Ok, so another year is upon us and aside from all the festivities that have occupied our time over the last month, there is a hidden danger that is lurking around you right now that is promising to rob you of wealth.
And if you’re not aware of what this danger is let me tell you – It is the status quo.
It is the slow adaptation of where you are, trapping you in your current circumstances and it’s limiting your potential for growth.
This is a quick personal story that I want to share that helps with the framing of what I am talking about.
It has nothing to do with money but it is the mindset around how to shift behavior for achieving a better result.
So, a few years ago I made a commitment to myself to get in better shape. I knew it wasn’t going to be easy since I have a very busy schedule but I wanted better for myself.
I thought about what I wanted my future self to look like in 6 months 12 months…I thought about the endurance, the weight loss, the pants size, and everything that goes along with getting into shape.
I envisioned where I wanted to be because I knew that sitting and talking with clients or speaking into a microphone – like I am doing right – is not helping my health to improve.
I had to make changes to have a different outcome.
So, I made a commitment to work out – nothing crazy that I couldn’t keep up with but dedicated time in my routine to get a workout in while eating better and getting regular blood work completed.
I haven’t followed this perfectly over the years but it is about making progress not expecting perfection.
So, that is what I did breaking me out of the routine I was in, it changed my trajectory and today I am in much better health because of it.
It is those settle mindset shifts followed by an action that makes a difference.
Many people think about these types of things but never execute.
They dream about better circumstances but don’t change anything.
As it is said, if nothing changes, nothing changes.
And some will get started with something then fall quickly back into their old way of thinking and chalk it up as “I tried that and it didn’t work.”
Where here is the thing, For the majority of things – the only way to fail is to give up. The problem is not usually the action, it is the commitment to the action.
I heard it said that it is easier to do something 100% than it is to do something at 95%.
The reason is that if you’re not 100% committed to the change, you will always use that 5% to make excuses or make exceptions.
Like when you’re dieting and you see that piece of candy… The 95% mindset will say, one won’t hurt when the 100% mindset says no.
The first step is the shift in mindset.
So, lets to move you closer to financial freedom by shift your thinking about what it takes to achieve it and then let’s figure out how to get started right now.
Ok…I want you to think about something that I believe is at the root of all financial planning decisions.
To do this, I want you to close your eyes for a moment. Unless you’re driving of course.
Close your eyes and imagine if you had an additional $100/mo?
Think about this for a moment… How much would your life change?
What could you do if you had this extra income?
Now, imagine if you had an additional $1,000/mo?
Think about this for a moment… How much would your life change?
What could you do if you had this extra income?
What about an additional $10,000/mo?
Think about this for a moment… How much would your life change?
What could you do if you had this extra income?
Imagine if you had an additional $100,000/mo?
Think about this for a moment… How much would your life change?
What could you do if you had this extra income?
What if you had an additional $1,000,000/mo?
Think about this for a moment… How much would your life change?
What could you do if you had this extra income?
If you played along with me here, the income escalation had you visualizing a more secure life as the numbers grew larger.
Now here is what I want you to do… reflecting back to your thoughts throughout this exercise…
At what monthly amount did you stop thinking about yourself and start thinking about helping other people, your family, friends, charities…
What was that number for you?
Was it $100… $10,000, $100,000, $1,000,000/mo what was your number?
Here is what is happening when you think about money in this manner… you’re focusing on what actually matters in your financial life.
What limits your ability to retire, to give, to help others is the absents of financial security.
In the absents of financial security there is no confidence.
For many of you listening to this, you have retirement assets, you have money but what’s missing and preventing the connection of dots is the security of income.
You see, financial security, financial freedom is the result of having income.
I visit with hundreds of people each year and the common way of thinking is centered around rate of return, account values, paying of debt…all peripheral things aside from what really matters.
What really matters is Income…
Just contemplate this with me…
There are two stages of supporting yourself financially.
When you work to earn a paycheck to support your lifestyle and when you have income from your assets supporting your lifestyle.
That’s it!
And the sooner you get to a point when your assets are supporting you the quicker you have financial freedom.
The mindset shift has to be a renewed focus on creating income sources.
By focusing on how much income your assets are generating, you have a true measurement of how close you are to achieving financial freedom status and the ability to give and contribute to those around you.
For most people when they begin this process, they find that the amount of income being generated is zero. That is because their portfolios are not designed for sending them income, it is just designed to grow.
Which of course is what you want the assets to do until you reach the point where you need or want additional income to retire, send a child to college, purchase a vehicle, or whatever you would need additional income to do….
Which does bring me to a side point here. If you notice I mentioned additional income for making purchases?
One of the mistakes people make is spending down their assets and resources. I see this played out time and time again.
When a purchase is made, they spend cash to make the purchase and while this sounds great on paper, what happens is that money is now gone forever and is no longer growing for you and cannot contribute to your future cash needs.
It is a mindset shift.
If you need to make a purchase, find an income producing asset to generate the amount of income you need to make the purchase. The result of this strategy is that instead of spending down your resources, you had your resources generate income and when the purchase is made, you still have the money to use it again for the next income need.
The entire goal of all financial planning is to use assets to generate income. The more assets you keep and grow, the more income you’ll have coming in.
It is that simple folks.
Keep stacking income because income is the ultimate goal of your planning.
So, the action following this mindset is to make the adjustments in your portfolio that will generate the income you need.
Because again, when you boil everything down, what remains is the need for income and that is either going to be a result of you working or through passive income.
The sooner you build your passive income sources, the sooner you will have financial freedom.
I created a list of the top 10 passive income opportunities that you can access for free at www.brianskrobonja.com/newyearshift . I will also include ten tax mitigation strategies as a bonus.
That concludes todays podcast…
Thanks for listening to the commons sense financial podcast.