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When You Track Your Money, You Control It…

As I mentioned in a recent previous post, Financial Principles:  Lighthouses that Will Never Steer You Wrong, I want to expound on 10 financial principles that are absolute and unchanging an that if applied will dramatically change your financial life; today’s post will cover principle 2:

Money Mastery Principle 2: When You Track Your Money, You Control It. Corporations are required to track spending and assets, yet individuals are reluctant to take the time to track and control their personal spending. People who do track find they are wasting at least $312 every month that they could be applying to savings or using to pay down debt.  Planning how to spend, and spending according to a plan is the key to becoming wealthy. To any responsible person, this should be the only option.

Consider the importance of tracking.  If officials did not track the score in a basketball game, what fun would that be?  How would know who won?  If you did not have a gasoline gauge on your car, you might have to walk a long way when you run out of gas.  In a similar way, if you don’t track your spending, how will you know when you have exceeded the money available?

All 10 Money Mastery principles are profound and extremely valuable, but tracking your spending has some of the most immediate impact and can help you get in control quickly. Without learning to track your spending, you will always be overspending, over-borrowing, never knowing when you can really go on a vacation and actually afford to do so, when you will be totally debt-free, nor how to plan for retirement.  I suggest you learn how to control your emotional spending by keeping track of what you spend, beginning today.

To learn how to do this, feel free to contact me at peter@moneymatery.com. I also suggest you go here to learn more online:  Money Mastery Online Program.

Leaked “Panama’s Papers” Show Corruption Worldwide

According to a May 2016 article in Research magazine by Alexei Bayer, the Panamanian law firm, Mossack Fonseca, accidentally leaked some 11,000 account names and numbers showing the prime minister of England, Putin of Russia, and many others as having hidden wealth in Panama bank accounts.  Add to this thousands of other safe havens like Nassau, Belize, Isle of Mann and what do you have?  Politicians that get in a position to know and control money do so for their own benefit.  I am not even touching the Clinton Foundation or Hillary’s hidden emails.

The article further states that the real takeaway from what are being called “Panama’s Papers” is the unprecedented scale of the pilfering.  Estimates put illegal pilfering at around $8 trillion in the 10 years between 2004 and 2013, which is the equivalent of India’s, Brazil’s, Germany’s and Russia’s GDP combined!

Just take Putin’s personal wealth, now estimated at close to $40 billion.  High Russian government officials were found to have offshore accounts and companies.  Since 2009, over $500 billion has left Russia, with outflows averaging 3 percent of the GDP a year.  How can a country get ahead when their own profits are leaving them behind and taking up house elsewhere?

On a personal level, how does a person get ahead?  

Here are my thoughts:  Trotty Veck once said,

“There are two things a person should never worry about, that which you control, and that which you don’t.”

Since we don’t have control of these far away events, we need to focus on what we do control and that’s our own money (at least for now).  Although illegal activities, greed, and pilfering from high government officials will affect and have affected economies worldwide, our own money should be our first concern. If we can’t even control that, why do we need to worry about how much of the rest of the world is out of control financially?

There are 4, and only 4 areas of personal financial management that you need to be concerned about:

  1. Control Spending
  2. Eliminate Debt
  3. Reduce Taxes
  4. Maximize Savings/Retirement Income

Each of these areas are interrelated and must work together in harmony. You cannot just focus on one while ignoring another. All must work together at the same time. Now you may not feel like you are in control of these four areas, but you can be.

For fear of being mundane, I suggest you go to www.moneymastery.com and sign up for at least the “basic” online training for just $4.95 a month.  Start by completing the “7 Steps to Money Mastery” online training course (short and simple and gets you on track within two weeks) and then assess where you are at with these 4 areas of spending, debt, taxes and retirement.  You will be amazed at how quickly you can take charge of your personal life and finances, right now. In addition to the control you will begin to feel, you will also get on the road to quickly securing an emergency fund, have money for fun, and start eliminating all debt so you can be debt-free in 10 years (yes, I said 10 years or less and that includes your mortgage, regardless of how much debt you have).  

Call me with questions, I will be happy to discuss at no charge:  (801) 292-1099.

Are You a True “Investor” or Just a Simple “Saver”?

As people apply a systematic, principled-approach to their finances, such as the one I teach my clients in the Money Mastery program, their thinking begins to change, fundamentally. They no longer feel out of control financially and begin to see each financial decision as it relates to a spending plan, savings plan, debt elimination plan, and tax reduction plan. Because they have an overall Master Plan with a big picture view of how each area of their finances must work together, they are personally and intimately connected to the details that make following those plans possible. They can avoid costly financial mistakes and begin to see highly lucrative opportunities for wealth expansion in the future. With time, they move from being simply a “saver” — someone who gives his or her money over to others to handle in hopes of making more — and instead begins to manipulate and handle that money personally as a dynamic investor.

What’s the difference between a “saver” and an “investor?” A saver lets someone else handle their money, thus eliminating opportunities to learn for themselves what will and will not make them more money. Examples of these types of savers are 401(k) participants, individuals invested in mutual funds and thus forced to use managers who control what happens to their money, and so forth. Often these types of people are referred to as “investors” because they are turning a portion of their money over to be “invested” in mutual funds and stock equities in hopes of gaining a nice return. But even though they may be referred to as “investors” that doesn’t make them such.

Unfortunately this group of people cannot be considered true investors because they are not personally controlling what happens to their money, nor learning how to put that money in motion to generate even more money. The whole idea behind using an integrated system of principles to manager your money, such as the Money Mastery system, is to learn to think like an investor. Doing so helps prevent you from getting into a “herd” mentality. Savers have their heads down, following the person in front of them, hoping for the best. If the rest of the herd is on a good path, then all is well. But unfortunately, as we have seen time and again with the stock market, what goes up must also come down. If the herd is following someone who is headed over the cliff, everyone else is going over with them.

I use this chart on the left to help people understand how little control the average “investor” has over their money when they turn it over to other people to manage in the market.

By contrast, a true investor has his head up, seeking to take action, observing his surroundings, expanding his perceptions, and making a plan by which he will put his money in motion to create more. Investing goes far beyond simply dumping money into a particular investment vehicle, such as a 401(k), or participating in a certain type of investment procedure. Remember, investing should be seen as a plan, not a product or procedure.