Decide to be Wealthy and Take Control
I read an interesting book yesterday titled The 5 Lessons a Millionaire Taught Me About Life and Wealth, one of the things that had not occured to me is that if you want to change the way you live the first step is to make a consious decision to be wealthy. It is not going to happen by itself. Unless you change the way you approach your finances things are not going to change.
The author also quoted some interesting statistics, one was that “Nearly one-third of lottery winners become bankrupt”. I’ve stated before that being wealthy seems to have little to do with income, this sure brings that home. The problem is that winning the lottery does not increase the winners income, but because lottery winners have so much money all of a sudden they increase their spending. Evidently what happens is that folks who have lots of money all of a sudden, feel rich and begin spending money on expensive stuff; fancy vacations, gifts to friends and family, etc. And then in a couple of years they look up and their big chunk of cash is mostly gone, but they have this large set of expenses they didn’t have before and their income has changed to much. As a result they are not even close to spending less than the earn, and end up blowing everything in a few years.
Another point the author makes is that you need to spend the time to become the expert on your personal finances. There are always going to be others smarter on the subject of money in general, but you need to be the expert on your money. You need to know where every dollar comes from and where every dollar goes. I’ve talked before about the importance of using a tool like Quicken, but this just brings that point home even more. You need to know where all your income comes from and what all your expenditures are. You need to be able to sort this info by category so you can see how much you spend on your cars, including all expenses like tax, insurance, etc. The same for housing, food, entertainment, etc. By knowing how much things really cost you can make intellegent decisions about where to cut back and what does not matter. Yes, it takes time to do this, but without being an expert on your personal finances you allow others to determine where your money goes, if for no other reason than you don’t have enough information to really know if you can afford a purchase.
All in all a good book, lots of interesting ideas and some good little stories about how and why the ideas work. And the sooner you wake up and realize that more money is not going to solve your long term financial problems the sooner you can take the first step and decide to be wealthy by becoming the expert in your money.