr. Money Mustache"), who retired at age 30 despite never earning more than $70,000 annually. By saving over 50% of his income and investing wisely, he achieved financial independence decades before most people. His story demonstrates that financial freedom is more about savings rate than income level.

Taking Control of Your Financial Future

I focus on the money management side of things because I can control it. I believe everyone has different capacities to earn money, and not everyone is equipped to make millions. But everyone can manage the money they do make, and that is where the real power comes from.

Understanding your psychological triggers is crucial for better money management. As research from St. Mary's Bank shows, our spending habits are often influenced by emotional states and social pressures. By recognizing what prompts you to spend—whether boredom, sadness, or social media influence—you can develop healthier financial habits.

Here are practical strategies for taking control:

1. Pay yourself first: Automatically direct a portion of each paycheck to savings and investments before you have a chance to spend it. This simple habit ensures you're building wealth consistently.

2. Implement a cooling-off period: When tempted by a purchase, wait 48 hours before buying. This "cooling-off" period helps determine if you truly need the item or if the urge to buy will pass.

3. Use cash for discretionary spending: Research from the Federal Reserve Bank of Boston found that people spend approximately 409% more when using cards versus cash. The physical act of handing over money creates a psychological "pain" that helps limit unnecessary spending.

4. Create personalized financial strategies: A 2021 study by Peetz and Davydenko found that developing your own money-saving strategies leads to better self-control than simply following expert advice. This is because your ideas better fit your habits and life circumstances.

5. Find joy in free experiences: Remember that happiness often comes from experiences rather than possessions. Spending time with loved ones, enjoying nature, or pursuing creative hobbies can provide lasting satisfaction without costing a dime.

You can make yourself "richer" by paying yourself first and investing some of your hard-earned money into income-producing assets. As Jim Rohn wisely observed, "A formal education will make you a living; self-education will make you a fortune." Taking the time to learn about personal finance and investing is one of the highest-return investments you can make.

The Path Forward

If you want to learn more about effective investing strategies, there are countless resources available. I offer books, audiobooks, courses, free articles, YouTube videos, and live seminars that can provide the knowledge you need to make informed decisions.

I am determined to show people that financial freedom is possible for everyone, no matter their income. You just need to take control. As Theodore Roosevelt said, "The only man who never makes mistakes is the man who never does anything." Don't let fear of making financial mistakes prevent you from taking action.

Start small if necessary. Even investing $50 monthly is better than nothing, as it builds the habit of saving and investing. Over time, you can increase this amount as your income grows or expenses decrease.

Remember that financial freedom is a journey, not a destination. Each step you take toward better money management brings you closer to a life where you control your money rather than letting it control you.

Conclusion

The distinction between making money and managing money is crucial for long-term financial success. While earning potential varies widely, everyone has the ability to manage their finances effectively.

By focusing on the gap between income and expenses, investing consistently, and understanding the psychological aspects of spending, you can build wealth regardless of your income level. Financial freedom—defined as having enough investment income to cover your expenses—is achievable for anyone willing to apply these principles consistently.

It's YOUR money, YOU should be in control. As Nelson Mandela wisely said, "There is no passion to be found playing small—in settling for a life that is less than the one you are capable of living." Take control of your financial future today, and step into the life you're truly capable of living.

Top 5 Money Mistakes Beginners Fear Making (and How to Avoid Them).

Starting to invest can feel daunting. Many beginners face investing anxiety or worry about making financial mistakes. Money fears like losing savings or picking the wrong stocks are real, but they don’t have to stop you. This article breaks down the five most common mistakes people fear—and how to avoid them. Understanding investment psychology helps turn uncertainty into action.

Financial mistakes often stem from fear, not lack of knowledge. This guide focuses on beginner investing fears and provides clear steps to address them. By learning practical strategies, you can reduce stress and build a stronger foundation for growth. Let’s tackle these fears head-on and start investing with confidence.

Key Takeaways

• Investing anxiety and beginner investing fears are normal and solvable challenges.

• Common financial mistakes often arise from emotional decisions, not market conditions alone.

• Learning investment psychology helps beginners make calm, informed choices.

• Addressing money fears early prevents costly errors and builds long-term confidence.

• Actionable strategies in this guide simplify investing, reducing stress and empowering smart decisions.

Understanding Investing Anxiety: Why Financial Fears Hold Us Back

Managing money triggers strong emotions for many, even those with basic investing knowledge. By exploring the roots of these feelings, we can turn anxiety into actionable strategies.

The Psychology Behind Money Fears

Our brains prioritize avoiding loss over gaining rewards—a principle called loss aversion. Money psychology research shows this bias makes us twice as sensitive to losses compared to gains. Early experiences, like seeing a parent lose savings, often shape lifelong financial fear factors. These patterns create automatic reactions that cloud rational choices.

How Investing Anxiety Affects Decisions

Investing stress often leads to reactive choices like panic selling during dips. Decision paralysis sets in when too many options overwhelm the mind. A 2023 study found 38% of investors delayed action during market swings due to anxiety, missing recovery opportunities. Emotional decisions usually underperform systematic strategies like regular portfolio rebalancing.

Common Symptoms of Financial Stress

Physical and mental signs of financial anxiety symptoms include:

• Difficulty concentrating on work or daily tasks

• Increased irritability or mood swings

• Ignoring statements or avoiding checking accounts
  

Symptom	Impact
Chronic worry	Leads to missed investment windows
Sleep disturbances	Reduces decision-making clarity
Avoidance behavior	Increases long-term financial risks

A 2022 Financial Planning Association survey found 63% of Americans experience these symptoms. Remember: these reactions are common, not weaknesses. The next sections will show how to address them practically.

The Fear of Losing Everything: Market Crash Anxiety

Market crash fears often paralyze new investors. The 2008 financial crisis and 2020’s pandemic-driven drops showed how stock market volatility can trigger panic. Yet history proves markets recover—like the S&P 500 rebounding in 5 years post-2008 and 11 months after 2020 lows. Understanding bear market psychology helps: fear drives irrational decisions, but data shows holding through downturns often pays off.

Investment loss anxiety spikes when values drop, but not all losses are permanent. Paper losses vanish if you wait—unlike realized losses from panicked selling. Letting emotions drive sales locks in losses, worsening outcomes.

Protecting investments starts with smart planning. Try these steps:

• Use dollar-cost averaging to avoid timing the market

• Keep 3-6 months of expenses in emergency cash, separate from stocks

• Spread holdings across stocks, bonds, and sectors to reduce risk

Remember: markets rise over time despite periodic dips. A 40-year study shows S&P 500 annualized returns averaged 10% despite crashes. Building a diversified portfolio aligned with your timeline turns bear market psychology into an advantage. Small, consistent actions today build resilience against future uncertainty.

Analysis Paralysis: When Too Much Research Leads to Inaction

Investing shouldn’t feel like a never-ending exam. Many beginners freeze when faced with endless data streams, news alerts, and conflicting expert opinions. This analysis paralysis investing creates a loop where overthinking replaces action. Understanding why this happens is the first step to breaking free.

Why Information Overload Causes Decision Fatigue

Our brains aren’t built for infinite choices. Studies show that too many options trigger decision fatigue financial, leaving us mentally drained. Imagine scrolling through 50 ETFs, comparing fees, past performance, and risk metrics—it’s exhausting. This information overload investing turns simple decisions into stress-inducing marathons. As behavioral economist Sheena Iyengar explains:

“Choice overload leads to indecision, not better outcomes.”

Breaking Free from Research Loops

Combat investment research overwhelm with these tactics:

• Set a timer: Spend 20 minutes max on any single decision.

• Create a checklist: Prioritize 3-5 criteria (e.g., fees, diversification, alignment with goals).

• Embrace “good enough” picks: Perfection isn’t required—starting with a 70% confident choice beats endless research.

Tools to Simplify Investment Decisions

Use these tools to practice simplifying investment decisions:

• Robo-advisors: Apps like Betterment or Wealthfront automate portfolio building based on your risk tolerance.

• Model portfolios: Platforms like Vanguard offer pre-built options for different investor profiles.

• Checklist templates: Use free guides from Morningstar or Bogleheads Wiki to structure research without overcomplicating.

Remember: Action beats perfection. Every minute spent researching after the basics is just analysis paralysis investing in disguise. Pick a starting point, and adjust later as you learn.

The Timing Trap: Waiting for the "Perfect Moment" to Invest

Investing timing fears often lead beginners to delay decisions, hoping to avoid market timing mistakes. But the perfect moment investing rarely exists—and waiting for it can cost more than acting now.

Why Market Timing Usually Fails

Even seasoned professionals struggle with market timing. A 2022 study by Vanguard found that 80% of active fund managers underperformed benchmarks over a decade. Emotions like hindsight bias trick investors into believing they can predict peaks and troughs, but markets are too volatile for consistent success.

“Trying to time the market is like trying to catch raindrops with your hands—you’ll end up empty,” says behavioral economist Daniel Kahneman.

• Markets rise and fall unpredictably, creating high-risk timing errors.

• Emotional reactions often lead to buying high and selling low.

• Over 70% of retail investors underperform the S&P 500 due to poor timing choices.

The Cost of Sitting on the Sidelines

Cash left idle becomes opportunity cost cash. For example, $10,000 invested in 2010 would have grown to over $18,000 by 2023 in the S&P 500. Waiting for dips means missing gains. Inflation also shrinks cash value: $100 today buys 97 cents’ worth next year.

Dollar-cost averaging benefits eliminate the need for perfect timing. By investing fixed amounts monthly, you buy more shares when prices drop and fewer when they rise. Fidelity reports that DCA reduces risk and improves long-term returns compared to lump-sum timing attempts.

Next steps for sidelined cash: Start small with automated DCA plans. Every dollar invested is progress—even if the market dips. The goal isn’t perfection, but participation.

Ignoring Risk Tolerance: When Beginners Take On Too Much

Many new investors dive into the market without a clear risk tolerance assessment. This oversight often leads to panic during downturns. Your emotional risk tolerance—how you handle losses—differs from investment risk capacity, which considers your financial ability to absorb drops. Mixing these up can derail goals.

Beginners often overestimate their investment comfort level after smooth markets. A risk profile questionnaire helps clarify this. Ask: “Would a 20% portfolio drop keep me up at night?” or “Can I recover financially if this happens?” Answers shape your strategy.

“Risk is what’s left over after thinking you’ve thought of everything.” – Howard Marks

Use historical stress tests. For example, test your portfolio’s performance during the 2008 crash. If it lost 40%, would you sell low? Adjust allocations to match your true tolerance. Start with balanced mixes and grow cautiously.

Risk Tolerance Level	Investment Comfort Level	Recommended Allocation
Conservative	Uncomfortable with losses	60% bonds / 40% stocks
Moderate	Accepts short-term dips	40% bonds / 60% stocks
Aggressive	Comfortable with volatility	20% bonds / 80% stocks

Reassess yearly. Markets shift, and so do personal circumstances. Small adjustments now prevent costly mistakes later.

The "All-In" Mistake: Why Diversification Matters for Beginners

Diversification isn’t just a financial buzzword—it’s your shield against panic and regret. Imagine your portfolio as a garden: planting only roses makes you vulnerable to disease, but mixing flowers, shrubs, and trees ensures beauty even if one part fails. That’s the core of portfolio diversification benefits: spreading investments reduces reliance on any single asset.

Diversification Basics for Anxiety Reduction

Think of diversification as a stress vaccine. By avoiding beginner portfolio allocation mistakes like putting all funds into one stock, you protect yourself from sudden drops. For example, owning both tech stocks and real estate balances risk—when one sector falters, others can stabilize returns. This investment risk management strategy turns “what if?” fears into “what’s next?” opportunities.

Building a Balanced Portfolio Step-by-Step

Start with three buckets: stocks (growth), bonds (stability), and cash (emergency use). A balanced investment approachmight look like this:

1. Allocate 70% to stocks, 20% to bonds, 10% cash for those under 30.

2. Reduce stock exposure by 10% every decade (e.g., 60% stocks at 40).

3. Add international stocks and sectors to spread geographic/industry risk.

>

Age Group	Stocks	Bonds	Cash
20s-30s	70%	20%	10%
40s	60%	30%	10%
50+	50%	40%	10%

Low-Stress Investments for Newcomers

Simplify with ready-made tools that handle diversification automatically:

• Target-date funds: Adjust allocations as you near retirement goals.

• Robo-advisors: Apps like Betterment or Wealthfront build and rebalance portfolios.

• Index funds: Track broad markets (e.g., S&P 500 ETFs) instead of picking individual stocks.

These low-stress investments let you sleep easier—no need to micromanage every dip or rally.

From Fear to Confidence: Creating Your Anxiety-Proof Investment Plan

Confidence in investing begins with a personalized investment plan that mirrors your unique financial fears and ambitions. Start today by following this actionable blueprint to transform uncertainty into actionable steps:

1. Map your goals with timelines. Write down objectives like “emergency fund in 2 years” or “retirement savings by 60.” Pair each goal with specific asset allocations—like 60% stocks/40% bonds for mid-term goals—to create clarity.

2. Quantify risk tolerance. Use free tools like Vanguard’s risk assessment to set loss limits (e.g., “I won’t sell if losses stay below 15%”). This financial anxiety management step turns fear into measurable boundaries.

3. Automate decisions. Link your paycheck to a robo-advisor like Betterment, ensuring consistent contributions without daily decisions. Automation cuts emotional triggers, a core part of anxiety-proof finances.

4. Script crisis responses. Draft a “playbook” for market drops: “If the S&P 500 drops 10%, I will rebalance using dollar-cost averaging.” This investment confidence building exercise reduces panic-driven choices.

5. Review quarterly, not hourly. Schedule portfolio checks on calendar days like your birthday. Use apps like Personal Capital to track progress without obsessive checking.

A written plan isn’t just paperwork—it’s your shield against doubt.

Turn this outline into a personalized investment plan document. Include sections for goals, risk rules, and crisis scripts. Reference it anytime anxiety spikes to remind yourself why you started. Remember: investing with confidence isn’t about being fearless—it’s about having a system that acts for you when emotions run high.

Resources and Tools to Calm Your Investing Anxiety

Building investing confidence tools starts with using platforms and materials designed to simplify learning. These resources turn overwhelm into empowerment, helping you grow your investment knowledge building at your own pace.

Apps That Make Investing Less Intimidating

Beginners thrive with beginner-friendly investment platforms that balance guidance and control. Here’s how three top apps reduce stress:

>

App	Key Features	Anxiety-Reducing Benefits
Acorns	Micro-investing, automated rounding	Encourages small, consistent steps without pressure
Stash	Mini-lessons, fractional shares	Demystifies markets through bite-sized learning
M1 Finance	Portfolio copying, visual goal tracking	Reduces analysis paralysis with pre-built templates

Educational Resources for Financial Confidence

Pair apps with financial education resources to address root fears:

• Books: “BYOB: Be Your Own Bank” breaks down long-term strategies for market crash fears.

• Podcasts: “So Money with Farnoosh Torabi” shares real stories of gradual success to counter perfectionism.

• Online Courses: My Be Your Own Bank - Step by step plan for financial freedom covers all the bases.

“Education transforms uncertainty into a roadmap.” – Behavioral economist Shlomo Benartzi

Choose resources that match your stress triggers. Start small—try one app plus a podcast weekly. Progress comes from steady, informed steps, not instant expertise.

Conclusion: Embracing Imperfection in Your Financial Journey

Financial journeys aren’t about avoiding every mistake. They’re about moving forward. Even experts face setbacks. Letting go of perfectionism in investing helps reduce anxiety. Focus on financial journey progress instead of flawless decisions. This mindset shift keeps you engaged without stress.

Earlier sections outlined fears like market crashes and analysis paralysis. Each has solutions, but growth mindset finances means viewing these challenges as part of the investment learning process. Setbacks become lessons, not failures. Celebrate small wins like diversifying a portfolio or reviewing risk tolerance—these steps build momentum.

Investing confidence building starts with realistic goals. Markets fluctuate, but consistent action matters most. Use tools like Robinhood or Betterment to simplify choices. Track progress weekly, not daily. Every adjustment—like automating savings or rebalancing—adds to long-term success.

Begin with one actionable step today. Maybe adjust your portfolio’s risk level or read a guide on dollar-cost averaging. Confidence grows through practice, not instant mastery. Imperfect choices are part of the journey. Embrace the learning process, and trust that steady progress outweighs flawless decisions. Your financial future isn’t built in a day—it’s built step by step.

FAQ

What is investing anxiety and why do beginners experience it?

Investing anxiety refers to the fear and uncertainty beginners feel when making financial decisions, often stemming from a lack of knowledge, past negative experiences, or overwhelming information. It's common to feel anxious about investing, but understanding these emotions can help in developing confidence.

How can I overcome my fear of market crashes?

To mitigate the fear of market crashes, consider strategies like dollar-cost averaging and diversifying your investments. Historical data shows that markets tend to recover over time, making it essential to focus on long-term investment strategies rather than panic selling during downturns.

What is analysis paralysis in investing?

Analysis paralysis occurs when an investor becomes overwhelmed by excessive information and options, leading to inaction. To break free, set research time limits, prioritize essential data, and use decision-making frameworks to simplify your choices.

Why is it a mistake to wait for the perfect moment to invest?

Waiting for ideal market conditions often leads to missed opportunities. Research indicates that even professionals struggle with market timing, and regular investing through methods like dollar-cost averaging can yield better long-term results than trying to predict market ups and downs.

How do I assess my risk tolerance as a beginner?

To gauge your risk tolerance, reflect on how you would react in different market scenarios. It's crucial to distinguish between risk capacity (financial ability) and risk tolerance (emotional capacity). Consider gradually adjusting your investments as you gain experience and confidence.

What are some essential principles of diversification?

Diversification involves spreading investments across various assets to reduce risk. By not putting all your eggs in one basket, you can diminish volatility and anxiety. Focus on a mix of asset classes and sectors to create a balanced portfolio that aligns with your financial goals.

How can I create an anxiety-proof investment plan?

Start by defining your financial goals and timelines, alongside realistic risk parameters. Develop an automatic investing plan to limit emotional decision-making, and carve out time for regular review sessions to stay on track. Having a written plan helps anchor your emotions during turbulent times.

What resources can help me reduce my investing anxiety?

There are several apps and platforms designed with anxious investors in mind, featuring educational components and easy-to-navigate interfaces. Additionally, consider books, podcasts, and online communities tailored to investing novices. These resources can help build your knowledge and confidence without feeling overwhelming.

Rich Is an Action: Why Being Rich Is a Choice

Imagine waking up every day with the certainty that you hold the power to shape your financial future. Is that the mark of true wealth? For some, being rich means having an overflowing bank account. For others, it’s about living a life filled with joy and purpose. In my view, being rich isn’t about the money you have—it’s about how you act every single day.

Redefining Wealth

We often assume that wealth is defined solely by numbers. Yet, true richness lies in the habits and behaviors that lead to long-term prosperity. It’s not about flaunting expensive cars, designer clothes, or a McMansion you can barely afford. Instead, it’s about making decisions that respect money, acknowledge the effort it takes to earn it, and ensure that it continues to work for you. Simply put: if you decide to act rich, you become rich.

Rich Behaviors That Transform Your Life

1. Pay Yourself First

Investing in your future should be a top priority. This means setting aside a portion of your take-home pay before you pay any other bills. Think of it as putting your money to work. Whether it’s through:

• Stocks

• Real estate

• Side hustles

• Peer-to-peer lending

• Education or self-improvement

...the key is to focus on long-term gains. For example, consider someone who automates their savings every paycheck. Over time, even small, consistent investments can grow into a significant nest egg, transforming their future possibilities.

2. Spend Less Than You Earn

This might seem like common sense, but it’s the foundation of all wealth-building strategies. In today’s consumer-driven culture, living below your means is more challenging than ever. Yet, it’s crucial to resist the lure of instant gratification. Remember:

“If you cannot save, then the seeds of greatness are not within you.”
— W. Clement Stone

When you consistently spend less than you earn, you not only secure your future but also develop the discipline needed for financial success.

3. Be a Creator

The modern mantra is “Be a creator, not a consumer.” Creation—whether it’s crafting a new product, building a business, or even developing innovative ideas—is inherently challenging. It demands time, effort, and sacrifice. However, when you create value for others, you also create wealth for yourself.

Consider the story of an entrepreneur who transitioned from a habitual consumer mindset to one of a creator. By focusing on developing solutions rather than simply buying into trends, they not only earned a reputation for ingenuity but also built a sustainable source of income. When you embrace your inner creator, you contribute meaningfully to the world—and in doing so, you pave your own path to wealth.

The Truth About Wealth

The balance in your bank account is merely a snapshot of the present—it doesn’t define who you are or what you can become. If you’re consistently investing, spending wisely, and taking initiative to create value, you are rich today. Your wealth is defined by the direction in which your finances are headed, not by a single moment in time.

Conversely, if you find yourself overspending or living beyond your means without planning for the future, it’s a sign that changes are needed. The good news is, it’s never too late to start. Every day is an opportunity to adopt rich behaviors and move closer to a more prosperous life.

A Call to Action

Being rich isn’t a static state—it’s a continuous series of actions and decisions. The habits you cultivate today will shape your tomorrow. So ask yourself: What rich action will you take today?

Start now. Pay yourself first. Spend less than you earn. Be a creator. Every step you take in this direction transforms your future. Remember, true wealth is not about the numbers in your bank account—it’s about the mindset and actions that propel you toward a richer, more extraordinary life.

Be rich. Be extraordinary.

How to Use a Margin Account Safely: A Comprehensive Guide

Margin Accounts

Do you want to make more money from your investments? Margin trading can help, but it's risky. Using borrowed money to trade can make your profits and losses bigger. It's key to know how it works, the risks, and how to manage them. This guide will teach you how to use margin wisely with strategies like:

• Start with a small part of your available margin.

• Know the risks of each trade.

• Don't use margin for buying options, as they are already risky.

• Use hedging and diversification strategies.

Keep reading to learn how to use margin safely. This will help protect your money and grow your portfolio without common mistakes.

As you may know, one of the investment strategies that I employ is buying dividend-bearing stocks within a margin account and using the margin as a tool to maximize my returns. It is powerful but dangerous. I want to give you the full rundown on margin so you can go into this with your eyes wide open. If you know what you are doing, you can really accelerate your journey to financial freedom. But remember..

“With great power comes great responsibility”

-Uncle Ben

The Basics

Margin trading can boost your returns but it's risky. Knowing how to use a margin account safely is key to protect your investments. This article will guide you through margin trading, offering strategies to manage risk and increase your returns.

What is Buying on Margin?

Buying on margin means investing with borrowed money. You borrow from a broker to buy securities. Your existing securities in your account are used as collateral. This lets you trade more than you could with your own money. Short sellers also use margin to trade shares. Using margin can increase your gains but also your losses.

How Does Margin Work?

When you buy on margin, you pay part of the price with your money and borrow the rest. The Federal Reserve sets the rules for margin. Under Regulation T, you must fund at least 50% of a security's price with cash or collateral. The other 50% is borrowed from a broker. But, brokers often ask for more margin than the rules require.

Not all securities can be bought on margin. You'll pay interest on the borrowed money, which varies by firm and amount. This interest is charged monthly to your account.

There are two margin requirements you need to know:

• Initial margin is the amount needed to start a trade.

• Maintenance margin is the minimum equity needed to keep a trade.

If your securities' value falls below the maintenance margin, you'll get a margin call. This requires more funds or selling securities to balance your account. If you ignore the margin call, your broker might sell your assets to meet the requirement.

Risks of Margin Trading

Margin trading is risky because it increases both profits and losses. If a trade goes wrong, your losses can be much bigger than with your own money. You could even lose more than you started with.

Other big risks include:

• Margin calls: If your investments drop, you might get a margin call. You'll need to add more funds or securities. If you can't, your broker might sell your assets, possibly at a loss.

• Interest fees: You'll pay interest on the borrowed money, affecting your returns.

• Over-leveraging: Using too much margin can lead to big losses if the market goes against you.

Margin trading is not for beginners. It needs a lot of risk tolerance and careful monitoring of each trade.

Safe Margin Usage Strategies and Tips

To use margin safely, consider these strategies and tips:

• Start with a low percentage of available margin: If you are new to margin trading, start by using a very small portion of your available margin, perhaps under 30%.

• Create a plan: Have a clear plan for when positions go against you. This might include exiting the trade, adjusting it, or rolling the position.

• Understand risk: Always ensure you understand the specific risk involved in each position.

• Do not use margin to buy options: Buying options is already a leveraged strategy. Using margin to buy options significantly increases your risk.

• Use margin on high-quality stocks: Use margin to amplify gains on stocks that are already showing a profit. Using margin to amplify good stocks with consistent income is a safer way to trade.

• Consider selling out-of-the-money options: Selling out-of-the-money options can be beneficial, particular for newer option traders. Out-of-the-money options decay faster.

• Close profitable positions early: Closing positions when they are profitable reduces risk.

• Backtesting: Use backtesting tools to assess the potential outcomes of your trading strategy before you trade. Many brokers offer free backtesting software.

• Paper trading: Practice using a simulated account before you trade with real money. This will allow you to experience both good and bad market conditions without risking your capital.

• Hedging: Put hedges in place to protect your portfolio from market downturns. Buying protective put options is a good way to hedge. Hedging can also provide financial benefits during market crashes.

• Diversification: Avoid putting all your money into one stock or strategy. Diversification will help protect you from losses. ETFs are a good instrument to use with margin because they already offer diversification.

• Understand every trade: Make sure you understand why you are making each trade. Do not blindly follow other people's trades.

• Monitor positions regularly: Check your positions at least once or twice a week. Do not simply place a trade and forget about it.

• Adjust losing trades: When a position moves against you, consider adjusting or rolling the position.

• Use technical and fundamental analysis: You need to understand both technical and fundamental analysis of stocks to make better trading decisions.

• Don't use all available margin: Just because your broker offers a large amount of buying power doesn't mean you should use it all. Keep a cash cushion to avoid margin calls.

• Be aware of how margin requirements may change.

Types of Margin Accounts

There are different types of margin accounts, including:

• Reg T margin: This is a standard margin account with requirements set by the government.

• Portfolio margin: This type of account can have lower margin requirements if you have a well-diversified portfolio.

When is Margin Appropriate?

Margin trading is not suitable for all investors. It is not for beginners and requires a high-risk tolerance. You must carefully monitor your trades. You should understand both the benefits and risks before using margin. Some types of trading, such as commodity futures trading, are almost always purchased using margin.

Benefits of Margin

When used correctly, margin can offer several benefits:

• Increased buying power.

• Opportunities to exploit market opportunities.

• No need to liquidate existing assets.

• Potential for higher gains.

• Access to advanced trading strategies, such as short selling.

• Margin can act as a line of credit.

• Potentially lower interest rates compared to other types of loans.

• Repayment flexibility.

• Tax-deductible interest.

• Facilitation of employee stock option plans.

• Ability to profit from share price declines.

• Diversification of a concentrated portfolio.

Margin and Options

Margin lets you buy equity and index options with more than nine months left. Selling puts on margin can be smart. It also helps with advanced options strategies.

But, you must know about options trading before using margin. Options trading has extra costs. Buying options with margin is risky.

Alternative Viewpoints on Borrowing to Invest

Some say borrowing to invest is good. Reasons include:

• Loan interest might be tax deductible.

• Borrowed money can earn dividends right away.

• Borrowing can make you save and invest better.

• Using others' money can help grow wealth.

Conclusion

Margin trading can increase your earnings but also risks a lot. It's key to use margin wisely and know the risks. Margin trading isn't for everyone.

If unsure, talk to a financial expert.

Step-by-Step Training: Using a Small Amount of Money to Explore Margin Trading

This guide helps you learn margin trading safely. It's about gaining experience, not quick profits.

Step 1: Educate Yourself Thoroughly

• Understand the Basics: Know what margin trading is. It's borrowing money to trade, using your assets as collateral. Margin can increase both gains and losses.

• Learn Key Terms: Get familiar with terms like initial and maintenance margin. The initial margin is the money needed to start, often 50% of the price. The maintenance margin is the equity needed to keep a position open, usually 30%. A margin call happens when your equity falls below the maintenance margin, and you must add more funds.

• Study Risk Management: Learn how to manage risks, like avoiding too much leverage and handling losing trades.

• Research Options Strategies: If trading options, learn about selling puts and covered calls. Avoid buying options with margin as they are already risky.

Step 2: Open a Margin Account

• Choose a Broker: Pick a trusted broker that offers margin accounts.

• Meet Requirements: Make sure you have the minimum equity (often $2,000) for margin. Read and understand the margin agreement.

• Apply for Margin: Fill out the application and agreement to start margin trading in your account.

• Start Small: Only put in a small amount of money you can afford to lose, as margin trading can lead to big losses.

Step 3: Start with a Simulated Account

• Paper Trading: Use a simulated account before real money to see how margin works without risk.

• Practice Trades: Practice different strategies in the simulated account. See how margin changes in various market conditions.

• Track Margin Requirements: Watch how margin needs change in your simulated trades. This shows what happens when a trade goes well or badly.

• Trade With a Similar Size: Use a simulated account with the same amount of money as your real one.

Step 4: Begin Trading with a Small Percentage of Your Real Account

• Low Percentage: Start with a tiny part of your money, like less than 30%. This keeps your risk low. If you're new, start with an even smaller amount.

• Choose Stable Stocks: Pick safe, good stocks you know well. Avoid risky ones.

• Sell Out-of-the-Money Options: Sell options that are not in the money. They lose value fast, which helps you. For example, sell a £80 put option if the stock is £100.

• Consider the Wheel Strategy: Try the 'wheel strategy'. It mixes selling puts and covered calls, great for margin.

• Avoid Buying Options: Don't use margin to buy options. Buying options is risky enough without margin.

Step 5: Implement Risk Management

• Understand Your Risk: Know the risks before you trade. Don't follow trades without understanding them.

• Diversify Your Portfolio: Spread your money across different stocks. This lowers your risk.

• Set Stop Losses: Use stop losses to limit losses on trades.

• Hedging: Use strategies like buying protective put options to cut risk.

• Have a Trading Plan: Make a detailed plan for trading. Include what to do if a trade goes wrong.

• Close Profitable Positions Early: Close trades when you're happy with your profit. This removes risk.

Step 6: Monitor Your Positions Regularly

• Regular Checks: Don't forget about your trades. Check your account often (at least weekly) to see how they're doing.

• Track Margin Requirements: Watch your margin needs. They change as your trades do.

• Set a Trigger Point: Decide when to add more money or close a trade.

Step 7: Learn and Adjust

• Back Testing: Test your strategies before trading. See how they did in the past.

• Keep Learning: Keep getting better at margin trading. Find a mentor or teacher.

• Adjust Your Strategy: Change your strategies based on what you learn. Make them fit your comfort level.

Important Considerations:

• Margin is Risky: Margin trading can cause big losses. It's not for quick money or gambling.

• Avoid Over-Leveraging: Don't use all your margin at once.

• Interest Charges: You'll pay interest on borrowed money.

• Margin Calls: Be ready for margin calls. Your trades might be closed if you can't meet a call.

By following these steps, you can start with a small amount of money in margin trading. Always focus on learning, managing risk, and being disciplined.

Frequently Asked Questions About Margin Trading

• What is margin trading? Margin trading involves borrowing money from a broker to purchase securities, using your existing investments as collateral. This allows you to control a larger position than you could with your own capital. It is essentially investing with borrowed money.

• How does margin trading work? You pay a portion of the purchase price with your own funds, and the broker loans you the rest. The securities you own act as collateral for the loan. You'll pay interest on the borrowed amount. The Federal Reserve Board sets the initial margin requirement, which is generally 50% of the purchase price. However, brokers may have their own, higher requirements.

• What is an initial margin? The initial margin is the upfront capital you need to deposit to enter a margin position. This is often 50% of the stock's purchase price.

• What is a maintenance margin? The maintenance margin is the minimum equity you must maintain in your account to keep a margin position open. This is typically around 30% of the current market value but it can vary based on the type of security and the broker.

• What is a margin call? A margin call happens when your account equity falls below the maintenance margin. Your broker will then require you to deposit more funds or sell securities to bring your account back into balance. If you do not meet the margin call, the broker may liquidate your positions.

• What are the main risks of margin trading? Margin trading amplifies both profits and losses. If a trade moves against you, your losses can be significantly larger. You could even lose more than your initial investment. Other risks include margin calls, interest charges, and the risk of over-leveraging your account.

• Is margin trading suitable for beginners? No, margin trading is generally not recommended for beginners. It requires a strong understanding of risk management, options strategies, and a high level of emotional control. Novice traders should avoid using margin, or use only a tiny percentage of their account if they have some experience.

• Can I use margin to buy options? It's generally not recommended to use margin to buy options. Buying options is already a leveraged strategy, so using margin adds significantly to your risk.

• What are some safe strategies for using margin?

• Start with a low percentage of your available margin.

• Have a clear plan for when positions move against you.

• Always understand the risk involved with each position.

• Consider selling out-of-the-money options.

• Close profitable positions early.

• Use backtesting to evaluate your strategy.

• Use paper trading or a simulated account to practice before trading with real money.

• Consider hedging your positions with protective puts.

• Diversify your portfolio.

• Only trade when you understand your trading strategy.

• Monitor your positions regularly.

• Use margin on stable, high-quality stocks.

• What are the potential benefits of margin trading?

• Increased buying power.

• Access to advanced trading strategies.

• No need to liquidate existing assets.

• Potential for higher gains.

• Ability to profit from share price declines using short selling.

• Ability to diversify concentrated portfolios.

• Margin can act as a convenient line of credit.

• Potentially lower interest rates than other forms of borrowing.

• Tax-deductible interest.

• What are different types of margin accounts? There are two main types of margin accounts:

• Reg T margin: Standard margin account with requirements set by the government.

• Portfolio margin: May have lower requirements if you have a well-diversified portfolio.

• How do margin requirements vary? Margin requirements vary based on regulations, the broker's policies, and the securities you're trading. Small-cap and volatile stocks usually have higher margin requirements.

• Can margin be used for things other than trading? Yes, margin can act as a line of credit for other purposes, such as large purchases or emergencies. Margin loans may have lower interest rates and more flexible repayment terms than other loans.

• What is the "wheel strategy" and how does it relate to margin? The wheel strategy combines selling put options and covered calls, and it is well suited for margin accounts. When selling puts, margin allows you to collect premium income and potentially acquire a stock at a lower price.

• How much of my available margin should I use? It is best to avoid using all of your available margin. Keeping some buying power in reserve will help you manage losing positions and avoid margin calls. If you are new to margin trading, use a very low percentage of your available margin, such as under 30%.

• Do I have to pay margin interest? Yes, when you borrow money on margin you will be charged interest. Some option strategies, however, may allow you to use margin without paying interest.

• Is margin trading a good way to get rich quickly? No. Using margin in a risky way is like gambling in a casino and will likely result in losing money. It should not be used for "get rich quick" schemes. Margin should be used to amplify what is already working and to make money safely.

• Do I need to monitor my positions when using margin? Yes, you should monitor your positions regularly, at least once or twice a week. Do not simply place a trade and forget about it.

• How can I manage margin risk?

• Don't over-leverage your account.

• Maintain a cash cushion.

• Prepare for volatility.

• Invest in assets with good return potential.

• Set a personal trigger point for adding funds.

• Pay interest regularly.

• Diversify your portfolio.

• Use hedging strategies.

• Understand your risk.

• Have a trading plan in place for when positions move against you.

• Should I blindly follow other people's trades? No. Always understand every trade you are making. Do not blindly follow other people's trades.

• What are some alternative viewpoints on borrowing to invest? Some people argue that it is a good idea to borrow to invest because:

• The interest may be tax deductible.

• Borrowed money can earn dividends right away.

• Borrowing may force discipline in saving and investing.

• Making use of other people's money can build wealth.

This FAQ should provide a solid starting point for understanding margin trading. Remember, it's essential to do your own research and, if needed, seek advice from a financial professional before trading with margin.

The Love of Money

The love of money is the root of all evil

This quote has been used for centuries to criticize money. It's often aimed at the wealthy or those who are poor.

I think most people misunderstand this quote.

It's the love of money that's the problem, not money itself. It's our attitude that matters, not the money.

Money is just a tool for exchange, neither good nor bad.

Our values are what go wrong, not money. Money is just a bystander.

Capitalism is Neutral

Capitalism is a system where people trade value for value. It's been around for thousands of years. Learning how it works can help us thrive.

It's a fair way to exchange goods, services, and labor. Not everyone is equal, but that's not about rights or worth. It's about what you contribute.

If you create huge value, you should get paid well. Hard work and risk-taking should be rewarded. A true meritocracy is best.

Everything has value, and there should be a way to measure it. Money is a good tool for this. The market sets prices based on what people are willing to pay.

People's perceptions of value can be off, influenced by marketing. But, they only pay what they think is fair. This is fair and equitable.

Time value of money

Time is our most valuable asset. We trade it for goods and services, not money. When spending money, think about how many hours it takes to earn it.

Calculating the time value of debt can be eye-opening. It shows how much time you'll spend paying off debt. Spend your time wisely.

Time is Value

I love the movie “In Time” with Justin Timberlake. It shows a society where time is currency. It's a powerful message about valuing time. We all have limited time, and we should spend it well.

Treat your money like you love it. Fold it neatly - care for it, nurture it. If you value your time, then you need to value your money. Money is the currency, but it really does represent time. So treat it lovingly.

Make sure the bills are all facing the same way. This is a way to remind yourself that you are caring and nurturing your life. Because money is your life. It represents time, freedom and survival.

If you have lots of money you have all three. Money for moneys sake is not the goal. Freedom over your life is. Take back he freedom and treat money like it is your life.

Money is LIFE

In our capitalist society, it is easy to put money on a pedestal as it represents life. We need money to live. It costs money for food, clothing shelter, healthcare, education.

Without it, our quality of life suffers. We have made it so that money is nesessary for our survival so we instinctually give it great power over us. What money really represents is freedom. It represents control over our lives. IT represents health and vitality.

In the context of our capitalist society we are only as free as the amount of money we have.

Is it any wonder that, in areas of our world where poverty is prevalent, crime and suffering are also widespread. Look at any slum, and you will see higher crime rates, higher alcohol and drug abuse, and lower moral standards? Why? This is out of necessity.

When you are desperate, you do not have the luxury of a strict moral code. Living on the straight and narrow might mean hunger, homelessness, sickness or even death when you are destitute. How can money be evil, when lack of money seems to create these types of problems?

Values

If I were to re-word the Bible quote above, it would be “Lack of values is the root of all evil”. There is nothing inherently evil about money or capitalism. It is when people lose sight of their values that things go wrong.

If people take capitalism too far by putting profit before people, then it becomes a monster.

The problem with “monster” capitalism is when people stop understanding the basic tenets of good old fashioned capitalism and start to believe that money and wealth are entities unto themselves. Believing that money is the end goal becomes and endless pursuit. How much is enough? What lines am I willing to cross to obtain it?

The old saying, and the title of my book “We could save the world, but there’s no money in it” sums up the problem. Capitalism is great and is a wonderful way to exchange value, but it should not be at the top of the food chain. People need to be at the top. Because people are immersed in capitalism they don’t realise that they are separate from it. They think that is the way it is. It’s like a fish doesn’t know it’s in water.

Capitalism is so pervasive that we can’t see it objectively. It is quite easy to put profit before people because we feel like if we don’t we might lose something. We might lose our place in line. We might lose to the competition, then we will have nothing and die. These are int instinctual feelings that come up, because we are so ingorssed in our capitalist fish tank.

Play the Game

In my book, Invest in Yourself, I talk about how we can become more aware of the fact we are living in a capitalist system, and how we can take that awareness and use it to our advantage. Play the game, then change the game.

As we are living in a world that is ruled by money, let’s learn the rules and play the game to our advantage. If we educate ourselves about how money works, we can become prosperous enough to help others. We can find the time to change the system for the better. We need to know the rules, before we can break them If we try to change the system to benefit humanity without being in a powerful position, we will have less efficacy and people may wonder if our motives are just a product of our circumstances. Take from the rich to give to the poor is a terrible plan. There are better systems.

If the rich are spearheading positive changes in the capitalist system then it has a lot more impact. Sure, people will question their motives as well, but I would rather be comfortable while fighting the good fight, then struggling.

New Ideas

We need to think about capitalism with limits. There should be a limit to how much capitalism can grow. We must put people first.

There are many ways to put people before profits. Charity, social programs, and laws can do this.

Charity is a way to give back when you're wealthy. Wealthy people often give a lot to charity. Giving 10% of your income is taught in many self-help books.

It's seen as a moral duty to help others when you can. This doesn't seem evil to me.

Every country has some socialism in it. We can learn from different countries' systems. The internet helps us study these ideas.

Most countries have social programs to help everyone. For example, Canada has universal healthcare. It's free, but we pay high taxes for it.

In some countries, healthcare is a business. If you can't pay, you might suffer or even die. This seems immoral.

Is it wrong to let people suffer from hunger or homelessness just because they're poor?

There are interesting ideas to solve capitalism's problems. Let's talk about them.

Universal Basic income

Universal Basic Income (UBI) is a social program. It gives everyone enough money for basic needs. It's been shown to work well in trials.

"Give Them Money" is a great book about UBI. It shows how effective it can be. I think it's a great idea.

Ubuntu Contributionism

Ubuntu contributionism goes even further than UBI. It suggests removing money from society. It's based on community and helping others.

In "UBUNTU Contribusionism," Michael Tellinger argues for it. He addresses common concerns. It's a fresh perspective worth considering.

Star Trek

This is the ultimate ideal. Star Trek shows a world without money, where technology gives us everything we need. Food, clothes, and homes are free. The only challenge is finding happiness.

Is growing as a person and being the best version of you a great goal? Isn't using our gifts to help humanity more noble than just making money? This dream might be our ultimate goal.

I want to wake you up to the dream of living in a capitalist system. It's important to be aware of our world. By understanding the game, we can succeed.

Reality

Dreaming of a better world is cool, but we must live in the present. We can't change the world overnight, but we can start now.

Let's learn about our capitalist system. Educate yourself on money and how to live freely. Use money to help others and spark innovation for a better life.

Stop seeing money as evil. Let's focus on our values, not just money. This will help us live our best lives.

Learn as much as you can about wealth and money. This will help you live your highest values.

I wrote an article on my top 5 personal finance books. They're a great starting point.

My books can also help you on your journey to financial freedom.

Opportunity Cost: What are you missing?

What is Opportunity Cost?

Opportunity cost is the money you didn't make by choosing something else. It's about the investment you missed out on.

Investors and stock market experts often talk about it. It's not always important for every deal. But, most people ignore it when making money choices.

I wrote about whether to pay off debt or invest. This choice comes when you get extra money, like a bonus or inheritance. I looked at both sides without picking one.

I have a preference, though..

INVEST

Always.

I'll explain why I think so.

Scenario

You owe $100,000 to the bank.

You pay 4.25% interest annually for 10 years. Your monthly payment is $1,024.38.

In 10 years, you'll pay $22,925.04 in interest.

Now, imagine you win $100,000 in the lottery.

What do you do with it?

If you pay off your debt, you gain three things:

1. You save $1,024.38 monthly. This is money you earned after taxes.

2. You save $22,925.04 in interest. This is money lost.

3. You won't owe the bank $100,000 anymore.

Your net worth is zero, but you're debt-free.

If you invest the $100K in a dividend stock:

Like Bank of Nova Scotia (TO:BNS) with a 4.64% dividend yield:

1. You earn $386.66 monthly in dividends (paid quarterly).

2. Your loan payments drop to $637.72 monthly if you use dividends to offset payments.

3. Or, you can keep paying $1,024.38 monthly and reinvest dividends for more returns.

4. You have a $100,000 nest egg for life.

5. Bank of Nova Scotia has raised dividends every year, so your dividend will grow.

6. The stock price will likely rise over 10 years, increasing your wealth.

7. The value of debt decreases over time due to:

1. Payoff over time

2. Inflation makes debt worth less

3. Use dividends to pay off debt faster, reducing interest paid.

There are more reasons to invest than to pay off debt. Some people can't sleep due to debt or market uncertainty. It's important to know yourself before deciding. If debt worries you, pay it off. If you're less worried, invest.

Do some research to find higher dividend stocks. Sign up for my newsletter to get my FREE stock picking guide for some good starting points.

Money Mindset

Not everyone is committed to wealth building. We fight our instincts to survive and money principles aren't always easy to understand.

In order to build wealth:

We need to have a long-term perspective…BUT…We often look for quick fixes.

We must have self-discipline…BUT…It's easier to follow the path of least resistance.

Using our heads, not emotions, is key…BUT…Money can cloud our judgment.

When deciding what to do with extra cash, do the math. Think about what you'll miss out on. Dream big about the possibilities.

If you're unsure, take time to learn about investing. It's an investment in yourself.

Read Books

I've written books to help you invest and build wealth. They offer simple steps without needing extra money. I also have an online course for a step-by-step guide to wealth.

I recommend these 5 books for a solid start. They're essential for becoming a money magnet. MJ Demarco's book is also life-changing.

Luck happens when you're prepared. Learning about money and investing can lead to financial freedom. Be ready for opportunities.

Good luck, my friends!

Wealth Building: Learn from the Affluent's Success Path

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Did you know that just 20% of the world's population controls over 90% of its wealth? This fact shows a huge wealth gap between the rich and the rest. But, what if we could learn the secrets of the rich and use them for our own financial growth? Let's dive into the path to financial success, using the proven ways of the wealthiest people.

Key Takeaways

• Understand the fundamental differences between income and wealth and how to build sustainable wealth.
• Learn the key principles and mindset shifts required for successful wealth accumulation.
• Discover how the affluent have accumulated their wealth and explore strategies to mirror their path.
• Explore strategic investment approaches, diversification techniques, and risk management used by the wealthy.
• Uncover the role of financial education, asset leveraging, and tax strategies in creating wealth.

Understanding the Foundations of Wealth Creation

Wealth creation is a complex journey that needs a deep understanding of key principles. At its core, it's about the difference between income and wealth. Income is the money you earn, while wealth is the assets you build over time. To create lasting wealth, you must change your mindset and focus on the right principles for long-term success.

The Difference Between Income and Wealth

Many people confuse high income with wealth. But they're not the same. Income is the money you make from work, business, or investments. Wealth is your net worth, which is your assets minus your debts. Knowing this difference is key to a financial mindset focused on building wealth, not just making money.

Key Principles of Sustainable Wealth Building

• Frugality and Prudent Spending: Spend wisely and delay gratification. Invest in assets, not liabilities.
• Passive Income Generation: Create multiple passive income sources like investments, rental properties, or businesses.
• Long-term Thinking: Think long-term for sustainable wealth. Wealth creation is a marathon, not a sprint.
• Risk Management: Manage financial risks with diversification, insurance, and cautious investments.

The Mindset Shift Required for Success

For wealth creation principles to work, you need a big mindset shift. Move from wanting immediate rewards to a long-term wealth-building view. By adopting a mindset of delayed gratification, smart risk-taking, and ongoing learning, you set the stage for lasting financial success.

"Wealth is the ability to fully experience life." - Henry David Thoreau

How the Affluent Accumulated Their Wealth – Can You Mirror Their Path?

Learning how the wealthy built their fortunes can help you on your financial journey. By looking at their habits and strategies, you can find ways to follow in their footsteps. This can lead to building wealth for yourself.

Many wealthy people focus on long-term wealth over quick gains. They save and invest regularly, avoiding impulse buys and fast money schemes. This steady, patient approach is key to growing wealth over time.

Wealth Accumulation Strategies	Affluent Habits
Diversified investment portfolio Regular savings and compound interest Entrepreneurship and business ownership Real estate investments	Delayed gratification Continuous learning and adaptation Prudent risk management Leveraging assets and opportunities

The wealthy have a special mindset that drives their wealth growth. They see opportunities to grow their finances and always look for ways to improve. This mindset is crucial for their success.

"Wealth is not about having a lot of money; it's about having a lot of options."
- Chris Rock

By studying the wealth accumulation strategies and affluent habits of the successful, you can learn from their financial success stories and wealth building techniques. This knowledge can help you achieve financial security and independence.

Strategic Investment Approaches of the Wealthy

The wealthy know how to invest wisely. They use strategies that help them grow their wealth over time. These strategies include diversifying their investments and managing risks carefully.

Diversification Strategies That Work

Diversifying their portfolios is key for the wealthy. They spread their money across different types of investments. This helps them avoid big losses and make the most of their investments.

Long-term vs Short-term Investment Philosophy

The wealthy focus on long-term growth. They believe in the power of patience and compounding returns. At the same time, they use short-term strategies to make quick profits.

Risk Management Techniques

The wealthy are good at managing risks. They use several methods to protect their investments. These include diversifying, hedging, and carefully choosing investments.

• Diversification across asset classes
• Hedging strategies to mitigate market volatility
• Careful analysis of risk-return profiles before making investment decisions
• Ongoing monitoring and rebalancing of their investment portfolio

By focusing on risk management, the wealthy can grow their wealth steadily. They navigate the financial markets well.

Investment Approach	Characteristics	Key Benefits
Diversification Strategies	Spreading investments across various asset classes, industries, and geographies	Mitigates risk and maximizes returns
Long-term Investing	Prioritizing sustainable growth over short-term gains	Capitalizes on the power of compounding returns
Risk Management	Employing techniques to minimize exposure to potential losses	Navigates market complexities and steadily grows wealth

"Successful long-term investment strategies are built on a foundation of diversification, patience, and prudent risk management."

Building Multiple Income Streams

Smart people know the value of having different ways to make money. Instead of just one job, they create multiple income streams. This helps them stay financially strong and grow their wealth faster.

Passive income is a great way to earn money with little effort. This includes things like renting out properties, investing in stocks that pay dividends, or running an online store. By focusing on these passive income areas, people can earn extra money that helps their main income.

• Look for side hustles that match your skills and interests, like freelancing or creating online content.
• Put money into dividend-yielding stocks or real estate for passive income.
• Use digital platforms to sell things or services and start an e-commerce business.

Creating diversified revenue streams helps protect against economic ups and downs. It also helps grow wealth faster. By managing these different income sources well, people can build a strong financial base that supports their goals.

Income Stream	Potential Benefits	Considerations
Rental Properties	- Passive income from rent - Potential appreciation in asset value	- Upfront investment required - Property management responsibilities
Dividend Stocks	- Passive income from dividends - Potential for long-term capital growth	- Market volatility and risk - Ongoing research and portfolio management
Freelance Work	- Flexible income generation - Opportunity to leverage specialized skills	- Inconsistent income stream - Time and effort required to build a client base

By focusing on multiple income streams, people can make their finances stronger, reduce risks, and find new ways to build wealth. This all-around strategy to making money helps people deal with economic changes better and with more confidence.

The Role of Financial Education in Wealth Creation

Building wealth is not just luck. It needs a strong base in financial literacy and ongoing learning. Investing in your economic education is key to unlocking wealth secrets.

Continuous Learning and Adaptation

The wealthy know the value of never stopping learning. They seek new info, analyze trends, and adjust their plans for new chances. By learning and growing, you can secure your financial future.

Resources and Tools for Financial Education

• Attend workshops and seminars on personal finance, investment strategies, and wealth management.
• Read books, articles, and blogs by top financial experts and leaders.
• Use online courses, webinars, and educational sites to learn more.
• Get advice from a skilled financial advisor for tailored guidance.

Understanding Market Cycles

Building wealth means knowing market cycles well. You need to understand growth and downturns. By watching economic signs and adjusting your investments, you can avoid risks and find chances.

Investing in your financial knowledge is vital for lasting wealth. By always learning, using educational tools, and grasping market trends, you can achieve long-term financial success.

Leveraging Assets and Opportunities

Savvy wealth builders know the power of strategic leverage. They spot valuable assets and opportunities to grow their wealth. This section explores asset management and opportunity recognition. It helps you find new ways to multiply wealth and strategic leverage.

Asset management is more than just collecting things. It's about managing your resources to make money. The wealthy find hidden gems, improve their value, and use them to make more money.

Finding and grabbing opportunities is key. The wealthy watch for market changes and new trends. By staying informed and quick to act, they make the most of chances to multiply their wealth.

The wealthy use strategic leverage and careful risk-taking. By following their lead, you can make the most of your assets and find big opportunities. This opens up new ways to create wealth.

Asset Management Strategies	Opportunity Recognition Techniques
Diversification Portfolio Optimization Real Estate Investments Alternative Asset Classes	Market Trend Analysis Emerging Industry Identification Startup Ecosystem Engagement Continuous Education and Adaptation

"Wealth is the ability to fully experience life." - Henry David Thoreau

Learning asset management and opportunity recognition opens up new wealth paths. Adopt this mindset and start your journey to financial freedom and abundance.

Tax Strategies Used by the Wealthy

The wealthy use smart tax planning to grow and keep their wealth. They use legal ways to lower their taxes. This helps them keep more of their money.

Legal Tax Minimization Techniques

The rich use many legal ways to cut their taxes. They take full advantage of deductions and special investment options. They also keep up with tax laws to find new ways to save.

Investment Structures and Their Tax Implications

The rich often choose special investment setups like trusts and partnerships. These can affect their taxes a lot. They work with experts to make these investments work best for their taxes.

Estate Planning Considerations

Good estate planning is key for the wealthy to keep their wealth safe. They use trusts and gifts to pass on money with less tax. This way, they make sure their wealth goes to the right people without losing too much to taxes.

The rich are serious about keeping their wealth growing. They stay informed, use legal ways to save on taxes, and plan their investments and estates well. This helps them keep their wealth strong for the future.

Network Building and Relationship Management

Building a strong network and managing professional relationships are key to financial success. Networking skills, business connections, and social capital can lead to great opportunities. They help you use your peers' expertise and resources.

The wealthy know the value of professional relationships. They spend time and effort on a wide network of contacts. This includes industry peers, potential investors, and mentors. By caring for these connections, they get valuable info, secure partnerships, and find new business chances.

• Attend industry events and conferences to expand your network
• Volunteer for professional organizations and committees to build relationships
• Reach out to successful individuals in your field and request mentorship
• Offer value to your network by sharing insights, making introductions, or providing assistance
• Maintain regular communication with your contacts to deepen your relationships

Good relationship management is key to wealth. The rich are great at building trust, respect, and lasting connections. By investing in their professional relationships, they use their social capital to find new chances, get good deals, and reach financial success.

Networking Strategies	Relationship Management Techniques
Attend industry events Join professional organizations Seek out mentors Offer value to your network	Build trust and respect Maintain regular communication Provide genuine assistance Cultivate long-term, mutually beneficial connections

By using networking skills and professional relationships, you can find many opportunities. Investing in your social capital can change the game. It lets you use your network's expertise and resources to reach your wealth goals.

Time Management and Productivity Habits of the Wealthy

Successful people often say their wealth comes from good time management and productivity. By looking at the daily habits and decision-making of the rich, we can learn to improve our own productivity.

Daily Routines for Success

Wealthy folks usually have a daily plan that focuses on their most important tasks. Their routines often include:

• Starting the day with early morning rituals like meditation, exercise, or journaling
• Doing deep work and important tasks when they're most focused
• Using time-blocking to avoid distractions and stay on track
• Taking regular breaks and self-care to stay energized
• Managing tasks well and delegating to reduce their workload

Decision-Making Frameworks

The rich are known for making smart decisions. They use structured ways to make choices. Some common methods include:

1. Cost-Benefit Analysis: Weighing the good and bad of each option to choose wisely
2. Opportunity Cost Evaluation: Thinking about what they might miss out on with their choices
3. The Pareto Principle: Focusing on the tasks that give the most results
4. Scenario Planning: Planning for different outcomes and being ready for anything

By using these productivity and decision-making strategies, anyone can follow in the footsteps of the wealthy. This can help improve their productivity and wealth-building efforts.

Productivity Habit	Benefit	Example
Early Morning Rituals	Start the day with a positive mindset and energy	Meditation, exercise, journaling
Time-Blocking	Stay focused by avoiding distractions	Set aside uninterrupted time for deep work
Opportunity Cost Evaluation	Make choices that consider all possible outcomes	Think about what you might miss out on with your decisions

Business Ownership and Entrepreneurship

Starting your own business is a great way to make money. It lets you earn more and build wealth over time. Successful business owners turn their passions into successful companies.

To succeed, you need good startup strategies. This means knowing your market well, having a solid business plan, and getting the right funding. Growing your business means being quick to change and think outside the box.

• Do deep research to find needs and opportunities in the market.
• Make a detailed business plan that shows your goals and how you'll make money.
• Look for money from savings, investors, or venture capital to start your entrepreneurial journey.
• Always be open to new ideas and ways to improve and scale your business.

Choosing to be an entrepreneur can lead to financial success. By using your skills and interests, you can build a business that makes money in many ways and grows your wealth.

"The best way to predict the future is to create it." - Peter Drucker

The path of entrepreneurship and business ownership comes with its own set of challenges. But with the right attitude, plans, and hard work, you can make your dreams come true and achieve financial freedom.

Conclusion

In this article, we've looked at how the wealthy build their wealth. We've covered the basics of wealth creation and how to invest wisely. We've also talked about making money in different ways and using tax strategies to your advantage.

By following the steps of the wealthy, you can start your own path to financial freedom. Wealth building is a long-term effort. It needs dedication, a love for learning, and a readiness to take smart risks. Use the wealth building summary, affluent strategies recap, and financial success path to guide you.

Keep working on your wealth-building plan and stay focused on your goals. Surround yourself with people who support you. Always look for new chances to grow your wealth. With the advice from this article, you're on the right track to a financially secure future.

FAQ

What is the difference between income and wealth?

Income is the money you earn. Wealth is the value of your assets minus your debts. To build wealth, you need to manage and grow your assets over time, not just earn more money.

What are the key principles of sustainable wealth building?

Key principles include living below your means and investing regularly. Also, diversify your portfolio, reduce debt, and think long-term.

What mindset shift is required for financial success?

For financial success, shift from short-term to long-term thinking. This means saving and investing for the future, not just focusing on making more money now.

How can I mirror the wealth accumulation strategies of the affluent?

The affluent diversify investments and leverage assets. They also create multiple income streams and optimize taxes. By applying these strategies to your situation, you can build wealth like them.

What are some effective diversification strategies used by the wealthy?

The wealthy diversify by investing in various assets like stocks, bonds, and real estate. They spread investments across different sectors and regions to reduce risk.

What is the difference between a long-term and short-term investment philosophy?

The wealthy focus on long-term wealth building through consistent investing. Short-term investing is more speculative, trying to time the market.

How can I build multiple income streams?

Start a side business or freelance, invest in rental properties, or create digital products. Use your skills to earn more money.

What role does financial education play in wealth creation?

Financial education is key for wealth creation. Stay updated on market trends and understand investment principles. This helps you make smart decisions and grow your wealth.

How can I leverage assets and opportunities to multiply my wealth?

Use your assets, like real estate, to earn more income or grow in value. Recognize and seize financial opportunities to increase your wealth.

What tax strategies do the wealthy use to minimize their tax burden?

The wealthy use legal tax strategies, like investment structures and estate planning. They also take advantage of deductions and credits to reduce taxes.

How can I build and manage a strong network for wealth creation?

Networking is vital for wealth creation. Build a diverse network of professionals and like-minded individuals. They can offer valuable insights and support for your financial success.

What time management and productivity habits do the wealthy possess?

Successful individuals have structured routines and productivity techniques. They prioritize tasks and use time-blocking to achieve their financial goals.

How can business ownership and entrepreneurship contribute to wealth building?

Business ownership and entrepreneurship can lead to wealth. Successful entrepreneurs use their skills and resources to start and grow businesses. This can create substantial income and assets.

You Are Only as Rich as Your Passive Income Allows: A Comprehensive Guide to Building Wealth and Freedom

In today’s fast-paced financial landscape, the notion of wealth has undergone a profound transformation. Gone are the days when a substantial paycheck defined your financial well-being. In the modern economy, true wealth is increasingly measured not by how much you earn actively but by how much you earn passively. In other words, you are only as rich as your passive income allows.

This article will dive deeply into the concept of passive income, explore its importance in achieving financial independence, and provide actionable strategies for building reliable passive income streams. By the end of this detailed guide, you’ll be equipped to begin transforming your finances and reclaiming your time.

Understanding Passive Income: The Foundation of Financial Freedom

To appreciate the power of passive income, it’s essential to grasp what it truly means. Passive income is money earned with minimal ongoing effort after the initial setup. Unlike active income—where you trade time for money—passive income enables you to generate revenue while you sleep, travel, or focus on other pursuits.

Types of Passive Income

Passive income can take many forms, including but not limited to:

1. Real Estate Investments
   Rental properties and real estate crowdfunding platforms are classic examples of passive income sources. They require upfront capital and management, but once stabilized, they generate steady returns.

2. Dividend-Paying Stocks
   Investing in dividend stocks allows you to earn recurring payouts from companies that share their profits with shareholders. Over time, these dividends can grow, especially when reinvested.

3. Royalties and Licensing
   If you create intellectual property—such as books, music, patents, or online courses—you can license it and earn royalties for years to come.

4. Digital Products
   E-books, templates, and software applications can be sold repeatedly without additional work, making them a scalable form of passive income.

5. Automated Online Businesses
   Websites, blogs, or YouTube channels that generate advertising revenue, affiliate commissions, or product sales can become passive once they are well-established.

6. Peer-to-Peer Lending and Fixed Investments
   Platforms like LendingClub or government bonds provide predictable returns with minimal involvement, making them another viable option for passive income seekers.

The Shift from Active to Passive Income: Why It Matters

Many people remain locked in the traditional income-for-time exchange. This "active income trap" makes financial independence an unattainable dream for most, as it limits earning potential to the hours available in a day. Shifting from active to passive income is critical for anyone seeking greater freedom, security, and opportunity.

1. Time Freedom

Passive income liberates you from the constraints of a 9-to-5 schedule. Instead of being tethered to your desk or worksite, you can choose how to spend your days.

2. Wealth Accumulation

Reinvesting passive income creates compounding effects, accelerating your wealth-building journey over time. With active income, this compounding potential is limited.

3. Reduced Stress

Relying solely on active income can create stress, particularly in uncertain economic times. Passive income provides a financial cushion that softens the blow of job loss, market downturns, or unexpected expenses.

4. Early Retirement

Those who build significant passive income streams can retire earlier than those dependent on active earnings, ensuring a more fulfilling and less stressful life.

The Mindset Shift: Building Wealth Like the Rich

It’s often said that the rich think differently about money—and for good reason. They prioritize building assets that generate income over working harder or longer hours. If you aspire to achieve financial independence, it’s crucial to adopt this mindset. Here are key principles that can guide you:

1. Value Time Over Money

The wealthy understand that time is their most precious asset. Passive income allows them to "buy back" their time and focus on pursuits that matter most.

2. Leverage Resources

Passive income is often the result of leveraging money, knowledge, or technology. Successful investors let their capital work for them, rather than the other way around.

3. Embrace Long-Term Thinking

Building passive income streams takes patience and persistence. Those who succeed understand the importance of delayed gratification and focus on long-term gains over short-term rewards.

Actionable Steps to Build Passive Income Streams

Now that we’ve established why passive income is essential, let’s discuss practical strategies to begin building your own. The process requires discipline, creativity, and a willingness to learn, but the rewards are well worth the effort.

1. Start with a Financial Audit

Before you can invest in passive income opportunities, you need to assess your current financial situation. Take stock of your income, expenses, debts, and savings. This will help you determine how much capital you can allocate toward building passive income streams.

2. Invest in Knowledge

Understanding the basics of personal finance, investing, and entrepreneurship is crucial. Consider taking online courses, reading books, or attending seminars to deepen your understanding of passive income strategies.

3. Choose the Right Stream

Identify a passive income opportunity that aligns with your skills, interests, and financial resources. For instance, if you have creative skills, digital products might be a good fit. If you have savings to invest, real estate or dividend stocks may be more appropriate.

4. Start Small and Scale

Begin with one income stream and focus on optimizing it before diversifying. This allows you to build momentum and gain confidence in your ability to generate passive income.

5. Automate Whenever Possible

The goal of passive income is to reduce your involvement, so automation is key. Use tools, software, and outsourced services to streamline operations.

6. Reinvest Earnings

Whenever possible, reinvest your passive income to create a snowball effect. Over time, this compounding approach will dramatically accelerate your wealth-building efforts.

Common Myths About Passive Income Debunked

Despite its growing popularity, passive income remains misunderstood. Let’s dispel some common myths:

Myth 1: "Passive Income Requires No Effort"

Reality: While passive income minimizes ongoing work, setting up these streams typically requires significant upfront effort and investment.

Myth 2: "You Need a Lot of Money to Start"

Reality: Many passive income streams, like creating a blog or selling an e-book, require minimal financial investment. What they demand is creativity and perseverance.

Myth 3: "It’s Too Risky"

Reality: Like any financial strategy, passive income involves risk. However, diversifying your income streams can actually reduce your overall financial risk.

Measuring Success: How to Know When You’ve Made It

So, how do you know when your passive income has reached a meaningful level? Here are a few milestones to consider:

1. Covering Essentials
   Your passive income is enough to cover your basic living expenses—housing, food, utilities, etc. This is a significant first step toward financial independence.

2. Funding Lifestyle Choices
   Your passive income allows you to afford discretionary spending, such as travel, hobbies, or dining out, without dipping into active earnings.

3. Achieving Total Independence
   You no longer rely on active income to maintain your desired lifestyle. At this stage, you’ve achieved true financial freedom.

Conclusion: Building the Life You Deserve

The journey to financial independence through passive income is not a sprint; it’s a marathon. It requires careful planning, disciplined execution, and a commitment to lifelong learning. However, the rewards are transformative. By building multiple passive income streams, you can reclaim your time, reduce financial stress, and create a legacy of wealth for future generations.

Remember, true wealth isn’t about the size of your paycheck—it’s about the freedom and security your income provides. Start today by taking small, actionable steps toward building your passive income empire. Your future self will thank you.

The key to financial freedom is to make more money - Cash Flow is KING

In modern society, chasing financial freedom and wealth means focusing on cash flow. It's key to making more money, creating passive income, and investing wisely. I've learned that managing your cash flow well is crucial. Here, I'll share strategies that have helped many, including me, achieve financial freedom.

Key Takeaways

• Cash flow is the lifeblood of financial success and stability.

• Mastering cash flow management is crucial for building wealth and achieving financial freedom.

• Diversifying income streams is a powerful strategy to increase cash flow and mitigate risk.

• Understanding the Cash Flow Quadrant model can guide your path to financial independence.

• Effective cash flow management involves reducing expenses, creating passive income, and investing strategically.

Understanding the Power of Cash Flow Management

Effective cash flow management is key to financial stability and making smart decisions. It's not just about how much money you earn. It's also about managing the money that comes in and goes out.

What Makes Cash Flow Essential

Cash flow is like a safety net. It helps protect against unexpected costs and changes in income. It also helps businesses meet their obligations on time and invest in growth.

Without enough cash flow, even profitable businesses can face serious problems.

The Relationship Between Cash Flow and Financial Success

Good cash flow is vital for lasting financial success. It helps with budgeting and planning. It also guides decisions on investments and growth.

Key Components of Effective Cash Flow Management

• Monitoring and controlling accounts receivable and payable

• Optimizing inventory management to minimize tied-up capital

• Exploring financing options to bridge cash flow gaps

• Forecasting cash flow to anticipate future needs and opportunities

• Maintaining adequate cash reserves to weather financial challenges

• Closely managing expenses to preserve cash flow and financial stability

By focusing on these areas, businesses and individuals can improve their cash flow. This leads to long-term financial success.

"Cash flow is the lifeblood of any business. Effective cash flow management is essential for maintaining liquidity, weathering economic storms, and seizing growth opportunities."

The Path to Financial Freedom

Reaching financial freedom is a journey that needs a mindset shift and smart wealth-building strategies. It's not just about making more money. It's about managing your cash flow, cutting expenses, and creating different income sources. By controlling your finances, you open the door to a life of true independence and happiness.

The first step is understanding the power of cash flow. This means watching your income and expenses closely. Look for ways to save and use those savings to build wealth. The 50/30/20 budget rule is a good start. It suggests using 50% for necessities, 30% for fun, and 20% for savings and paying off debt.

Diversifying your income is also key. This could mean starting a side job, freelancing, or investing in things like rental properties or stocks that pay dividends. Having many income sources makes you less dependent on one job and strengthens your financial base.

It's also vital to have a money mindset focused on long-term wealth, not just quick wins. This means saying no to impulse buys and investing in your future. Put money into retirement accounts, emergency funds, and other smart investments.

"Financial freedom is available to those who learn about it and work for it." - Robert Kiyosaki

The journey to financial freedom is unique for everyone. It needs careful planning, discipline, and a willingness to try new things. By taking a full view of your finances and sticking to your goals, you can open up a world of possibilities. You'll have the freedom to follow your passions without worrying about money.

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Mastering the Big Three Expenses

Reaching financial freedom starts with mastering the "big three" expenses: housing, food, and transportation. These areas take up most of your budget. By optimizing them, you can save a lot for wealth-building activities.

Housing Optimization Strategies

Housing is usually the biggest expense. To cut costs, think about refinancing your mortgage for a better rate. Downsizing or renting out extra space can also save you money. These steps can help you save a lot for your financial goals.

Food Cost Reduction Techniques

Food is another big expense. To save, cook at home more, plan meals to avoid waste, and buy in bulk. Being smart with your grocery spending can lead to big savings. This is a key part of budgeting techniques for expense reduction.

Transportation Expense Management

Transportation is the third big expense. Look for ways to lower car costs, like using public transport or carpooling. Even considering a one-car household can save a lot. These cost-cutting strategies help you get closer to financial freedom.

Mastering the big three expenses frees up money for wealth-building. This includes investing and creating income streams. These are key to long-term financial success.

Creating Multiple Income Streams

Many dream of financial freedom, and one way to get there is by having multiple income streams. The average millionaire has about seven sources of income. You can diversify your earnings through jobs, starting your own business, investing, and side hustles.

Shaw is a great example. He now has nine income streams, earning in the mid-six figures. His income comes from public speaking, book sales, consulting, and podcasting. He suggests adding one or two new income sources each year to stay manageable.

Podcasting can be very profitable, needing about 10,000 downloads per episode to attract sponsors. Public speaking can also increase in value as you build your brand. Investing in rental properties or peer-to-peer lending can provide steady passive income.

The subscription model offers predictable income from exclusive content or software. ETFs and affiliate marketing are also good for passive income online. Renting out personal assets, like cars or storage space, can also create diversified income without needing to sell them.

There are countless opportunities in entrepreneurship and side hustles. Creating content on YouTube or blogs can open up different ways to make money, like ads and sponsorships. Passive income from rental properties, stock dividends, and online courses can also help secure your financial future.

To build wealth, explore the many opportunities for diversified income that match your skills and interests. By creating multiple income streams, you can work towards financial freedom and long-term success.

"Passive income includes money earned from sources like rental properties, stock dividends, online courses, and projects where little active involvement is required."

The Cash Flow Quadrant: Your Blueprint to Wealth

Starting your journey to financial freedom begins with the Cash Flow Quadrant. This model was created by Robert Kiyosaki. It shows four ways to make money: Employee (E), Self-Employed (S), Business Owner (B), and Investor (I). Each has different levels of risk and potential for wealth.

Employee Quadrant: Trading Time for Money

People in the "E" quadrant get a steady paycheck by trading their time. They look for job security and benefits. But, they pay a high tax rate, about 40%, and can't easily increase their income. Moving past the "E" quadrant is key to financial freedom.

Self-Employed: Building Personal Brand Value

The "S" quadrant is for freelancers and small business owners. They have more control but face a high tax rate, about 60%. To succeed, they must build their personal brand and learn skills for the "B" quadrant.

Business Owner: Leveraging Systems and People

In the "B" quadrant, business owners focus on systems and teams, not just their time. They pay about 20% in taxes. This quadrant offers more wealth-building potential than "E" and "S" quadrants.

Investor: Making Money Work for You

The "I" quadrant is for those who make their money work for them. They might pay 0% in taxes. By investing in things like real estate and stocks, they can achieve financial independence.

The aim is to move up the quadrants to become an investor. This path requires taking risks, learning new skills, and building systems and passive income. The Cash Flow Quadrant offers a roadmap to lasting wealth and security.

"The key to financial freedom and great wealth is a person's ability to convert earned income into passive income and/or portfolio income." - Robert Kiyosaki

Building Passive Income for Long-Term Success

Many people dream of true financial freedom. The secret to achieving this is through passive income. This way, your money works for you, not the other way around. By exploring options like real estate, dividend stocks, and online businesses, you can earn money without constant effort.

Real estate investing is a promising path. Rental properties can bring in steady income and even grow in value. Dividend stocks also offer regular payments without needing to manage the companies directly.

Starting passive income may take time or money upfront. But the long-term gains are worth it. With multiple income streams, you can achieve financial independence. This means your money works for you, freeing you to pursue your passions or enjoy time with loved ones.

Passive Income StrategyPotential BenefitsPotential DrawbacksReal Estate InvestingSteady rental income, potential for property value appreciationRequires significant upfront investment, management responsibilitiesDividend StocksConsistent dividend payments, potential for long-term capital growthPotential market volatility, requires research and portfolio managementOnline Businesses (e.g., e-commerce, affiliate marketing)Scalable income potential, flexibility, lower overhead costsRequires upfront investment of time and effort, competition can be fierce

Diversify your passive income sources and keep reinvesting. This builds a strong financial base for the future. Embrace passive income to achieve true financial freedom.

"The key to achieving financial freedom is to have your money work for you, not you working for your money." - Warren Buffett

Strategic Cash Flow Management Techniques

Knowing how to manage cash flow is key for keeping finances stable and planning for the future. Using smart cash flow management can help businesses face financial hurdles and find new ways to grow.

Monitoring and Tracking Systems

It's important to keep an eye on money coming in and going out. With the help of real-time data and advanced analytics, businesses can spot trends and make better financial choices.

Cash Flow Forecasting Methods

Being able to predict cash flow is vital for planning ahead. By using past data, industry trends, and predictive models, companies can make accurate forecasts. This helps them plan for expenses, find new revenue sources, and keep their finances liquid.

Risk Management Strategies

Good cash flow management means having solid risk management plans. This includes keeping enough cash on hand, diversifying income, and having backup plans for unexpected events. By tackling risks head-on, businesses can protect their finances and support their growth goals.

By using these cash flow management strategies, companies can improve their financial knowledge, optimize their cash flow, and plan for the future. This approach helps businesses overcome financial challenges, grab opportunities, and achieve financial freedom in the long run.

Investing for Sustainable Cash Flow

As an investor, building a portfolio that generates steady cash flow is crucial for long-term success. Investment strategiesthat focus on portfolio diversification and long-term investing are key to this goal.

Creating a diversified portfolio with income-generating assets is a smart move. This includes dividend-paying stocks, bonds, and real estate investment trusts (REITs). These assets provide a steady cash flow, which can be reinvested to grow your wealth over time.

Reinvesting dividends and using compound interest are powerful strategies. By consistently reinvesting your earnings, you can see your portfolio grow steadily in value. This is the power of compound growth.

Another key aspect is focusing on long-term, reliable returns. This means being patient and disciplined. It's about building wealth over time, not chasing quick gains.

"The key to financial freedom is to make your money work for you, not the other way around." - Robert Kiyosaki

By following these principles, you can build a portfolio that generates steady income. This helps you reach your financial goals over the long run.

Conclusion

Getting to financial freedom is a journey with many steps. I need to increase my income, manage my cash flow well, and build passive income. This way, I can reach true financial independence and follow my dreams without money worries.

In this article, I looked at the importance of managing cash flow and the path to financial freedom. I also learned about strategies for handling big expenses and the benefits of having multiple income sources. Understanding the Cash Flow Quadrant and making smart investments are crucial for building wealth and security.

Thinking back on what I've learned, I see that financial freedom is more than just money. It's about living life as I want. By keeping a long-term view and using these strategies, I aim for a future where my investments and passive income cover my costs. This will let me focus on my passions and leave a lasting legacy.

The Flow of Money

I like to start my seminars with a disclaimer. I make sure that the audience understands that what I talk about is not how to make money. My whole message is about how to manage money, and more specifically, how to invest it.

I think a lot of people have a hard time making that distinction. Earning money is a whole world unto itself. Everyone has their own, unique way of trading value for money, and if I were to make any sort of comment on those activities it would be to earn as much as you can. Once you have money coming in, then we can talk,

When they say to “Pay yourself first” that means you insert an activity between Earning and spending. Most people skip this step. They earn, then spend and hope there is some left over. In my experience, there isn’t usually much left over. It is far too tempting to spend all that you earn and then some. We want everything NOW. We want the latest and greatest gadget. We want to enjoy life now and pay for it later.

My only problem with this way of living is that it is precarious. It works fine if you:

1. Earn lots of money

2. Spend less than you earn

3. Plan on working forever

Personally, I find it difficult to do all three of these things. So what is the solution? To pay myself first.

I take all the money I earn and feed it into my money machine and then I spend what the machine allows me to. You can learn more about my money machine here.

But people seem to ignore the first part of the sequence. Income.

Earning money

You can only be responsible with money if you earn some. You need input in order to control the output. My ideas and methods are for people who provide value to the world and are compensated for that value. My plan will not work if you have no money.

The good news?

The amount of money you earn is not as important as what you do with it. If you manage it well and invest properly, you will get ahead no matter how much you bring home. There is no question. Of course, the more you earn the faster financial freedom will find you, but I think the psychological benefits of just knowing you have a plan and are moving in the right financial direction is half the battle. You will make all kinds of excellent decisions once you are committed to growing that which you already have.

So please take earning money seriously. You need money to survive in this world and the more of it you earn the more of it you can keep and put to work for you. I have written articles about multiple streams of income before, as I feel that having more than one source of income is a great idea in order to protect you from job loss, business failure and other unforeseen events, as well as it increases the amount you earn, therefore accelerating your journey to financial abundance. I think it is a great idea, but I do not teach any methods to do so. That is not my expertise.

So if you have earning money figured out, I encourage you to insert money management/investing into the flowchart. Before you spend it, put it to work. Money can be difficult to come by and we usually have to work really hard to earn it. Don't let that hard work go to waste. Discipline yourself to compound that hard work by having your money earn you more money in perpetuity. There is no better feeling than having money grow instead of shrink.

Money is such an integral part of our lives we sometimes forget how much we rely on it. It is everything we do. It costs money to pay for life, and the quality of our life with always have a certain degree of dependence on our income. Crime and addiction and suffering tend to be more prevalent in impoverished locations than affluent ones. What does that tell you? Ignoring money might not be the best plan.

Also, there is no righteousness in poverty. That is a myth. There are good and bad people in all walks of life. You always have that choice, unless poverty and desperation limit your choices.

If you have a source of income, my ideas are for you. If you are looking to get rich quick, I am not your guy. Just so we are on the same page.

My hope is that my ideas can help you to find financial peace and optimism. I believe that anyone can improve their situation by applying the principles I teach in my books and courses.

Money Makes Me Happy

Money makes me sad

Money is hard to acquire and easy to spend. This is the universal truth that everyone has experienced. Yet. If we really think about it, we are the ones making that saying true. We are the ones who make all of our spending decisions, and we are the ones who decide to add value to the-world in exchange for money. So if, money makes you sad, you are doing too much of the former and not enough of the latter.

Now you may be thinking that providing value to the world is hard work, which sucks, and spending money take s very little effort, which is not so sucky. I agree, yet if you examine human nature deeply enough you will find a strange truth. That truth is in the form of purpose.

Purpose is the pursuit of a worthy goal. It is not the attainment of a worthy goal, just the pursuit of it. It is as Ghandi said,

“The path is the goal”

Some have replaced the word "purpose", with the word "success". I would argue that both words actually reference the ultimate goal - happiness.

Psychology dictates that we, as human beings, require a sense of purpose to be happy. So having a purpose leads to happiness. If the goal (happiness) is to be achieve through purpose (the path) then logic would assume that we probably will not find happiness in idleness. We need to move. We need to actually be doing something.

My brilliant wife has a few sayings that I live by -  My favourite of which is,

"What can I do?"

This means that no matter your circumstances, you tend to always have SOMETHING that you can do to move forward. It is like in hockey - if you don't have a play, keep skating. As the situation moves, so do the options. Life is no different.

So money can make you sad or it can make you happy. depending on whether you are using it to move forward or not. Moving forward usually involves looking into the future.

A famous study showed that the biggest factor determining a person's success in life was not intelligence, good looks, connections or even race - it was long term perspective. You are moving forward if you are keeping the long-term in mind. If you invest your time, if you invest your money, if you invest in yourself, you are putting energy towards the future and you will receive payment in due course.

There are many stories of entrepreneurs that have worked at building a successful business for decades and finally they sell the company for a fortune and retire to live "the good life". In most cases, they end up bored and miserable within a very short time, because doing nothing removes their sense of purpose. They thought that sitting on a beach sipping Piña Coladas would bring them joy and contentment but it didn't.

This has nothing to do with being a workaholic or a type 'A' individual. This has everything to do with feeling useful. We all must strive for something to be happy. We need adversity. We need to grow. I often refer to the saying "you are either growing or you are dying". There is no staying the same. Nothing stays static in a living ecosystem. Because our universe is vibrating and blinking in and out of existence constantly, movement is the fundamental state of all things. The torus of creation and destruction is ever-flowing and we can go with the flow or be miserable. This means we need to always be creating new, and leaving something old behind us.

Change is the only constant so we must choose to change consciously or allow ourselves to be swept away by the winds of change.

Money makes me happy

How?

By making most of my money decisions in the direction of my purpose.

For example:

I value my time more than anything. If I can have complete control over how I spend or invest my time, I am a happy guy. So, if I direct my money towards things that support my goal of controlling my time, I am in alignment with my purpose, and therefore, money is making me happy.

If I spend my money on things that steal my time, I am sad. If I spend money on a sports car that puts me in debt, and I have to spend 5 more years working at a job I hate to pay for it, then I have not aligned with my purpose. I have stolen my time (my highest priority) and given it to my desire for status ( a MUCH lower priority). Once I know what I truly value, and how much it will cost, I will funnel my money to that end.

If I take my hard earned money and invest it in income-paying assets, I am buying back time. I am using money to create the life I want. If I spend money on a book or a course or a seminar that teaches me how to earn more money, then I am investing in my highest priority, as having more money to invest in income producing assets buys me more time freedom. Money is therefore making me happy.

So I guess the old saying money doesn't buy happiness is false. It does buy happiness. But it can buy sadness too. You have to know what it is that you truly value to be happy. You must know your purpose. You must have activities (movement) that makes you feel alive. Money, more often than not, allows you to figure what that is, and then do more of it.

If you are living a life where you feel like everything you do is dictated by your need to barely keep your head above water then you are a slave. You are not free, and the solution is not necessarily more money. It is figuring out what it is that you value and funneling the money you already have in that direction - deliberately. Money doesn't solve problems, but it is the fuel for the solutions.

So I guess I could say money doesn't make me happy, but it allows me to have the time, energy and means to make myself happy. So once you figure out what you truly value, figure out how much its going to cost and then put your money to work. Now your money has a purpose too. How nice is that?

Spending vs investing

The self-discipline to build wealth is often equated to thrift. The golden rule being: spend less than you earn. As much as this is the tenet by which I live my life, I have to broaden the scope to include more context.

It is hard to build wealth. Not only do you need to earn money somehow, which is never easy, but you also have to not spend it. Of course, paying yourself first by investing is the name of the game, I feel we sometimes need reminding of the old standby:

Money is hard to get and easy to get rid of.

This not only includes daily, monthly and yearly spending habits, but it also includes money spending opportunities disguised as money "saving" opportunities.

For instance, you may go to the mall and see something "on sale" that you would like. You feel like you made a good decision because it was on sale, yet you probably shouldn't have bought it at all. This also applies to many things. In general, as you move about in the world somebody is always trying to sell you something. You must keep this in mind and remember to only part with your money when it gets you something valuable.

Money is a representation of an exchange in value. If you truly value something, then spending money to acquire it is a sane thing to do. But if you just want something , it does not mean it has value.

It has been said lately that things go down in value over time, but experiences go up in value. We tend to get bored with things we buy but tend to colour experiences positively as we reminisce about them. A good time gets better as it ages, like fine wine and my wife.

So it would make sense for us to really make sure we have our values defined before we embark on our wealth creation journey. A well-thought-out hierarchy of values is a solid foundation to make spending decisions going forward.

For instance - if you want financial freedom you need to figure out why you want it. If it is to have the freedom to do as you please with your time, then that is different than wanting to impress your friends. You can impress your friends by just racking up a pile of debt and having all the latest toys. I don't recommend this but to each his own. Time freedom would require a totally different strategy and habits.

It is far easier to stick to a budget if you have a large goal, backed by values to keep you on track. Giving your family a better life might be valuable enough to you to inspire you to tighten your belt about a few things. It is all a matter of focusing on what is truly most important to you. Like the sand vs. big rocks analogy.

Always seeking short term pleasure is another way to make sure you never align with your values. You may argue that short term pleasure and continuous dopamine hits are something that you value, but I rarely see this behaviour result in long term or lasting happiness. It tends to end up in addiction, poverty and frustration.

As I have talked about before, most things in this life that are truly worthwhile take a long time to create, are not cheap, and require effort. If you believe otherwise you have fallen victim to the myth that life is supposed to be easy and pain free. This is just not the nature of existence.

So not only do we want to manage our money based on math, but also on our very own personal values. We need to make our behaviours stem from our deepest desires, not our whimsical notions that come and go like the latest fashion trends. Our values are our foundation and we will have far more access to self-discipline when we stand upon our core beliefs.

Invest in yourself.

I wrote a book called invest in yourself where I suggest several ways to manage your money to maximize your returns and approach investing in unconventional ways. As helpful as this book was, I believe I forgot to include the very important difference between spending and investing.

For instance, you can spend time or invest time. You can spend time playing video games which leaves you with nothing at the end except less time. If you invest your time, it is time you spend improving yourself so in the end you have more potential value. Working out at the gym is an investment of time. Reading and learning is an investment of time. Watching TV is just spending time because you did not grow, and I believe you are either growing or dying - there is no staying the same.

Investing in yourself means improving your skills, knowledge or status. If you learn to do highly valued things, people will compensate you greatly for those skills. The only difference between you and a billionaire is that they know something you don't. It is that simple. You spending time and effort to learn those unknown things is an investment because you are coming out the other side with more earning potential - or in other words, you are more valuable. You only earn money in direct proportion to the scale of your value to the marketplace.

Investing your money means spending it on something that will create value. Investing it in companies that provide value is adding value by proxy. You often can receive value in return because of this. Investing your money in education for yourself makes you more valuable. This creates value and it should be returned to you in the form of money, status or respect.

So always keep in mind the difference between spending and investing. Are you adding value or not? Are you creating or consuming? Which do you think aligns with your values? Money either grows or dies as well. Spending money is a path to zero, while investing money is a path to infinity. Which will you choose?

The MOST Passive of all Incomes

The term "passive income" is thrown around on the internet and in personal finance to describe many things. The key part of that phrase is the word "passive".

The common interpretation of this concept is "money while you sleep". The money arrives into your bank account and you have to do absolutely nothing for it to keep coming.

I have heard it used for investment income, real estate income, side-hustle income and many more. Every one of these vehicles is awesome for creating income, but they are far from passive.

Real estate is a lot of work, and requires a lot of know-how. It is quite easy to get yourself into big trouble in real estate if you don't know what you are doing. Plus, the barriers to entry can be tough to overcome.

Side hustles are just that - a HUSTLE. You have to hustle to get it off the ground. This means work. Long hours and personal sacrifice are the price you pay here. Starting and building a successful business is not for the faint of heart.

Investing.

I believe investing in dividend-bearing blue chip stocks is as close to "real" passive income as you can get. You buy a stock and it pays you a quarterly dividend forever.. and you do nothing. A good stock will even give you a raise (increase their dividend payout) from time to time. To me, this is the ultimate in passivity.

Of course, I am not oblivious to the fact that coming up with the money to buy the stock in the first place is a lot of work. This is definitely not passive and can be quite hard when you have other bills to pay. I get it. But the cool thing is you can start small. You can become a dividend investor with ONE share.

But let's look at some other cool things about dividends.

Compounding

Many brokerages offer a "dividend reinvestment" plan, whereby they will automatically buy more stocks with any dividend distributions you receive. This compounds your wealth. This increases passivity as you no longer are working for your initial investment. The stocks are basically buying themselves. This is pretty awesome. The compounding effect is, as you buy more stock, you receive more dividends, which buys even more stock, which increases the divided - you get it. It compounds. The 8th wonder of the world, according to Mr. Einstein.

Taxes

In the US and Canada, dividend income is taxed at a much lower rate than most other income. It can come in the form of tax credits or a special tax rate. Either way, you can earn a smaller rate of return with dividends and still come out ahead as you will keep more of what you earn than, say, interest income.

Diversification

Many people think that diversification is for safety. Yes it is, but the other cool thing about diversification is the cash flow opportunities. Every company has its own yearly cycle for its dividend payout, based on their corporate "year end" and many other factors. This means that not every company pays out their dividends on the same day. If you invest in the right combination of companies, you can increase the number of "pay checks" you receive every month. If you get crazy, you could potentially receive money every single day from dividends. Not the best strategy, but you get the point. You don't have to wait 3 months to receive your next payout. You can diversify and get money every month or even every week. I like that.

Reliability

I like to stick to big companies that have been paying out dividends for decades and sell something that doesn't go out of style. The likelihood of them going out of business is very slim, and they tend to weather the storms of economic volatility quite well. Many companies keep paying dividends even through recessions and pandemics. The odd one even increases their distributions during these time. This provides far more peace of mind that the rent cheque from a tenant or a fickle consumer demographic.

Time

The best thing about dividends as passive income is the time they buy you. Once you buy the stocks the dividends start coming and if you set up your automation correctly, you really have nothing else to do but collect money. This gives you the time freedom to pursue other activities. You can use this time for any number of things. If you use this time to earn more money, and then invest it, you are compounding your time investment. Each dollar you earn without working gives you the opportunity to earn more. It is not only leveraging time, as you are effectively duplicating yourself, you are compounding it as well., This is the ultimate goal. You are not only compounding and leveraging your money, but also your time. Time is a far more precious resource than money and the truly wise know this.

If you are interested in learning more about these concepts and a practical plan for impelneting them into your own life, I humbly suggest you consider reading my books or taking my online course. You can invest in yourself and learn to enjoy the MOST passive income.

How to Get a Raise

When you are working for an employer, you are at the mercy of their whims as to whether you ever receive a pay raise or not. Is this true?

When you start out you negotiate a salary or you accept the position as advertised.

You work there for a while, then you feel like you need a raise. What do you do?

Here are the reasons an employer will pay you more:

You make the employer more money

There is no other reason.

If you get better at your job, the employer receives more productivity per hour from you and less headaches. This makes him more money

If you get a promotion, you will earn more money because you now have more responsibly. The higher you go in an organization, the more your daily activities impact the bottom line. Therefore, you are getting promoted and paid more because you are making the employer more money.

You are nice

This may translate into getting along with your peers and then promoting a positive workplace culture, which could result in less absenteeism and more productivity. More productivity means more money for your employer - nothing else. He doesn't care if you are nice if there is no effect on the bottom line.

Reasons not to receive a raise

Seniority

This is nonsense. It is a holdover from the olden days when unions were necessary. You do not deserve more money just because you have worked there for a long time. If you are doing the same job with the same efficiency, you are worth the same to the employer.

If your seniority means you are more efficient then see point #1 above - it is not the years it is the fact you are very good at your job due to experience.

Cost of living

Many would argue that you deserve a raise because the cost of living is higher. If it is more expensive to live, then you are technically getting paid less every year as inflation rises. True, but if your employers profits are not going up in kind, you do not deserve a raise.

Loyalty

Loyalty means nothing. An employer will value you to the extent that you make his life easier and he makes money from your output. If you decide to go work somewhere else, and he can hire someone to replace you with the same output, it doesn't matter. If you have a highly specialized skill or are irreplaceable then you may have a leg to stand on.

So if you want to earn more money, provide more value to those who pay you. This applies to employees as well as entrepreneurs. If you want more sales, more clients or more off anything, provide more value and people will gladly pay you for it. You can only exchange value for value. There is very little goodwill out there that will compensate you for being a good human being.

You are really only as valuable as what you do for other people.

This article changed my life.

6 Harsh Truths That Will Make You a Better Person

Despite the salty language, it is the truth. It makes a very good point about the reality of life and you would do well to read it and integrate it into your psyche.

This means you have to give to get. If you want a raise, give more. If you can't figure out a way to make what you do more valuable, do more of it.

Work longer hours.

Double your output.

Improve the quality of our output.

Do what you do faster.

Figure out ways to make your boss more money. Help your supervisor to succeed. You can only be rewarded for giving, not taking.

At first, this whole concept sounds awful. It seems cold and harsh. I begin to question the inner workings of people and wonder if the doomsayers are right. Perhaps we are headed for a dystopian future where we eat each other. I don't know.

But in essence, this is actually how everything works, including the good stuff. The basis for all human interaction is the exchange of value for value.

In a healthy conversation there is an exchange of information between two people where each sends and receives the requested content. In a one-sided conversation only one person benefits. This is unhealthy and non-productive as the person who didn't get to speak will be less likely to want to engage in further conversation with the person who dominated the interaction.

In love, we tend to think of a healthy relationship as one where two people love each other, and they each give and receive equal amounts of love in the form that they prefer. Unrequited love is no fun.

In friendship it is the same. Good friends enjoy each other's company. They each get something out of the relationship or it usually fades over time. The value in this situation could be defined as companionship, laughter or intellectual stimulation. Value takes many forms.

In business it is no different. If I have something you want and you give me something that I want, we have the means for a business transaction. You have an iPAD and I have money. I want an iPAD and you want money. I give you money and you give me an iPAD. We both walk away happy.

There is no other way the world works, unless you are a psychopath and just take without giving.

I first learned of this concept from a man names Robert J Ringer in one of his books. I don’t remember which one but they are all worth reading.

I know there are some people out there who will not be inclined to provide fair value in exchange for your contribution. This happens. The best thing you can do is find another situation to exchange value in. These people will eventually be exposed for who they are and will have a harder time getting value from anyone in the future.

So if you want a raise it is in your power. You can control it by finding out what your boss values and providing more of that. You are not subject to their whims. You can appeal to the basic function of human interaction. There is no better selling point than that. You give more, therefore you should receive more. If they don't want to give more, then they can find someone else to take advantage of. You respect yourself too much to be under-valued.

You can also give yourself a raise by learning about my BYOB investing strategy. By buying additional blue-chip, dividend-bearing stocks you are giving yourself a raise and you don't really have to work any harder for it. They may even give you a raise without you asking for it if they have a good year and they raise their dividend. Yay!

What to do with your dividends

Dividends are awesome. I love them. They are the best thing to come along since compound interest. I love being able to wake up and see that money came into my bank account while I slept, without me doing anything at all but live my life.

As cool as dividends are, I also believe money needs to be useful. It needs to serve a purpose. I like to think of it as "putting it to work". I rarely think in terms of "spending" money, even though I spend it just like everybody else does, I just like to re-frame it in my mind. I like to believe every dollar I use is serving a definite purpose. Sometimes. It's purpose is a mundane thing like food, which is keeping me alive. Other times, it is a sophisticated as "making my dreams come true', like when I invest for the long term.

So to simplify it, I like to maintain a balanced approach to money and its purposes.

The old argument of "should I pay off debt or invest" is constantly nagging at us all. I am no exception. I have bills to pay, and financial aspirations to fund. I want to do both. So I make a conscious effort to nurture both "purposes".

The plan

I am a simple man, so I have a simple plan. (Hey! That rhymed!)

Every year I figure out how much I am going to earn from dividends over the next 12 months. I then take that amount and split it in 2. Very simple.

I take half of my projected dividends and I re-invest in more dividend bearing stock. I take the other half and I give it to my wife. She then uses this money for all of our everyday needs. Mostly we use it for a vacation fund, and the feeling of going on a fully-funded vacation that is not putting us in debt or infringing upon our regular everyday expenses is awesome. It is a guilt free experience.

Of course, the benefit of this plan is that it is predictable. Each year the amount of dividends we earn goes up, and so our 50/50 split does too. We are investing more each year and spending more too. It is a win/win. I am being sensible and enjoying life at the same time. Plus, this is all happening with money that I didn't have to trade my time for.

The nitty gritty

Every year, when I calculate our impending dividend payments, I borrow that amount from our margin account. I then buy shares with half (within the margin account) and I put the rest on our credit card. The dividends then pay off the margin account over the year. The interest on the loan is covered too, as it all comes out of the same account and the additional shares I bought cover much of the interest. My calculations are based on last years yield. If any of my blue-chip friends decide to give me a raise (which they regularly do) it all goes better. The loan gets paid off sooner and the next year gets re-calculated with the new numbers. It almost never gets worse..

I, of course, am contributing to the margin account from my other earned money so I am paying back the loan a lot quicker than 12 months, but in the event my earned income is interrupted for any reason, the margin loan is always paid back.

You may remember that I mentioned putting half on our credit card. This is because we pay for EVERYTHING with our credit card. This way we earn an obscene number of "points" every year and we use them to fund our vacations. We love to travel, so this helps us live the life of our dreams without having to come up with the cash. I am not concerned with the interest we pay on the credit card because dividends are paying for it. No harm no foul.

Now if you are just starting out or enjoy a less affluent lifestyle, you can always change up your ratio of investing to credit card debt. You may want to invest 80% of your dividends to new investments and only 20% to debt. Its up to you. You may be buried under a mountain of debt and use 80% for that. Not a problem. I suggest you make whatever decisions work for your circumstances, but I really would encourage you to always put SOME into the investment side. The only way you are going to grow your system is by contributing to it. Even if it is just 10%, you will still see the benefits over time. As soon as you neglect your portfolio, you will have stalled. Keep the momentum, even if it is just a pittance. The habit will eventually become a way of life and you will never regret it.

If you want to learn more about my investing strategies and some cool ways to manage money, then treat yourself to one of my books or even my online training. I look forward to seeing your progress!

Income Can Be Bought

Nothing like starting with the punchline, but that is the whole point of this article.

As I have mentioned in my books and previous articles, getting richer is your most advantageous activity if you want more freedom.

I always come back to a few quotes I love:

“We cannot solve our problems with the same thinking we used when we created them.” - Albert Einstein

“Don’t wish it was easier, wish you were better. Don’t wish for less problems, wish for more skills. Don’t wish for less challenge, wish for more wisdom.” - Jim Rohn

I like to drive the point home by asking people if the problems they had in junior high school would still seem like problems now. So ask yourself,

Did the problem get smaller or did you get bigger? The things that sent you into a tizzy in middle school are laughable now. You grew. You learned more and you developed more life skills. The problem didn't change. You did.

The same holds true for money problems. A $5000 debt may seem like a big problem now, but if you grow and become richer, it will be less of a problem. It is still $5000 but your ability to deal with it has changed.

This is why I always say get richer. It also solves the dilemma of "should I pay off debt or invest?". .

Always invest

Now the other mantra I repeat over and over again is:

Cash flow is king.

Always create more cash flow. The more money coming in every month the better.

The long-term solution to your money problems is to earn more money.

This may seem like an over-simplification but it is not. Just make more money.

How?

Well if you are a regular working stiff you might have a problem doing this. You may have to ask for a raise. You may have to work longer hours, or upgrade your skills in order to earn more. This is because you are at the mercy of your employer to decide whether you are worth paying more money or not.

In my BYOB strategy, YOU are the king. YOU decide how much money you make, borrow and invest.

So here is the simplified idea. Income can be bought.

How?

You buy assets that generate cash flow.

This can mean all sorts of things:

1. Real estate

2. Businesses

3. Dividend bearing stocks

4. Peer to Peer lending

5. Side hustles

There a ton of ways to generate income.

Let's use "dividend bearing stocks" as an example as this is my favourite vehicle and is the most versatile.

As you may know, many companies distribute a portion of their profits each month/quarter with their shareholders. This means, for every share you own, you get a specified payout per share. Each company that does this has a different amount depending on how big they are and how profitable they are.

So if you bought 1 share of Scotiabank (BNS), as of today they would pay you $1.06 every quarter just for owning that stock certificate. You will receive this "free money" into your brokerage account like clockwork whether you pay attention to it or not.

And it gets better. They are likely to give you a raise from time to time. This particular company has increased their dividend nearly every year for about 100 years. I figure thats a pretty good track record.

So back to the philosophy of buying income - now you see that you can choose to increase your income just by investing in a great company. You are earning more money and you really don't have to work harder or invest more time. It is very simple.

Of course, the reality is, this will take time to really make a difference. You will not get rich overnight doing this. But I will say, you will be richer than you were yesterday. You will be earning more money . Bit by bit you will increase your cash flow and this will increase your ability to solve problems. Nice work if you can get it.

The wonderful part of this is you can start small. You can invest as little or as much as you can afford and still be moving in the right direction. This will create momentum and soon you will be addicted. You will build upon your 'wins' and eventually you will not be able to imagine how you lived before.

I implore you to manage your money so that you can have some extra to invest. I suggest you spend less than you earn and make it a habit. You will have to think long-term, but it will pay off.

“Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative and creation, there is one elementary truth the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then providence moves too.

All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one's favour all manner of unforeseen incidents, meetings and material assistance which no man could have dreamed would have come his way. I have learned a deep respect for one of Goethe's couplets:
Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now.”

― William Hutchison Murray, The Scottish Himalayan Expedition

I use the dividend example to explain the concept, but it also applies to the other income ideas I mentioned.

You can buy a business that is profitable.

You can buy a rental property that earns more than it costs.

You can lend your money to others and collect interest

You can invest your time, energy and creativity into a side-hustle that generates income

There are so many ways to generate income. Do not be paralyzed by fear. Do not wait until the time is right. It will never be right. Do not scoff because the amounts are small. Scale is irrelevant. It is the actually doing of it that makes you spectacular. If you have made the decision to pursue any of these income generating ideas and are ACTUALLY doing it, you are in the 1%. You are elite and it will do nothing but grow. It will grow your wealth, it will grow your power and it will grow your mind. You will never be able to go back to who you were before.

Welcome to the high country, my friends.

Left Brain vs. Right Brain

When it comes to money, personal finance and things of that ilk, we always jump right to the logical left brain.

"This is all about math, right?"

"Why yes, yes it is. You must do a thorough analysis and wear out the buttons on your calculator to see if any money-related activity is worthwhile. Especially when it comes to being responsible with money. You must have a sober and rational view of all things having to do with your finances."

I agree with this.

..AND

I also believe we need to use the other half of our brain too.

Some money gurus out there say things like,

"Building wealth should be boring"

"Take emotions out of your investing decisions"

"Pay off the highest interest rate loan first"

"Spend less than you earn and invest the difference"

All of these quips are very much true. But they do not tell the whole story.

The reason I use the word "story" is because that is how we tend to think as human beings. We tell ourselves stories and fables to make sense of the world; more specifically, to try to define the "why" we do what we do. We are equally driven by logic AND emotions. We are not Vulcans (as much as some of us want to be..)

So having empowering and useful "stories" can be super helpful when it comes to good money management habits. I believe we SHOULD leverage our emotions when it comes to money.

Money emotions

Many people will immediately come up with a long list of NEGATIVE emotions surrounding money. Their relationship with wealth is usually somewhat complicated. Our parents told us that money doesn't grow on trees. We may have even seen our folks argue and stress about money. Common attitudes prevail such as,

"There's too much month at the end of the money"

"Trying to make ends meet"

It goes on and on.,

My theory is we are so emotional about money because it represents survival itself. We need it to live. In our western society nothing is free. We need money for the basics - food, shelter clothing. In some western countries you also need money for health care and education. This is a reality that is hard to swallow, especially if you have an unhealthy emotional relationship with money.

Make friends with money

Money is neither good nor bad. It is just a means of exchange and a representation of value. You can do good with it and you can do evil with it equally well. Money doesn't care.

One of my tenets that I constantly preach to my readers is - you should be in control of your money.

This has a few connotations but here is what I mean

1. You should always have a proactive approach to your money. You should never feel like a victim when it comes to finances. You are ALWAYS in control.

This means,

• You are in control of what you earn.

• You are in control of what you spend

• You are in control of how and where you invest

• You are in control of keeping track of your money

• You are in control of your plan

If you feel like any of the above are out of your control, you are not taking responsibility for your financial life. You MUST change your attitude about these ideas and you MUST do it now. The truth is, you are ALWAYS in control of the above. You are the master of your life. Both hemispheres of your brain will benefit from this ownership mindset.

2. Even if you rely on someone else to do your investing and/or money management, you should ALWAYS be very aware of what is going on. Sticking your head in the sand is not safe, nor healthy. As Oprah Winfrey said,

"Always sign your own checks"

Right brain leverage

Since we are not completely logical creatures, we need to find a way to use our "human tendencies" to help us in our financial journey. Instead of letting right-brain emotions sabotage all of our left-brain's hard work, let's give it a supporting role.

I have heard that the psychology of winning has been studied extensively and they have come up with some interesting nuggets that we can use in our journey to financial freedom.

1. Winning is contagious

This doesn't mean what you think it means. Other people will not "catch" winning from you. This contagion means it permits every aspect of your life. It creates a sort of momentum that drives and accelerates you mentally, emotionally and physically. This is why sports teams tend to experience "winning streaks". Winning builds upon itself. Winning creates a mindset that leans towards expecting to win. You gain confidence and know-how. You tend to drive in the direction you are looking.

So my suggestion is this. Figure out what the best financial plan is for you to get to where you want to go, and then do it. Do it consistently and without deviation. Here is the key point:

The scale at what you do it is irrelevant. If you invest 1 dollar a month into the plan you win. If you receive $0.03 in passive income you win. If you spend 1 dollar less than you brought home you win. The feeling of these "wins" is the same whether it is a large or small amount. You are doing it. This is all that matters. You are doing what the 1% do everyday. This makes you a winner. The scale at which you are winning is an after-effect of your behaviours.

As you gain experience, confidence and momentum, you can then increase your investment to 2 dollars a month,. It doesn't matter. By stringing together enough wins in a row you are building up a mindset and habitual behaviour that will keep building momentum until you are unstoppable.

2. Systems, not goals

I heard recently a person explaining that you should be more interested in building systems instead of setting goals. This has wisdom on so many levels.

1. You can only change your life if YOU change

2. Only YOU can change your life

3. The journey is the destination

4. The path to success is where you will find it.

5. Your daily, monthly and yearly habits will determine your outcomes. Nothing else will.

There is power in building good habits. A habit is something you do consistently enough that you don't have to think about it anymore. You just do it. It seems to take very little willpower or effort once you have it ingrained in your psyche. This is how you can become rich. Make investing and good money habits a part of your life and you will eventually not be able to do anything else. You will always be growing and nurturing your fortune and it will seem to be effortless. Plus, the added bonus that will ensure you stick to it is the feeling you get when you work your plan. Receiving income from your investments feels awesome.

The common factor that is shared by most successful people is having long-term perspective. When your plan spans several years, even decades, you will achieve something worthwhile. Get-rich-quick is not realistic. In our fast-paced modern world we are led to believe that everything should be instant and on-demand. We believe that we should be able to press a button on our smartphone and have anything we want magically appear. Sadly, this is not the case with anything of real value.

Long-term perspective allows us to create good habits that we adhere to without seeing any reward for a long time. We invest our dollar a month for years without seeing any significant returns - yet, insidiously, the cumulative effects are manyfold. We are improving our bank account, our mindset, our habits, our emotional set point and a host of other human sounding things.

We are building the habit of winning over and over again, and creating a system to get us where want to go. This effort become a habit. Not just a behavioural habit, but a thinking habit too. Since we have trained ourselves to make consistently good decisions with money and keep working our system, in the event we start to earn more money, or receive an inheritance or anything that increases our cash on hand, we automatically do the right thing with it. We don't blow it on a new ski-doo. We don't take a luxury vacation or upgrade our lifestyle. We invest it in our system and keep going along. We can't see any other option. This is the power behind creating a system and sticking to it.

Emotions

Building wealth feels good, It really does. I enjoy every single cent I receive from my investments. Yes receiving money feels good, but the really deep emotional contentment occurs because I am responsible for that passive income. I made the decision to invest my money and I made the appropriate sacrifices to make it work. I created the system and I am reaping the rewards. This feeling is unbeatable. Feeling like you have sovereignty over your life is amazing and I'm here to tell you it is yours for the taking. You can create that feeling for yourself just by doing the right things. The scale at which you do them will not diminish the feeling these behaviours create. Being able to say to yourself,

"I invest my money every month in dividend-bearing blue-chip stocks, no matter what, and I receive passive income on a regular basis whether I work or not"

I don't know how you can possibly feel anything but pride and joy when you utter this phrase and it is true. You are not only creating a fortune, you are creating a feeling. You are creating a state of being. You are a human and we are driven my emotions as much as logic so why not create a system that caters to both?

This paradigm is the reason I always say it is better to invest than to pay down debt if you come into extra money. Not for the mathematical advantages, but for the emotional and psychological advantages. It far more compelling and has far greater long-term impact to build a cash-flowing investment portfolio than to have less debt.

So use your emotions. Each of us has a different reason why we do anything. There is no ONE right way to achieve financial freedom, and one size does not fit all. If you tend towards emotions more than logic there is a way. Just use the tools (gifts) that you have and you can achieve success.