Money is a mental game. Mentally strong people use their mind to set themselves up for success. How does one do this? Through repetition, learning, and a strong desire to succeed.
#1 They Understand The Power Of Each Decision
Each decision creates a result. The collection of those results creates the financial future for you and your family. Those who want to create wealth, understand that no matter how small a sum of money is, it will grow much larger over time.
If you spend $20 a week on something consistently, in 20 years you have spent $20,780.
If you invest that $20 a week with the market average of 8% interest, you would have $51,310.30 in 20 years.
30 years invested: 130,037.35
40 years invested: 305,139.62
Realize that the decision you make today, can have a huge impact on tomorrow.
#2 They Remove Emotion From the Equation
This may be the most important trait that any mentally strong person can have. Emotions will destroy your financial decision making in every aspect. How many times have you gone into a store and made a purchase. Immediately after, you regret the decision you just made? 99% of the time, that is a result of a choice based on emotion. It is the entire premise of “buyers remorse”.
Mentally strong individuals can control their emotion when making decisions with their money. This is especially important when they make large purchases (such as a home or investment). Just because the house is perfect in every aspect does not mean you should pay above market value to have it. You can almost always find a similar house below market value for the same price. I know, I know, it has the exact granite countertops you saw on Chip and Joanna put in, but it is still above what you should be paying.
Many people make the same mistake when purchasing investments. In the late 90’s during the tech boom, many people thought Yahoo would had infinite potential. It would have to be worth the Gross Domestic Product of the United States to be worth buying. Yet, emotional investors kept buying Yahoo, feeding off the media frenzy. Well, the buy train did not last forever. Their emotions got the best of them and ended up costing folks thousands if not millions of dollars.
#3 They Are Consistently Persistent
The money game is a long one. One that takes stamina to endure. Financially strong people are extremely persistent. Each day they stick to their plan. They work at it, learn, and tweak their plan. That plan, in turn, becomes their success.
Say your goal is to simply be a millionaire. If your plan lays out a foundation of what you must contribute to your investment account to achieve that goal. Then by-golly you better contribute your planned amount to that account every month. You know that this persistence will get you where you want to go, and nothing should get in your way.
#4 “Can’t” Is Not An Option
Setting out to achieve your dreams is an absolute characteristic of any mentally strong individual. Fear is an emotion that can get in the way of this. Many people set out on their financial journey, stumble into a few roadblocks, and are paralyzed into inaction because they fear they “can’t”. When you focus on fear of failure, you will never achieve your goals.
Those with a strong mentality know this, and use their failures as learning experiences. I have achieved more success learning from my failures than I can count. You need to be willing to keep trying until you get it right.
#5 They Roll With the Punches
Failure is inevitable. Everyone makes mistakes. It’s how you handle those mistakes will dictate your life.
If you overspend on your budget, don’t beat yourself up, adjust. If you buy an investment that doesn’t pan out, learn from it and move forward. Letting mistakes keep you down will never enable you to reach your goal.
6. They Aren’t Afraid To Put In a Little Sweat
Having a strong financial mentality also requires the willingness to work. Even though work ethic requires action, it is your mentality that drives that action. If you put in calculated work, the results will follow. Hard work in your early years can reap rewards that will last your entire life.
7. They Never Stop Learning
The greatest money mind of all time, Warren Buffet, is known to read 80% of his work day. Those who have a strong mentality will never stop learning. Knowledge is such a powerful tool and we have so much information at our fingertips. If you are not pushing yourself to learn on a daily basis you will fall behind. Mentally strong people know this. In the book Rich Habits, the author studies that everyday lives of the rich. He looks for the things that they do on a daily basis that separates them from the rest of the pack. The author notices that those who have a multi-million dollar net worth all have the same habit. They would read non-fiction books with direct correlation to their goals every single day.
Learning also helps put the person who cares the most about your life in charge, YOU! You can kiss that financial advisor goodbye, which is good for you and your wallet. Financial literacy should be at the forefront for anyone looking to build wealth. Knowledge is the fuel for a successful financial mentality.
Andrew is the host of The Personal Finance Podcast, a show that is changing the way you think about your money. His primary goal with the podcast is to bring as much value as possible to his listeners.
Andrew's favorite free financial tool he's been using since 2014 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.
His favorite investment platform is M1 Finance, a site that allows him to build a custom portfolio of stocks for free. It has no trading fees and is his preferred way to invest without having to lift a finger.
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