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The Value of Knowing the Rules of the Financial Games You Play…

Knowing the rules is pretty important if you want to have any chance of coming out a winner in the game of life and this is especially true when it comes to finances.
I’d like to use the following as an example of why knowing the rules is so important if you plan to get control of your money and learn how to make more for the future:
Let’s say you gather up your family one Saturday afternoon to play a professional football game with the New England Patriots.  Let’s remember that they are the National Champions…of course they are very good, very big and very talented.  What is your chance of winning a game against such a team?   Zero to none, is my prediction! You get to be the quarterback but you have no experience whatsoever. You don’t necessarily have any muscles and you really don’t have any experience.  Your equipment is haphazard and poor, but nevertheless you are going to play.  In terms of financial games this is no different than you going up against Wells Fargo Bank, for example or any other experienced financial institution.
The game starts and for some reason a miracle occurs and your team is doing well.  Your team is ahead two touchdowns as you break for halftime.  The Patriots are livid.  Your team is making a mockery out of them.  They are going to make adjustments in the third quarter and decide they get to change the rules of the game and not even tell you!  The Patriots have 55 players earning on average $3 million each. Their players all played high school and college football — they have experience that is extremely impressive. And then of all things, they get to change the rules without telling you and the referees have to do whatever the Patriots ask them to. Again I ask, what is your chance of winning? Zshutterstock_248620027ERO.
Here is your problem when working with big banks, financial investment advisers, credit card companies, mutual fund brokers, foreign exchanges, and the like.  They have years of experience, attorneys, tax CPA’s and millions of clients to practice on. They have the resources, know-how, and backing to compete in a very complex arena and come out the winners.
Here is my suggestion:  Take the time to study your financial decisions.  Learn the backdrop, the rules, and ask questions.  Keep a journal, and regardless of what is said, test everything. Leave no stone unturned. You must know, for yourself, the information you need that will help you make the best financial decisions. While you don’t need to know everything, you do need to be aware of the rules behind the financial games YOU are personally playing. Take the time to read your credit card contracts, mortgage documents, 401(k) and bank statements, etc. It will take time but you must be willing to put forth this kind of effort, or you are just giving your money away.
Another trick is to thoroughly check out your financial decision and then pretend you made the investment, began using the credit card, took the insurance policy or whatever, then see what might happen. If it checked out, you are better prepared for next time.  If it fails, well then, what have you learned?  Plus you still have your money to invest again.  Here is a wise but ironic axiom from a smart money manager, “The deal of a lifetime only comes along once a week.”  Most financial decisions are not one-and-done.  Almost always are decisions on a continual need basis.  Don’t be fooled by those trying to sell you financial products who claim that there will ever only be one deal such as they are offering. This isn’t so. There will always be lots of good opportunities for those who take the time to examine the opportunity, to learn the rules surrounding it, and even have other professionals take a look at it and be sure it’s sound.
Here are basic steps to help you prepare to make good financial decisions in the future:

  1. Get out of all consumer debt, NOW.  This is possible only when you create a Spending Plan and  begin tracking your spending according to that plan. When you do so, you will find extra income that you did not know you were wasting. This can be incorporated into a Debt Plan that will accelerate debt payoff RAPIDLY.
  2. Create surplus. Once consumer debt is eliminated, you can more rapidly create a cash surplus and start saving up for the future.
  3. Make decisions on paper, meaning only on paper and don’t use real money for a short time. When your ideas are working with regularity, then use real money.
  4. Record successes and failures.  Always start with a written game plan, whether it is trying to control your spending, or getting our of debt, or learning how to make more money. Nothing stays the same for very long so you will need to refer to your plans at least monthly and keep a journal and refer back to it often to see where you have made errors. It has been said that those who don’t know history are more than likely doomed to repeat it.

To learn more about creating a Spending Plan, Debt Plan, and Retirement Plan that will actually help you understand the rules you are playing and come out a winner, even against large financial institutions, contact me today.

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