Many people have lived their entire lives never really being financially fulfilled. They go to college, study, and earn a degree that really isn’t their first choice, just so they can get out of school quickly and “begin” real life. Before they know it, life is about a family, a house, and bills that never seem to end. When do you pay off a cable bill, the internet or your cell phone bill? Just asking.
Almost from the word “go” people make huge financial mistakes. My life changed when I read Robert Kiyosaki’s book, “Rich Dad, Poor Dad,” where the author reviewed the lives and financial decisions that two influential men had in his life. By looking at the consequences of those choices, the reader is given a very clear and concise choice — be financially educated or work forever for money.
In my 21 years of experience as a financial professional, I have learned a few of the huge mistakes people make when it comes to their finances, beginning with thinking the house in which they live is an asset for them. Now, it is an asset, just for the mortgage holder (the bank) and not you. However, owning an asset where others have to work so that you can make money is a REAL ASSET.
First, learning the definition of an asset that wealthy people have used for decades is the only definition that matters. Second, pay yourself first. Before any another expense, put aside money so that you can buy assets. People have come to me that earn $20,000 a month or more and they are broke. I don’t mean they don’t have a nice car, a nice house and beautiful clothes. They have all of those things and that is precisely why they are living paycheck to paycheck. Another definition worth knowing: Broke = living paycheck to paycheck. Instead, save each month. Deposit 10 percent of your paycheck into a savings account for emergencies, 10 percent into a retirement account, 10 percent into a mid-term investment account (car or house down payment) and donate 10 percent.
Next, select one of these to fight for in your own life: Financial Equality or Financial Freedom? You can’t have both. In fact, my experience has taught me that the more of one you have, the less you have of the other. It is a zero sum game. The more equal pay you want these professions to earn — doctor, garbage collector, schoolteacher — the less valuable any one of them becomes. Do you want a doctor to work on you, or a loved one with the same length of education it took to become a trash collector? Professions that require a higher level of education, training or credentials, such as doctors, lawyers, and engineers, get paid higher salaries. History shows that society found these careers should offer more pay.
Some people are lazy and choose jobs that only require a minimal effort to provide for their basic needs. Notice I did not say they are bad — I think people make a choice. Not everyone has what it takes to be a doctor or lawyer or politician or police officer or firefighter. All of these require different skills, patience, temperament and determination. Just because you do not have IT, does not mean you must be broke.
That’s why financial literacy is key! It can level the playing field in all of the professions. Every person, regardless of career or educational background, can learn to become wealthy and successful, whatever that means to them. Learn the proper definitions from wealthy individuals and not from those that benefit by feeding you a dictionary of poor thinking vocabulary. Save and invest money each month by delaying gratification. Finally, keep your thinking geared to the possibility of results and not envy of possessions. Never be afraid of hard work or working outside the normal world of “paycheck to paycheck.” Today, you literally can learn how to be wealthy.
Arif Halaby is a Certified Estate Planner in California and President/CEO of Total Financial Solutions, Inc., a financial and insurance services company in Santa Clarita with offices extending to the San Fernando Valley, Simi Valley, and Antelope Valley. Contact: 661-753-9683