I’ve always been fascinated by the rich and wealthy. Our society worships them. Early into my entrepreneurial journey, I made an intentional effort to learn more about money since it was integral to my definition of a successful business. And what I learned was that your money mindset was the most important thing to master. Your mindset includes how you feel: about money, about making money, about spending money, about having money, and about losing money. Each facet of your relationship with money must be examined and adjusted or in times of pressure, you will fall back to an internal dialogue that might not align with your desires. After mindset, you need good habits. And of course, as a project manager, I believe habits are best mastered in a system. The right system will create an atmosphere for you to consistently execute the right habits. For example, if you want to exercise more you have to create a system that will encourage more of the habits you want (like placing workout clothes on the bed the night before) and discourage the habits you do not want (like buying fewer unhealthy snacks). Wherever you are in your money journey, you should create a system of habits that will help you eradicate debt (good, bad, or otherwise), pay current expenses, and save for future expenses. So for the past seven years, creating a successful money system has been my focus.
Now, learning how to build a successful money system or wealth system has not been easy. I had to learn how each piece would work individually and how to put them all together. I read books, attended classes, purchased courses, sought mentors, and made a ton of mistakes! However, one of the most impactful aspects of any system is the environment that it will operate in. Our money/wealth systems operate within the economy of the United States. For example, say my wealth system included going to college, graduating, and getting a good job. Well in 2008 when I graduated from undergrad the environment/economy in which my system existed greatly impacted my system’s success. In 2008, America (and the rest of the world) experienced “The Great Recession.” Although I had a great system (school, degree, job), the environment/economy placed limitations on how well my system could operate (lack of jobs). Thankfully I had always planned to pursue a law degree, but even then, the environmental limitations made that decision even more challenging. The financial crisis made law admissions even more competitive (because now seemingly everyone was going back to school) and finding intern or clerk opportunities more challenging as well (because now everyone is in school). Then upon graduation, the job crisis was still evident because senior-level executives did not want to retire so that stifled mid-level employees from moving up which impacted entry-level employees from moving up which limited the availability of entry-level positions for recent graduates. So now the system I adopted was completely broken. The school + degree + advanced degree = success formula was inaccurate and I had to find a new formula and upgrade my system. However, again I was blessed with another pivot, which was starting a business while in law school. Although at the time I didn’t plan each pivot (undergrad to law school and career to entrepreneurship) because I had such an understanding about what was happening in the economy and was being strategic, I thankful I was just obedient to the path in front of me.
So what does this have to do with you? I’ll explain. If you are a good little American citizen you might have also copied the above-mentioned formula for success as your money/wealth system and pressed play. Then when the tape got jammed (2008) you took it out blew on it and put it back in. Then when the screen when black (anytime after 2008 including right now) you realized the tape is just not working… The formula and system are not working. We cannot just go to school, get a degree (debt), get another degree (more debt), and then get a job and land in wealth. As of this writing, 26+ million Americans are unemployed due to the COVID-19 pandemic and we are just getting started… The only way out is to scratch the plan and start all over! Here’s how:
Get some knowledge under your belt - Once I graduated from law school and saw so many of my peers struggling to find jobs I began to study more of exactly what happened in the 2008 financial crisis and what are the lessons to be learned. One of my favorite resources on the topic is the movie, The Big Short (no I haven’t read the book yet!), but that’s not the only resource on the topic it’s just a very entertaining one. In 2019, there were already alerts of a global slowdown and the COVID-19 pandemic will not help that impending recession. Knowing how some do well in tough economic times helps to draft a new blueprint for our current economic crisis and the ones that will come. This blueprint is essential to creating the safeguards of your money/wealth system. Yes, there are a million ways to make money but which ways work in times of crisis. Any project manager will tell you that preparation for when the plan does not go perfectly is almost more important than making the perfect plan. Beyond financial crisis knowledge, you still need to understand the fundamentals about money, how it moves, and how to maximize how much you can earn. Three of my favorite resources on this are (for a list of some others visit here):
Financial Peace University - This is literally an entire system of debt eradication and financial disciple based upon biblical principle however, it doesn’t teach how to make money. Nevertheless, to get to the right step of making and keeping more you have to get out of any erroneous teachings and bad situations.
Rich Dad Poor Dad, & Cashflow Quadrant - These books together will help you re-evaluate your money generation systems and encourage you to explore how you want to make money and keep your money.
I Will Teach You To Be Rich - This is a fun review of tested money systems but for the modern age (ie for our debit card/credit card society).
Make a plan to not only survive but thrive - Sometimes when you make money mistakes or learn that you grew up with limitations on your money mindset the first reaction is to just get out of where you are and get back to safe harbor. That is correct but not complete. Yes if you are in debt you need to create a plan to eradicate your debt. But do not let fear limit the plan to just debt eradication. Include in your plan ways to generate more money then you need and eventually how to create enough money for future generations. Here are some components of a well thought out plan:
Debt eradication - Even if you currently have debt any good plan will address future debt eradication as well. Debt is not the enemy. Debt without a plan is.
Covering current expenses - Are you making enough to cover your current expenses? Are you making enough to cover your ideal situation (housing, car, travel, etc.)? A good plan will be able to cover where you are and take you to your ideal place.
Covering for emergencies - The best plans help you cover the inevitable unplanned moments of life, like medical emergencies, car trouble, insurance issues, childcare issues, tech upgrades, etc. You should have a way to cover emergencies without going into debt.
Planning for the future - Whether or not you receive retirement from your job your retirement is your responsibility. Your plan needs to address when you no longer want to work not just when you no longer can work.
Planning for future generations - Can you create a blueprint that will provide a strong financial foundation for future generations? Can they get not only an inheritance but a system for sustainability? What would their life look like if they started off with a house, car, etc. paid for and they worked not only to pay bills but to have a lifestyle that they choose?
Work the plan - There’s no easy way to say it but you have to work the plan. It might take months or years but working your wealth plan will be well worth it!
Recessions come and go but the knowledge you have and a good system will help you.