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Learn crucial money lessons for the changing economy before you earn, save, or spend another dollar.
Right now our economy is reinventing itself. The ways we earn, spend, and save money have been changing since the mid 90’s, but the biggest shift is yet to come. When it does, the work-money relationship we know today will never be the same.
In case you’re not a fan of world history, it’s helpful to know that this type of evolution is both natural and inevitable. It happened with the invention of electricity. It happened with the job economy as things like music, news, and communications became digitized.
Now, it’s happening with money and everything money-related.
The majority of people will get left behind, as you saw happen to the baby-boomer and older generations not long ago.
But the minority of people will learn and prepare today so they’re ready to thrive in years ahead. The minority will adopt a mindset that embraces change instead of fearing it.
In this article, you’ll learn the attitude and abilities you need to adopt in order to succeed in our future economy. You’ll also learn 3 things that every beginner needs to know about money.
It’s not hard. It’s not heavy. It all begins with your mindset.
Your Mindset Begins Here – Are You Poor?
Are you broke? It’s okay to be broke. Broke means you don’t have much money, and that’s something you can change. Broke can be fixed.
Poor is different. Poor is a mindset that prevents you from succeeding. It puts you in a perpetual waiting pattern, relying on the pity of others to get by.
Don’t believe us? Look it up in the dictionary! The word “poor” is defined as…
- Oxford Dictionary: “…attributive (of a person) deserving of pity or sympathy”
- Merriam Webster: “exciting pity”
- Urban Dictionary: “The poor often get jealous of people who have means to fulfill their dreams and goals.”
Jack Ma ought to know. Growing up in a communist country and from a family of modest means, his chances of success were very low.
But Jack was a scrappy kid with determination who never saw himself as poor. He spent decades failing at things like college admittance, careers, and new businesses before founding a successful online store in 1999.
By 2014, Jack’s company, Alibaba, went public with one of the largest initial public offerings in history – 26 billion dollars. Today, Ma is one of the richest people on earth and listed as one of the Forbes “Top 20 Billionaires of 2018.”
Here’s what Alibaba’s founder Jack Ma has to say about the “poor”…
The worst people to serve are the poor people. Give them free, they think it’s a trap.
Tell them it’s a small investment, they’ll say can’t earn much.
Tell them to come in big, they’ll say no money.
Tell them try new things, they’ll say no experience.
Tell them it’s traditional business, they’ll say hard to do.
Tell them it’s a new business model, they’ll say it’s *MLM.
Tell them to run a shop, they’ll say no freedom.
Tell them run new business, they’ll say no expertise.”
(*MLM: multi-level marketing)
It’s a scarce mindset and it can severely limit your growth.
Instead, you want to think different than the majority of people (hence the Minority Mindset) and develop a growth mindset. Having a growth mindset doesn’t just apply to money – it’s a lifestyle.
But for the sake of this article, let’s stick with finances.
Why Financial Literacy is Important
Money is a tool that amplifies who you are.
If you give a bad person money, they’ll have a tool to do more bad. But if you give a good person money, they’ll have a tool to do more good.
It costs money to eat and it costs money to feed other people. If you want to feed hungry mouths and buy roofs for people who can’t afford shelter, it takes money.
*Did you know:
- 2.5 billion people in the world live on $2 a day or less.
- Globally, 783 million people do not have access to clean water.
- An estimated 7500 children die every day from causes related to extreme poverty.
That’s why we need more good people with money.
There’s an Epidemic Growing in Our Country
There’s a growing epidemic in the United States. It’s called financial illiteracy, and it leads to money problems 100% of the time. Did you know:
- The majority of Americans are financially illiterate. *69% have less than $1,000 in savings accounts and about half have zero retirement account savings.
- Money problems were the cause of *100,000 suicides during the recession (from 2008 – 2010).
- Money problems are the *2nd most common reason for the 876,000 divorces that take place in the United States every year.
The fact is, we’re not taught “new money” in school, and it’s a big reason why the majority of people are broke. When was the last time your high school finance class taught you how to become a millionaire on just $4 a day (through compound interest investing)?
You are Responsible to Secure Your Own Financial Security and Retirement
You must become financially literate now in order to live a decent life later on. If you think that you’re going to be able to depend on social security, pensions, and retirements in the future – think again!
In the 10.4 minutes it will take you to finish reading the rest of this article, we’ll give you the information you need to start learning to move and act in a way that secures your financial future.
This knowledge will help you build the kind of wealth that creates better relationships, richer life experiences, and the ability to help others.
Welcome to the Minority Mindset.
3 Things Every Beginner Needs to Know About Money
Times are changing quickly, but a lot of people are still living in the past.
The days where you can just go to school, get a job, work for 50 years, and retire on a healthy pension are over.
There are things about money you must learn in order to adapt to future changes. That’s why it’s so important to understand these 3 concepts about money:
- Money Rewards Value, Not Hard Work.
- Rich People Stay Rich by Living Like They’re Broke.
- You Are Guaranteed To Lose If You Save Your Money.
Once you understand these 3 basics, you’ll be inspired to start thinking about new and better ways you can earn, spend, and save your money. And you’ll be ready to start learning how to make it all happen.
Money Lesson #1: Money Rewards Value, Not Hard Work
It takes hard work to create value. But just working hard isn’t enough. You can work 16 hours a day, 7 days a week and still end up broke.
Your grandparents might not agree with this because they were raised with a strong work ethic and a belief in the “American Dream.” Back then, an honest day’s work would put a roof over your head and food on the table. That’s no longer the case.
In today’s America, 25% of our nation’s homeless are employed.
Among them are your teachers, plumbers, maintenance people, and retail clerks. They sleep where they can and often pay for gym memberships in order to take a shower each day.
- In 2015, more than 300 of New York’s Staten Island full-time city workers were homeless. Their salaries simply weren’t enough to keep up with inflation. Many lived out of their cars and, unable to take showers or change into clean clothes for work.
- On the west coast, things are no better. 10 local governments declared a state of emergency due to the surge in homelessness.
This is happening because of a shift in the way our economy works. In today’s world, the amount of money you earn is directly tied to how much value you bring to the table instead of how many hours you work.
What Does It Means to “Bring Value?”
It means you contribute unique abilities or talents that improve people’s lives or raise a company’s profits. The more significantly you contribute to the success of others, the more value you have to offer.
For example, if you’re flipping burgers at a local burger joint, you don’t add much value because you can easily be replaced.
But if there were only 5 burger flippers in the world and you were one of them, you’d be adding serious value because of the limited supply of burger flippers – and you could demand a lot more money.
If you’re a server at a local restaurant, you probably add great value to the people you serve each day. But if you’re not doing something that stands out and earns the company higher profits, then you can easily be replaced.
Unless you can sing like Luciano Pavarotti while serving food. Then you will bring in more customers and add value to their business.
Value Is Added by Being Different and Creating Something Unique
How much money you make is determined by how valuable your work product is. Aim to provide value that:
- Is unique
- Improves people’s lives
- Solves a problem
The majority of people will learn a skill and get to work earning an hourly or salaried paycheck. But a small percentage of people – the minority – will constantly strive to add value that exceeds the status quo.
Those who think different and do something different than the majority of people outearn the average person because they apply this principle of value over hours.
The price of anything is the amount of life you have to pay for it” – Henry David Thoreau
Ask yourself how much value you are actually creating. Would your boss replace you with a robot if they could? You must begin thinking about your value today in order to survive tomorrow.
Money Lesson #2: Rich People Stay Rich by Living Like They’re Broke
“Rich people stay rich by living like they’re broke. Broke people stay broke by living like they’re rich.” – author unknown
Most people earn money by trading their hours for dollars.
They get paid by the hour and bring home a regular weekly paycheck. Then, they take their earnings and buy, use, toss, and repurchase things – over and over again – for a lifetime.
Work. Get Paid. Spend. Repeat. Get a raise and spend even more. Use credit cards to buy stuff you can’t afford.
The majority of people are caught in a “push-pull” pattern of earning and spending. They live with a huge amount of stress because they’re trying to keep up with society’s expectations of living large while also providing for their families.
The majority of people spend a lifetime chasing the perfect balance. Sadly, they’ll always come up short when compared to the “next guy.”
Rich People Think Different
Rich people live by their own standards instead of letting other people influence their buying decisions.
Not all rich people live the same way. Many squander their earnings and end up bankrupt millionaires. But the ones who make it to “wealthy” status often handle their money differently:
- Mark Zuckerberg drives a $30,000 Volkswagen.
- Bill Gates wears a $10 watch.
- Warren Buffet has lived in the same $30,000 house since 1958.
33-year old marketer Neil Patel has a net income of 30 million dollars. Ranked as one of 2018’s “Top Marketers in the World,” Neil thinks different than the majority of people.
In 2016, Patel got rid of everything he owned. He sold his Las Vegas condo and everything in it. He doesn’t own a car, a bicycle, a boat, or even own a yoga mat. All his possessions fit in a small briefcase and an international-sized carry-on.
Why would someone turn around and get rid of the things he worked so hard to buy? He says that possessions were becoming a distraction to him.
I don’t need stuff to make me happy. In fact, the more stuff I have, the more hassle I’m forced to deal with.” – Neil Patel
He went on to say that life isn’t about the things you have. His house didn’t energize him or fill him with passion. It wasn’t a source of joy.
Relationships with people and life experiences are far more important than buying and repurchasing “stuff.” Letting go of material possessions can be both a source of joy and fuel to build wealth.
Don’t worry, we’re not going to tell you to sell all your possessions or live homeless or not to buy nice things. But thinking different than the majority does involve taking a close look at your spending habits. You have to think for yourself and not let other people or the media convince you that you need more “things.”
When you want to buy something, make sure you can afford it first. A simple way to know if you can afford something is by using our rule of 5, “If you can’t buy 5 of them, you can’t afford 1 of them.”
Rich People Give Back
Warren Buffett has given away more than $46 billion to charity since 2000, and Bill Gates has given $18 billion. More than 168 billionaires across the globe have agreed to give away the majority of their fortune through an initiative called “The Giving Pledge.”
But it’s not just billionaires who are giving back.
Millennials make up 50% of today’s workforce, and if you plan on working with or employing them, then giving back needs to become part of your mindset right now.
According to a recent report by Cone Communications, 75% of Millennials consider a company’s social and environmental commitments when deciding where to work.
- 64% of Millennials won’t take a job from a company that doesn’t have strong Corporate Social Responsibility practices.
- 75% of them say they would take a pay cut to work for a socially responsible company.
- 83% of them say they will be more loyal to companies that help them contribute.
Of course, being rich doesn’t make you a good person, it just makes you – rich. Again money is a tool, what you do with your money is up to you.
But in today’s economy, giving back has a direct effect on the success of your business.
The majority of people will keep pushing forward, planning on giving to charity “someday.” Few will begin by choosing causes that matter to them and make plans to give as they grow.
The important thing is to plan and think things through so you’re prepared when you start earning real money. If you don’t approach your future with the right mindset you will end up burning through money as fast as you earn it. But if you think like the minority, you can grow wealth alongside a rich lifestyle.
Money Lesson #3: You’re Guaranteed to Lose By Saving Your Money
Saving all your money in is a guaranteed path to broke.
Growing up, you were probably taught to work hard and put a percentage of your earnings into a savings account. This worked fine for your parents and grandparents, but things have changed.
In today’s world, investing your money in the bank is a 100% GUARANTEED way to go broke.
Savings Accounts Don’t Earn Enough to Keep up with Inflation
The cost of living goes up by about 3% a year. That’s called “inflation.” So, if a pack of gum costs you $1.00 on January 1st, it should cost you $1.03 by the end of the year.
When you put your money in a savings account, it grows by .03%.
Notice the extra zero before the “3?” It means that at the end of the year your $1.00 has grown to $1.0003. That’s right – $1.0003. Not the $1.03 needed to keep up with inflation.
At the end of the year, the gum costs $1.03, but your dollar is only worth $1.0003. You can no longer afford the gum because you just lost money by putting it in a bank account
Every year that your money sits in a bank account it loses about 2% of its’ value.
So if you have a million dollars in the bank, you lose between $20,000 and $30,000 every year! Your “safe” investment is not growing your money. .
Rule #1: Don’t invest money when you’re guaranteed to lose. Rich people don’t invest their money in a savings account.
Why Do the Banks Push Us to Save Money?
Because they take your money and loan it out to other people at a much higher rate than the .03% they’re paying you.
Want to get a loan for your house? You’ll be paying about 4% interest on your money. And if you take out credit card debt, then you’ll be paying upwards of 20 or 25% interest a year to borrow the money you gave to the bank.
But that’s not all. Through a system called Fractional Lending, banks are able to turn a one dollar deposit into upwards of $20. This way can loan out your one dollar again and again and again, earning 4-25% every time they loan it out.
Banks don’t want you to understand how to manage your money. Now you understand why big banks spend 17 billion dollars a year in advertising.
Now, this doesn’t mean you should never save your money. It is very important to have an emergency fund (we recommend starting with $2,000). However, saving your money just to save it is a losing financial plan.
So what should you do instead? Use your money as a magnet to attract more money by investing your money in investment seeds – things that grow and make you more money.
Embrace Change and Become Financially Literate
Now you understand the 3 most important things every beginner needs to know about money:
- Money rewards value, not hard work.
- Rich people stay rich by living like they’re broke.
- You are guaranteed to lose value by saving your money in the bank.
Remember that your mindset is where wealth begins. Never think of yourself as poor.
Never let other people tell you that you need material things when you can’t afford them. Give back. Educate yourself and invest like crazy.
In our next article, we’ll show you what to do with all that money you earn. You’ll learn about seed investments and how you can get started. Don’t miss it so sign up for our newsletter before you go!
If you want to know more about the homeless crisis and how you can help, visit NationalHomeless.org.
25% of homeless are employed:Parade.com
554,000 homeless in 2017: H.U.D. 2017 State of Homelessness report
2.5 billion people in the world live on $2 a day or less. (Gates Foundation)
Globally, 783 million people do not have access to clean water – (CDC.gov)
Every day, an estimated 7500 children die from causes related to extreme poverty. (World Health Organization)
Money problems were the cause of 100,000 suicides: