Episode 3: Money Is A Tool

In this third episode of the Melby Money Show, host Shaun Melby explores a transformative concept for Millennials: viewing money as a tool. The episode explores common misconceptions that create a scarcity mindset and limit financial potential, emphasizing the importance of shifting perspectives to see money as a means to achieve goals. Additionally, the episode offers practical strategies to overcome limiting beliefs and addresses the economic concepts of inflation and deflation, discussing their impact since the COVID-19 pandemic. The benefits of compound interest and the importance of financial education are also highlighted, along with actionable steps to start using money strategically. The episode concludes with a call for community engagement and ongoing learning.

00:00 Introduction to the Melby Money Show
00:33 Changing Your Perspective on Money
02:23 Current Events: Inflation and Deflation
06:39 Understanding Compound Interest
08:12 Practical Steps to Shift Your Money Mindset
10:48 Overcoming Limiting Beliefs About Money
14:20 Actionable Steps for Financial Success
17:17 Conclusion and Final Thoughts

This podcast is for informational and educational purposes only.  This podcast is not financial advice.

Transcript

Shaun 0:22

Welcome to the third episode of the Melby money show. I'm your host, Shaun Melby. And today's episode, we'll be exploring a crucial topic that can transform the way you think about and interact with money. Viewing money as a tool. For many millennials, money is often associated with stress, anxiety, and even fear. We've grown up, hearing phrases like money doesn't grow on trees or money is the root of all evil. Which can lead to a scarcity mindset, a negative relationship with our finances. The great recession, certainly piled on that scarcity mindset during some pretty formative years for us. But if we can begin to shift our perspective and recognize money as a powerful tool, we can unlock new opportunities and achieve our goals with greater ease. For many people, they see money and finances is binary ones and zeros in black and white. What I mean by that is they think if I can just get my salary to a hundred thousand dollars or if I can just buy that$750,000 house, or if I can just get my student loans paid off, followed by a then statement. Then I'll be happy, then I'll be less stressed. This is how people normally think about money. But the problem is when you check off the box for that particular goal, there's a new box to check off and you're constantly chasing the next thing. So imagine for a moment that money is like a hammer. in the hands of a skilled carpenter, a hammer can be used to build a beautiful home create furniture. Or repair broken structure. Similarly, when we view money as a tool. We can use it to construct the life we desire. Whether that means buying our first home, starting a business or investing in our education. By changing our mindset and embracing money as a means to an end, rather than the end itself. We open ourselves up to a world of possibilities. Throughout this episode, we'll explore the common misconceptions about money that hold millennials back and provide practical strategies for overcoming these limiting beliefs. By the end of the episode. You'll have a new found appreciation for the power of money and a roadmap for harnessing it's potential in your own life. But first let's talk about what's in the news with current events. In this episode's current event, we're going to be talking about inflation and deflation. We'll discuss what these economic phenomenon are, how they've behaved since the pandemic began and why? I believe we're more likely to see inflation continue to moderate rather than slip into deflation. First we need to define what inflation is. Inflation is the rate at which the general level of prices for goods and services is rising. And consequently. The purchasing power of currency is falling. In other words, when prices increase each dollar buys fewer goods and services. The most common measure of inflation is the consumer price index or CPI. On the other hand, deflation is the opposite. It's a decrease in the general price level of goods and services. During deflation, the purchasing power of currency rises over time. While falling prices might sound good for consumers. Deflation can be a sign of economic weakness. And lead to a vicious cycle, falling profits, wages, and rising unemployment. So while we're all clamoring for grocery store prices decrease, and we may see some of that in some goods, what is more likely to happen is this is the new normal level at which prices are set at. When the COVID 19 pandemic hit in early 2020. The us economy, nearly ground to a hault. In response, the government and the federal reserve took unprecedented actions to support the economy. Thinking back to 2008. The government response and the subsequent recovery, the government did not want to repeat the mistake of not having enough of a government response. So they went. Big on their economic response while necessary. These actions led to a surge in inflation as the economy reopened. After running around 2% for years from 2008 to 2020. Because of the weak economic recovery because of the weak government response to the great recession. The consumer price index jumped to over 9% by June, 2022. A 40 year high. However, since peaking in 2022. Inflationary pressures have steadily eased. The most recent CPI report for July, 2024 showed prices rose 2.9% from the year before. This is the first time, year over year. Inflation has been under 3% since the spring of 2021. While still above the Fed's 2% target. This is major progress from the 9% readings two years ago. Core inflation. Which excludes volatile food and energy prices has fallen from 6% to 3.2%. Despite the progress on inflation. Some people are clamoring for deflation because they want prices for goods and services to be lower than they are today. Go back to what they were in 2019. While it's a nice thought. If that were to happen, it would be pretty economically destructive. There are several factors why? I think deflation is unlikely and we'll continue to see inflation, moderate. The first reason. The fed has aggressively raised interest rates from 0% to over 5%. Which is cooling demand, higher borrowing costs are weighing on rate sensitive sectors like housing. The second. Fiscal stimulus is faded and is now dragon growth. As COVID-19 relief programs have ended. The third. Nationwide gasoline prices have fallen sharply to under$4. A gallon is oil supplies have increased. The fourth reason supply chains are healing and goods. Inflation has eased substantially used car prices are now falling after surging 50% plus earlier. The fifth reason rents. The biggest component of core inflation are starting to soften as well with national rents declining since last fall, according to private data sources. The sixth reason. Longer-term inflation expectations remain well anchored. Reducing the risk of a 1970s style wage price spiral. While inflation surged after the pandemic price pressures have clearly peaked and are moderating. Despite some concerns, deflation appears unlikely given the still supportive fiscal and monetary policy, strong labor market, and well anchored inflation expectations. The most likely scenario is a continued gradual easing of inflation back towards the Fed's 2% target overtime. Now a word from today's sponsor. This episode of the Melby money show is brought to you by our friend at compound interest. Compound interest is like a snowball rolling down a hill, growing bigger and faster as it goes. When you invest your money, it earns interest. But here's the real magic. The interest you earn also starts earning interest itself. Your money grows upon itself, compounding over time. Let's say invest a thousand dollars in it earns a 10% growth in the first year. You now have$1,100. And year two, that entire$1,100 earns 10% again, growing to$1,210. The original investment and the interest from your one. Both earned interest in year two. This compounding effect continues year after year. The earlier you start investing, the more time you give compound interest to work in your favor. Even small amounts invested regularly can snowball into significant wealth over the longterm. Thanks to the power of compounding. Albert Einstein allegedly once said, quote, compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't pays it unquote. To put your money to work. Consider investing in diversified stock and bond funds within your 401k IRA or other investment accounts, then sit back and let compound interest, do the heavy lifting for you over time. Your future self will. Thank you. Compound interest, helping Melby money show listeners, harness the power of compounding to build longterm wealth. Now back to the show. Today's episode is about shifting your mindset around money and thinking of it as a tool to achieve your goals, rather than a target to be achieved thinking if I could just make a hundred thousand dollars, then I wouldn't be so stressed is limiting. What would be so different if you made a hundred thousand dollars? But by thinking in a way of I'm going to earn my MBA, because that is the best way I can increase my earning potential is a better framework. Let's dive deeper into what I mean to view money as a tool. When we think of tools, we often picture tangible objects like hammers, screwdrivers, or paint brushes. These tools are designed to help us accomplish specific tasks more efficiently and effectively. In the same way, money is a tool that can help us achieve our goals and create the life we desire. By viewing money as a tool, millennials can make more intentional and strategic financial decisions. Instead of spending money impulsively or without a clear purpose, we can prioritize our spending based on our values and long-term objectives. For example. If your goal is to buy a house. You can use money as a tool to save for down payment, improve your credit score and research affordable mortgage options. By aligning your financial habits with your goals, you'll be better equipped to make progress and achieve success. Similarly, when we recognize money as a tool, we can develop healthier saving habits. Rather than viewing, saving as a restriction or sacrifice. We can see it as a means to an end. Every dollar saved as a step closer to our dreams, whether that's starting a business pursuing further education or building an emergency fund. By shifting our perspective and understanding that saving is an active way to use money as a tool, we can find more motivation and satisfaction in the process. Let's consider a few real life examples on how millennials can use money as a tool to achieve their goals. If your dream is to start your own business, you can use money to invest in your education, attend workshops or conferences. And purchase the necessary equipment or inventory. If you want to further your career, you can use money to enroll in courses, obtained, certifications or hire a career coach. And if you're looking to buy a house, you can use money to save for down payment improve your credit score and research, affordable mortgage options. In each of these scenarios, money serves as a powerful tool to help you take action and make progress towards your objectives. By viewing money as a tool, millennials can transform their relationship with their finances and feel more empowered to create the life they want. It's not about accumulating wealth for the sake of it, but rather using money strategically to achieve your goals and live in alignment with our values. With this mindset shift, we can approach our financial decisions with greater clarity purpose. And competence. One of the biggest obstacles millennials face when it comes to viewing money as a tool is the prevalence of limiting beliefs. We talked about in the last episode, but these beliefs are often ingrained from a young age, can hold us back from developing a healthy and empowering relationship with money. Some common limiting beliefs include money is the root of all evil. I'll never have enough money or rich people are greedy. These negative associations can lead to feelings of guilt, shame, or fear around money, preventing us from using it effectively to achieve our goals. Think about growing up in you're six years old, you're in target or Walmart and looking at different toys. You ask your parent for one. And what do you hear back? Do you hear. We can't afford that. These sorts of things get ingrained in you. My earliest memory about money. Is that, that exact scenario. I might've been a little younger than six. I'd ask my mom for something. And she'd say we can't afford that, or we don't have money for that. Just to get me to move on. To which I just matter of factly, say, just write a check, mom. Clearly, I didn't understand how checks work. I just thought you buy things with checks and never really thought about where that money actually came from the point being. These limiting beliefs can start early. To overcome these limiting beliefs. It's essential to recognize that they are just that. Beliefs, not facts. By questioning and challenging these beliefs, we can start to shift our mindset and develop a more positive outlook on money. One effective strategy is to reframe negative thoughts into positive affirmations. And these can feel a little woo. So bear with me. For example, instead of thinking I'll never have enough money try saying. I am capable of attracting abundance into my life. It sounds funny at first, but say it again. I am capable of attracting abundance into my life. Again, I am capable of attracting abundance into my life. One more time. I am capable of attracting abundance into my life. I hope you're actually saying this with me. Do you feel different by the fourth time you said it out loud. I know I do. repeatedly affirming a more empowering belief. We can gradually rewire our thought patterns and change our relationship with money. Another powerful way to overcome limiting beliefs is to seek out success stories and role models. Many millennials have already transformed their mindset around money and used it as a tool to achieve their dreams. Changing your mindset around money is a process. And it's important to be patient and compassionate with yourself along the way. Seek out resources, such as books, podcasts, or financial education courses that can help you develop a more positive, empowering relationship with money. Surround yourself with like-minded individuals who are also committed to using money as a tool for good. And remember every small step you take towards changing your beliefs as a step closer to financial freedom and fulfillment. By overcoming limiting beliefs and adopting a more positive mindset around money, millennials can unlock their full potential and use money as a powerful tool to create the life they desire. It's not about becoming rich for the sake of it, but rather about aligning your financial habits with your values and goals. With persistence education. And willingness to challenge old beliefs. Anyone can transform their relationship with money and use it to build a brighter future. Now that we've explored the importance of viewing money as a tool and address some of the limiting beliefs that may hold millennials back. Let's dive into actual steps. You can take to start putting this mindset shift into practice. The first step is to create a budget. tracking your income and expenses, you can gain a clear understanding of where your money is going and identify areas where you can cut back or reallocate funds towards your goals. There are many budgeting apps and tools available such as Monarch money or YNAB, which is short for you need a budget. That can help you get started and stay organized. Once you have a budget in place, set clear financial goals for yourself. These goals should be specific, measurable, achievable, relevant, and time-bound. So that acronym spells smart. Again, Specific. Measurable, achievable, relevant and time bound. For example. Instead of saying, I want to save more money. Set a goal like I want to save$5,000 for an emergency fund within the next 12 months. By breaking your goals down into smaller actual steps. You can make steady progress and stay motivated along the way. Investing in personal development is another powerful way to start viewing money as a tool. By acquiring new skills, knowledge or experiences, you can increase your earning potential and open up new opportunities for growth. This may include taking online courses, attending workshops or conferences, or seeking out mentorships from experienced professionals in your field. Remember investing in yourself is one of the best investments you can make as it can pay dividends for years to come. Financial education is also crucial for millennials who want to change their relationship with money. Seek out resources, such as books, podcasts, or online courses. That can help you learn more about personal finance, investing and wealth building strategies. Some popular resources include the book, simple wealth, inevitable wealth by Nick Murray. The book, the millionaire next door by Thomas J. Stanley and William D. Danco. And the Morgan Housel podcast by Morgan Housel. By educating yourself about money and developing a strong financial foundation. You'll be better equipped to make informed decisions and use money as a tool to achieve your goals. Finally. Remember that changing your mindset and financial habits is a journey, not a destination. It's important to be patient with yourself and celebrate the small victories along the way. Start by implementing one or two of these actionable steps and gradually build from there. Surround yourself with supportive friends, family members, or a community of like-minded individuals who can encourage you and hold you accountable. And most importantly, don't be afraid to make a mistake. Or course correct as needed. Every experience, whether positive or negative is an opportunity to learn and grow. By taking consistent, purposeful action and maintaining a growth mindset, you can transform your relationship with money and use it as a powerful tool. To create the life you desire. As we wrap up today's episode, let's take a moment to reflect on the key points we've discussed. We've explored the transformative power of viewing money as a tool and how this mindset shift can empower millennials to take control of their financial future. By recognizing money as a means to an end, rather than an end in itself. We can make more intentional and strategic decisions. That aligned with our values and goals. We've also dressed the common limiting beliefs that may hold us back and provided strategies for overcoming these beliefs and adopting a more positive and empowering mindset. We've emphasized the importance of taking action and implementing practical strategies to start viewing money as a tool. From creating a budget and setting financial goals to investing in personal development, seeking financial education. There are many steps you can take to transform your relationship with money. Remember change doesn't happen overnight, but by taking small, consistent actions and maintaining a growth mindset, you can make significant progress over time. We encourage you to start implementing the strategies would discuss today, whether it's tracking your expenses, setting a specific financial goal or seeking out new learning opportunities. Take that first step towards viewing money as a tool. Surround yourself with supportive individuals who share your values and encourage you along the way. Even if that person is just me through this podcast. I want to help you build this thing. And most importantly, be patient and compassionate with yourself. Embrace the journey. Learn from your experiences and celebrate your progress no matter how small. I'd love to hear from you about your own experiences with viewing money as a tool. What strategies have worked for you? What challenges have you faced? And how have you overcome them? During the conversation, our social media platforms are reach out to us directly. By sharing our stories and supporting one another. We can create a community of like-minded individuals who are committed to using money as a tool for positive change. Remember, you have the power to transform your relationship with money and create the life you desire. By embracing money as a tool and taking purposeful action. You can unlock new opportunities. Achieve your goals. And make a meaningful impact in the world. Thank you for joining us on this episode of the Melby money show, we can look forward to continuing the conversation in future episodes. If you have any questions, you'd like me to answer on the show. You can email them to shaun@melbymoney.com. It would really be an honor if you subscribe to the podcast, especially since many of the algorithms place a heavyweight on these early episodes, but also, so future episodes show up in your feed. If you feel compelled to leave a review or rating, I'd appreciate that. As well as getting feedback will only help make this podcast the best it can be. And finally, if you'd like to receive my free email newsletter, you can sign up at my website, Melbymoney.com farewell, and I'll see you on the next episode of the Melby money show.