Updated: Oct 14, 2020
There is No Knight in Shining Armor
Buckle up Mama, its about to get real.
The destination of our "Golden Years" is hurdling at us at light speed. Nothing is going to slow it down. Nothing. Every single year that passes by is going faster and faster. Are you confident in your retirement plan?
It feels so far away. As a 20-something mom of two, I feel that. I do! I've got two babies, right now to worry about too!
But we've been lulled by a false security blankey that will be ripped out from under us within the next 20 years. We've had this idea that social security will cradle us when we're ready to sit back and enjoy our golden age.
It's time to wake up now, rip off that blankey ourselves, and take control of the future. Because this is the real world where people do outlive their money. Imagine what happens then. Go on. I'll wait. What happens when you actually outlive the money you've saved? Think of the road you're on right now, where does it lead?
These are scary questions to ask ourselves. But they need to be asked. Because you, my friend, need to think them through. I don't want that devastation for you. I want you to do everything in your power to make sure you are taken care of when you're ready to retire. So if you're not there yet - wake up and figure it out.
I will come back to this topic, likely often, but for now you'd better believe that your future deserves your full attention right now.
Its All Up to You Now
Guess what. No one is born financially literate. No one is born with the ability to create and grow wealth. Even though it feels a little unfair, one reason the rich stay rich through generations is because they teach their children how to manage wealth.
I get it, its much nicer to think they stay wealthy because they're all trust fund babies... But the truth is, no matter how much money you are handed, you can always blow it. All of it.
Example: all the lottery winners who end up filing for bankruptcy. Our egos are always hungry for more, and our bank statements tell us we don't know how to manage our money. The more money we're handed, the more we will blow. The answer to your money problems is not more money.
So, if learning to handle money is so important why weren't we taught? Did our parents do us a disservice?
If your parents didn't teach you about managing money and growing wealth, I can almost guarantee that it is because they were not taught either. It blows, I know. You and I are in the same boat.
But as much as it stinks, its up to us to change it now. Its up to us to start learning as much as we can about handling our money. Its up to us to decide when enough is enough and make a real substantial change. We are the ones who get to break the cycle. We are the ones who get to decide to take control.
It is my goal, and I hope it will become yours, to continue to learn about money for the rest of my life. I am, personally, financially illiterate - but at least I can say I'm already way better off than I was just last month. I'm putting in the work to change my family's future.
The Solution to Your Money Problems isn't More Money
Interestingly, an article in the MIT Press Journal found that winning the lottery often did not prevent bankruptcy, it merely delayed it. When people win the lottery their spending habits don't change, only the amount they spend changes. Substantially.
They spend, spend, spend until the money is used up. The same damn thing we do with our monthly income.
The key to becoming wealthy, or to simply fixing your own financial mess is not more money. The key is a set of brand new habits. You cannot expect to continue making the same choices about your money and get different results. Life doesn't work like that.
Yes, you can blow an entire stash of lottery winnings in a relatively short period of time. But you can also take a low income and turn it into something great. One of our biggest downfalls, my biggest downfalls, is that we waste what would be the seeds of our fortune on useless things to feed our ego and simplistic wants.
We chase instant gratification over the slower process of growing wealth. But we can change this at any time.
You Can't Change While Keeping Up With the Joneses
News flash: The Joneses don't care about you. Not in the way you deserve to be cared about. They don't care whether or not you actually do keep up with them. They don't care about the debt you've racked up to look like them. And they certainly don't care about your happiness.
So why are we trying so hard to blend with people who know nothing about us and who don't really care to know anything about us? It is in our human nature to fit in, to be accepted by our peers, and this nature drives us to do some pretty ridiculous things.
One of those ridiculous things is going in debt for items we can't afford so that we can appear to have the money to afford them. We destroy our financial situation in the name of appearances.
Is it worth it to have a negative net worth just to appear to be savvy, chic, stable or wealthy?
I get it, I did it too - sometimes I still mess up and am swayed to purchase things that I really should have waited on. Because I'm human and I like to feel good too. But, writing it all out, it sounds like a pretty rookie move. Something that a millionaire certainly wouldn't do.
When you change this pattern of behavior, there will likely be resistance. It may come from your own heart, your own desire to chase admiration. It could even come from friends and family, the people you don't expect it to come from. But you know what? It's okay that your path looks a little different from theirs - because your going to a different destination. You are making your own success.
And that's a good thing.
Everyone Builds Wealth: Who are you building wealth for?
You're Better Off Without Credit
Its a strange concept, I know. In a world where we're taught that a high credit score is similar to the winning card in life, this thought is a little disorienting. But that's because we've been taught that we need to build our credit.
We've been taught that to get the things we want, we need to go into debt. We go into debt so we can get more debt so we can eventually have massive debt. And that's the big goal? Nah, I'm good.
We have been set up to not only accept, but to want a life filled with interest payments. How are we supposed to get financial peace of mind when our money is always filling up someone else's pockets? We don't. But the company selling us the credit cards, lines, and loans? He might.
Is it possible to benefit from using credit cards if you pay them off every month? Sure. Am I personally responsible enough at this time in my life to do so? Nope. And I know that about myself. I've taken the bait with the best of intentions over and over and over again. Hubby and I both have, and that's why we're in this mess. It hurts to see cash leave our hands, it doesn't hurt (in the moment) to use a credit card - and so the trap is set.
Let's put it as simply as possible. Broke people use credit cards. Wealthy people, they don't need them and they're smart enough to not want them. Every single day you make the choice to live like a wealthy person or to live like a poor person. Give up the credit cards. Pay with the money you already have.
It's a tough one to swallow. I know. That's why this entire post is called "6 Tough-Love Realizations". But I have 2 goals here. The first is to selfishly expand my own knowledge of money, how it works, and how to grow it. The second, is to help others achieve the same thing. And I honestly believe that a creditor (of any kind) has never had my best interests in mind.
The borrower is slave to the lender - Dave Ramsey, The Total Money Makeover
You aren't Going to Get Rich Overnight
The final realization to be discussed here is potentially the saddest one. Don't worry Rookie, I feel it too. I feel it deeply and it makes me want to stomp my feet a little. I want to be rich. I want to be rich right now.
But, here's the thing. At this time we do not have the skillset to generate substantial wealth without substantial effort or risk. So please, stop searching for the shortcuts. Nearly every single shortcut we've ever taken in life has led to disappointment.
Just for fun let's pretend a shortcut works. We win the lottery or maybe that "Get Rich Quick" scheme actually plays out in your favor. What happens then? Is your ego magically going to be under control? Would you suddenly master the ability to not only save that money, but grow it? Or would you blow it? Be very honest with yourself here.
As for me? I could see myself paying off my debt and splurging a little here and there. I could see myself overlooking money pits because I have excess. I could see myself using credit to avoid diminishing my balance. I could see myself being overcome with fear of losing the money because I wouldn't know how to make it back once it was gone. I could see myself blowing it.
I'm sure there would be good intentions in there. However, I do not have the self discipline to be "handed" a large sum of money - yet. I am getting there. Every day I am getting closer to understanding how I handle money and how that needs to change. I hope you are too.
But right now, what's in my best interest is manually cleaning up the mess I've made so that I know how to avoid doing it ever again. That's what I need, much more than I need a hand out.
When I'm ready to be rich, you'd better believe I'll know how to handle it. I'll know how to handle it so well that I won't fear losing it - because even if I do, I know I'll be able to make it all back again.
That's the level of knowledge I'm aspiring to obtain. That's the level of knowledge I want you to obtain.