What's your money beliefs

This episode discusses the mindset we have about money based on what we have been taught to believe about how money impacts our life.

Transcript

SPEAKER_01 1:01

4021 to the 100th episode of this podcast. Whether you're just starting your financial journey or you've been around the block, welcome to Money, Finance and Investment with Mr. Will.

SPEAKER_00 1:30

Hey everybody, welcome to today's episode of Money, Finance, and Investments with Mr. Will. So today's episode was motivated by a couple of discussions I've had recently with some clients. And interestingly enough, uh both clients initiated a discussion that centered around today's topic, which is what is your money beliefs? In other words, what is your mindset as it relates to money? And in particular, how do your money beliefs impact your mindset as it relates to money? So I'm gonna start with this question. What does money mean to you? Have you actually thought about that? Now I asked that question because in both of these conversations that I had uh with these individuals, we were talking about things that impacted the decisions that they make in life and how their beliefs about money influences this or that as it relates to decisions. And if we're honest with ourselves, all of us our decisions are impacted based on our beliefs as it relates to money. You know, so for example, does it affect how you see yourself? Years back I worked with a gentleman and we were in sales, and we started at the same time, and I advanced faster than he did, me and a few other people. And I was one of the people assigned to help him to get him up to the level where we were, and so eventually that happened. So we used to, you know, give him suggestions, you know, help him with different things and so forth and so on. And then all of a sudden, he got to this level where we were, and we couldn't tell him anything anymore. You make such, I don't need you to tell me, I don't need I'm like, man, what's wrong with you? Well, all of a sudden, and of course it was money related because the um position that we were in was a position of sales, which ultimately impacts your level of advancement within the organization, and so he all of a sudden became you know very arrogant and cocky and high-minded, and you know, nobody couldn't tell him anything. Now, unfortunately, he ended up having a fall and being humbled, but I just bring that up because money caused him to change how he saw himself, and you may have had occasions where you've seen this happen with others, it may have even happened to you, depending on who you are listening to this podcast. But does it affect how you see yourself? Here's another question: Does it affect how you regard yourself in relation to others? So I know many people who, when they get around people who they perceive to be wealthy, celebrities and you know, other people that they uh perceive to be, you know, very wealthy, they kind of look at them as superior to themselves. Just because they make more money. They may not be more important, they may not have a greater status, but the perception of them being wealthy causes them to look at them differently in relation to themselves. Right? Have you ever thought about that? Does that happen with you? Does it affect how you define yourself? Um you know, people place a lot of stock in how they regard themselves and think of themselves based on how much money they earn. You know, based on the perception that they have um of of themselves and how others see them. So so does it does it does it uh affect how you define yourself? Do you do you define yourself or or feel to be more valuable based on your money situation? These answers, the answers to these questions inevitably impact our financial decisions and and decisions that we make in life. What we spend money on, the kind of car we drive, where we live, what kind of clothes we wear, what type of um accessories I adorn myself with, based on the answers to these questions. This is real stuff, whether we want to admit it or not. Um so you know, what does money mean to you? Here's another question. What do you believe is the primary purpose of money? This is another very important question that impacts the decisions that we make. What is the primary purpose of money? So in my book, money ain't the problem. What we do with it is I have a whole section dedicated to understanding money. And one of the things that I talk about is the money mindset. Okay, now the things I talk about in the book is expanded far beyond what I'm doing here on this podcast. But one of the questions that I ask is, what is money? So, based on your money belief, what is money? Okay, I hear I hear these different answers. Right, those are the same answers that I always hear. It's a tool, uh, it's a medium of exchange, uh something that we gotta have, right? Well, those answers don't really tell us what money is, right? When you say it's a tool, well, a hammer is a tool, uh, screwdriver is a tool, a wrench is a tool, a saw is a tool. So does that make it money? No. So a tool really talks more about one of the usages for money. Money can be used as a tool, but that doesn't mean it is a tool, it can be used as a tool. Okay, I have a cell phone, I can use it as a hammer. That doesn't make it a hammer, but if I need to hammer something and I got my cell phone handy and I, you know, something lightweight, I can hammer with that cell phone, but that doesn't make the cell phone a hammer. So the fact that money can be used as a tool does not make it a tool, okay, by definition, right? Medium of exchange, yep, that's another usage, right? But your labor can be a medium of exchange, you know, salt um once upon a time as a medium of exchange, animals, right? So, yes, can it be used as a medium of exchange? We do it all the time, absolutely, but that doesn't really you know define what it is. So, again, my money beliefs tell me that money, the answer to what money is, is it's a resource, and it is a resource that serves multiple purposes, right? But that's my money belief. So now, because I see it as a resource, my mentality towards it is a little different than people who look at money as a source, because there are many people who think money is the the thing that can solve any problem. Well, that's not true, but people think that. They think money is power. Money isn't power, you know, but people think that. And so your money beliefs are going to drive, because if you think money is power, or somebody who's got more money than you, then you are going to be subservient to the perceived power you think they have because they got more money than you. If that's your money belief. So these things are important because they they they impact the way we think, the way we live, they impact what we tell our children, how we raise our children. You know, I I in my generation, when I grew up, it was common where a mother would tell her daughter, don't you let no man know about all the money you got. So now I know women who married, have children, you know, 15, 20 years, and they harbor this mentality even in their marriage, where they don't tell the husband everything again about their money. That's a money belief. So understanding this is important because at the end of the day, it also impacts the level of success that you are able to achieve as it relates to your money. Okay, so going back to the question of the primary purpose of money, for me, the primary purpose of money is to protect and preserve quality of life. That is the primary purpose of money. Because if you think about it, right, shelter, quality shelter, quality housing, quality place to live, right, in a safe environment where you have the access to the proper utilities and heat and air conditioning, you know, and running water, clean water, and you know, the proper uh resources or utensils and everything to do what you need to do within the home, right? That's that's essential. That's not that's essential, right? Food, essential, clothing, essential. You know, if you need medicine and and health care services when you get sick, ill, or injured, essential. Transportation, whether that's public transportation or your own, money to provide transportation, essential. Cell phone, not essential. Um Mercedes AMG, not essential. Fur coat, not essential. Diamond ring, not essential. Now, there's nothing wrong with having these things, but you know, putting things in perspective. Once you have the essentials taken care of, everything else is really extra. Now, I realize there are things like vacations you need, you know, to take a break for your sanity, for your peace of mind, to get away from the hustle and bustle of everyday work. And I get it. But there are ways to do that where you don't have to spend a lot of money. And it's nothing wrong with doing it. And I'm not suggesting for any, you know, uh uh by any stretch of the imagination that you shouldn't take time to, you know, go on vacation and stuff like that. I'm just trying to focus in on the point of the primary purpose of money is to protect and preserve our quality of life. Quality of life, not standard of living. And they're two different things. Standard of living could be like, okay, you live in Beverly Hills in $3.2 million home with all of the latest and greatest and fanciest, you know, trappings of your house, right? But you could live in that house and you and your spouse are fighting every day. Your child, you know, is depressed and then emotionally distressed because of the dysfunction that's going on in the home and ain't nobody happy, and everybody's stressed and don't have no peace. That's not quality of life. I would much rather live in a you know small three-room home where everybody loves each other, we got good quality food, we enjoy you know each other's presence, and we're we're happy. I would much rather have that than the other scenario. That's a higher quality of life. So we're not going to confuse the difference between quality of life and standard of living. And so when I talk about quality of life, I'm talking about what I said, having the resource of money to make sure that your quality of life, your quality of housing, not your standard of living, your quality of food, right? Not you eat at a five-star restaurant, or you can afford to eat at a five-star restaurant. No, you can eat quality at home, preparing your meal. Okay? Again, nothing wrong with going out, but I'm just trying to define what I'm talking about, right? Um, so your quality of life, that's the primary purpose of money. And when we really think about it, once that's taken care of, most of us have more than enough money to do that. Where people get stressed out and get into financial issues is because they're spending money on other a whole bunch of other stuff too. And they don't have enough money to do that and be comfortable because their money beliefs are causing them to believe that that's living. As a matter of fact, I made a comment recently, I was talking to a young person, and the young person was talking about how expensive things are. We were going back and forth and talking about inflation, and I was talking about how it's relative because I've lived long enough to understand that. And, you know, we started making comments about, well, you know, if you ain't spending money on this and spending money on that and spending money on this and spending money on that and spending money on that, it's like, oh, well, you don't want me to live. So, in other words, if you can't have all of this other extra luxury stuff that ain't living, that's his mindset, that's his money belief. So it's going to impact the decisions that he makes. So, what's your money beliefs? So, primary purpose, protect and preserve your quality of life. Main objectives of money, I say, is to meet our needs and then satisfy our wants and then help us to meet the needs of others. So, first and foremost, to meet our needs. That goes right into quality of life. But then it's okay to satisfy your wants. If you've been a good steward and you've done the right things with your money, then hey, you put yourself in position to be able to do that, go for it, right? But that's secondary to the priority of protecting and preserving my quality of life first, meeting my needs first. Then I take care of the wants. Then I can help meet the needs of others. You know, when you're on a plane, they tell you, hey, your oxygen mask drop, put yours on first. So you can't help meet the needs of somebody else if you're all jacked up. So there's a priority. And so what does your money beliefs cause you to think about things in that way? Okay, how do your money beliefs influence your other beliefs? For example, how does your money beliefs influence your beliefs about doing being charitable? Or uh what about your material possessions? Right? I I know people who their material possessions are a symbol of their money. So they have material possessions, things that ain't worn or 17 years, they can't get rid of it. Stuff that they bought and ain't used but once in nine years can't get rid of it. A whole house full of bunch of stuff that they pay for, don't use, but can't get rid of it because psychologically they it's a symbol of their money. That's their money belief. What about politics? How do your money beliefs affect your political views? What about investing? How do your money beliefs affect your investing? Whether you invest, what you invest in, how much you invest. Some people, because they're so scared to lose money, because their money is their source. So they're timid about investing. That's their money beliefs. What about relationships? I mentioned earlier about you know, my generation, women, or I know a lot of women who were taught, don't won't tell no man about all the money you got, right? Well, how do your money beliefs affect how you do things in your relationships? Right? This is these are all significant and real things that many people don't talk about and don't think about, but it impacts our everyday lives. And I'm gonna close on this. One of those clients that I was having a discussion with, we the discussion came up about taxes, and ultimately what that person was looking to do is try to figure out how they can avoid paying taxes. And I said, Well, that's easy. Don't make any money. That's how you avoid paying taxes, don't make any money. Well, of course, they didn't like that answer. But what I was doing was communicating to them that you you're you can't get out of not paying taxes. But what's really your goal? Because your energy is being directed towards, and this is a constant thing, your energy is being directed towards how can you avoid paying taxes? And my money belief doesn't focus on that. Because at the end of the day, this is what it boils down to. I'm just gonna use a generic example. This year you're gonna have 50,000 extra dollars from January 1 to December 31. And at the end of December 31, you're gonna have to pay taxes on that money. So let's say you're in a 20% tax bracket, and that 20% knocks that 50,000 down to 40,000, okay. So you started with 50,000, and at the end of the year, you're going to end up with 40,000 because of the taxes. And the reason why you don't want to pay taxes is because you want to keep the whole 50,000. Okay? So again, they're just keeping this simple. All right. So my money belief says I'm not going to invest all of my energy in trying to do something that I really can't do anyway, which is avoid paying taxes. And you know, people, well, you know, wealthy don't pay taxes. Well, it's not true. Wealthy people pay taxes. Okay? And wealthy people pay a lot of taxes. Fortunately, for them, and unfortunately for those of us who who don't have their situation, the percentage of taxes that they pay is less because of how they derive their income, right? A lot of them derive their income in the form of dividends and long-term capital gains, which is taxed at a lower rate. And so when they have hundreds of millions of dollars because they got you know millions of dollars invested in stockholders and equities and business ventures that's paying them out this money, then that money is able to be taxed at a lower tax rate. That's the way the tax law is. Okay, so learn the tax law and learn how to position yourself to take advantage of the tax law as opposed to trying to avoid complying with the law. Okay, but what this boils down to is I said to the person, rather than investing the energy into trying to avoid paying taxes, here's what I do. 50,000, I want to be able to enjoy spending the 50,000 when it's all said and done. So rather than me investing my energy in trying to figure out how to do something that I can't really do, right? Just so that I can end up with the 50,000, let me invest my energy in understanding how to put my money to work and leverage it. And so now I take that 50,000, I don't invest that 50,000. And when I invest that 50,000, that 50,000 will work to generate enough money to pay the taxes for me and leave me with the 50 or more that I started with so that I can enjoy the 50,000. Okay, so let's say that I invest that 50, and that 50 ends up, you know, generating 80, right? Or ends up in a total of 80. Okay. Now, after I pay the taxes on that, right, let's say I'm left with 60. Well, mission accomplished. Because I started with 50, and instead of ending up with 40 after the taxes, and instead of obviously ending up with just the 50 by not paying the taxes, because I can't do that either, I invest the money, leverage it, put the money to work, and now the money pays the taxes and leaves me with 60 after taxes. Mission accomplished. Now, what I said to the person is this you can't have competing priorities, and you can't have priorities that that that are conflicting with one another. So you can't go north and south at the same time. Okay. So what do I mean? Do you want to be in the best financial position possible, or or is it your priority to pay no taxes? What is the priority? Because you can't have them both. If your goal and your priority, your main priority is to not pay taxes, okay, then being in the best financial position possible can't is is not a priority. If being in the best financial position is the priority, then I'm not focusing on the taxes. I'm focusing on doing what I need to do to put me in the best position possible so that my financial situation can be maximized. And I don't worry about the taxes because I let the money do the work to take care of the taxes. It's a different way of thinking, but again, that's my money belief. So, what does money mean to you? What is the primary purpose of money to you? And how does your money beliefs influence other beliefs? That is the topic for today. Think about these things, and I'll see you next time on money, finance, and investments with Mr. Will.

SPEAKER_01 27:34

This has been another episode of Money, Finance, and Investments with Mr. Will. For more information, check out his book, Money Ain't the Problem. What we do with it is so that you can learn how to live your best financial life. In the meantime, be sure to check out our next episode of Money, Finance, and Investment with Mr. Will.