8 Money Lessons I wish I learned Sooner..2020

In this Article, I want to share with you eight of the most important and practical lessons that I have learned about money. Whether we like it or not, money plays a crucial role in our livelihoods. It decides what we eat for dinner, how we vacation, and even how we raise our children. So let's get started.

So the first lesson is that money is not the end goal in life.

     Now, I have spoken to dozens of millionaires and I've asked them some of the mistakes that they've made in the past or things that they would have done differently. And what are the biggest things? The thing that kept recurring every time that I asked somebody is they told me that sometimes money would skew their decision making process a little bit more than what they, in hindsight, would have liked it to do.

So this is something that you really do need to understand, because sometimes we put money too high on the list for things that are important to us and we can make bad decisions. For example, if you're looking at two different jobs in one job might pay you five percent more or 10 percent more, even though, you know, it's not going to be a very fulfilling job. You're not going to like it versus a job that maybe you're a little bit less.

But, you know, it's going to be a fulfilling job. You know that you're very passionate about that job. Many of us still choose that higher paying job, even though it's not as exciting. It's not something that's fulfilling. And so just those little decisions, especially those life decisions, they're important to think about and make sure that you're not letting money affect some of those decisions, even though it is important, it's also important to make sure that you're having fun and being happy in life.

The next lesson that I've learned is something known as the 80 20 principle. And you can use this 80 20 principle and apply it to certain areas of life or certain expenses that traditionally would be large expenses. But if you use this correctly, we can actually end up saving a lot of money.

Number three is to realize that cash flow can be much more powerful or just as powerful as assets. So let's say that maybe you own ten thousand acres of land. You own a massive plot of forest somewhere in the world. And although this might be worth, say, two million dollars, it's not pulling in any money. It's not making you any money. This actually might end up being a liability. And so you can have to pay taxes on this. You might have to pay for various different expenses for this land. And if it's not bringing in cash, if you're not making money off of something that you own, it can end up actually hurting you quite a bit. You could use this as well, thinking about a house you own a million dollar house, but you have no money coming in. How are you going to pay your mortgage? How are you going to pay for your water bill? How are you going to pay for your property taxes? Right. So just because you have assets doesn't mean that you are raking in the money. It doesn't actually mean that you're wealthy. There's a term that's called house poor, and it actually happens to a lot of people where they buy a house that's too large and they can barely afford it. And they end up not having any money left over because it's all going into the house. And they were almost poor in a sense at that point.

Actually leads us into the fourth lesson that I've learned, which is that your house is not always an asset. Now, if you've read a number of real estate books, maybe you've heard this idea being thrown around that your house might actually be a liability. It does depend how you look at it, but I do like to not treat a house solely as an asset. There's a couple of reasons for this. One is because you can't always count on appreciation of a home value now, maybe over a very long period of time, perhaps you can factor that in. But over a span of a decade, assuming that you can buy a house and then sell it for more three years later, that might not always be the best route to take your house is not necessarily an asset, in my opinion. We can dispute this. Feel free to comment down below when your opinions. But if you have outgoing expenses, if you own a home, look, there's always going to be a cost of putting a roof over your head, regardless of whether you rent or you own a home. And some people actually ask me this just last week because I just. In my new apartment a couple of weeks ago and they said, why are you renting still? Why don't you just buy a house? And it's because there's always a cost of putting a roof over your head, your property tax, mortgage, insurance. You have a lot of expenses with owning a home and with an apartment. You don't have those expenses. Now, we can even the amount we can look at the actual cost of homes and still. So statistically, yes, over the long term, it's still probably better off buying a house than renting. We can talk about that in a separate video. But I just want you to think about that a little bit more, realizing that there's still a cost of putting a roof over your head. If you own your house, you still have a lot of expenses. If you're a homeowner, you know exactly what I'm talking about.

So this next one is arguably my favorite lesson in this Article, and it's understanding sales and sales strategy. I was just reading a few books about this because if you can understand how people sell to you and the strategies that the that they use to convince you to buy something, whether this is buying a house, whether this is buying a car at a car dealership, whether this is buying a sofa at your local furniture store, if you can understand the tactics or the strategies that people use to sell you something, you can sort of reverse this on them. I have a good friend of mine whose mother is an incredible saleswoman, and I've seen her do this when she goes somewhere and somebody tries to sell her something and she'll say, you know what, I'm a sales person myself. I know this strategy that you're using. Let's actually take this conversation in a different direction, because I know what you're doing kind of exposes them sometimes. I have a lot of friends who are salespeople. There's nothing wrong with that, of course, because you want to sell something right. There's a strategy to selling. But if you understand how they sell, you can end up sometimes getting a better deal. If you're really good at negotiating and picking apart sort of the strategy that some people use to sell you things. So get really good at negotiating, get a really understanding of how to sell and then use it in reverse to get a better deal and a better bargain for yourself.

Number 6, pay yourself first.

    This is a simple idea, but many of us still don't do this. In fact, I actually did a recent poll on one of my social media accounts and I asked people whether they were paying themselves first. And I had a lot of people who said that they still don't pay themselves first. The best way to do this, and I can't tell you how to manage your money, but a simple strategy that I use for myself is to simply have money come into one checking account or one bank account, and then you have automatic withdrawals that go into a separate account that you save money in or you invest money, whatever you would like to do with your money. So you have automatic withdrawals going from maybe your checking account to your other account, like your savings account or your investment account so that you don't have to really think about saving money. It almost automatically does it and then says that you make a thousand dollars per week and so you have automatically two hundred dollars per week withdrawn from your checking account, goes into your other bank account. So then you have eight hundred dollars to work with. You pay yourself first and now you can think about paying your bills. Now you can think about what you want to use as discretionary income. So don't even treat that extra money or that savings money as discretionary income. Put that towards savings and then see what you have left over. So pay yourself first. Trust me, it's one of the best things you can do.

Number 7, Discipline leads to freedom.

    This actually applies to many areas of our lives. But if you can have discipline, we can end up getting freedom at some point.

Now, obviously, this is not a paved path that everyone's going to follow. It's going to be issues that arise along the way. But if you are disciplined, it's going to allow you to be more free in most areas. The section where we can expand this much further than just finances. If you want to become healthier, you need to discipline yourself to eat healthier foods. If you want to have better finances, you need to discipline yourself to be able to say no to certain expenses. And I think in part sort of becoming a no man or a no person where you're able to say no to things that maybe you don't want to do, not being susceptible to peer pressure, maybe if you have something important that you want to do, but other people are pressuring you to do something else. Be able to just say, you know what, no, this is the decision. This is my discipline and I'm not going to do that activity that maybe I will regret in the future or I'm not very proud of as a person. And having that discipline is very important, it takes a lot of time to build up. And, you know, I'm going to be honest, I have a lot of problems. I'm not perfect. I'm not totally disciplined. There's things where maybe I go astray a little bit. But for the most part, I do like to try to stay as disciplined as possible with certain areas of life that are important to me.

The final lesson I want to share with you is it's OK to spend money. I actually spend quite a bit of money. You don't want to be a cheap person. You don't want to be somebody who pinches pennies and doesn't spend anything, because I think everybody has a different philosophy in life. But one of mine is to make sure that I'm very happy and content and feeling good about my lifestyle and the things that I'm doing. And so my goal, if I'm trying to make money, I'm making this money so that I can use it for something that's important to me, whether this is something that's for myself or for other people or for community or for family or something else.

But it's OK to spend money. You don't have to feel like you have to save every penny. And so that's something that I think a lot of us sometimes do forget, because we talk about saving money all the time. We talk about finances all the time. We think that we just have to squirrel all of our money away. But there's really no point in doing that. I know personally, I'm not taking money to the grave with me, I'm learning to use it for certain things that I have vision and ideas that happened in my life. and that's one of the reasons why I have saved and taken it seriously.

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