Chapter Seven: Over Three Ways To Protect Your Newly Found Money Tree

It might be surprising, but I didn’t realize until I was in my early 20’s that even wealthy people have a budget. I always thought internally ‘they have so much money, they can buy whatever they want.’ As mentioned previously, tons of folks have a negative perception on rich people. They think rich people are stingy, stuck up, and non-giving. It is probably because of a movie, film, YouTube video, meme, or literal instance where a rich person walks past someone in need and doesn’t help them or give them money.

But you have done that too, right? You have driven by that person who was holding that sign looking sad, frightened, scared, and upset, and you did absolutely nothing. You’ve walked by that person who was laying on the ground when it was cold outside and they were sleeping on and under cardboard to stay warm. I know you have. It happens to all of us.

I certainly have been in those situations where I am just unable to help at that moment. I feel horrible each time, but I know it actually is physically impossible to help every single person in this world. I certainly scope out the situation, surroundings and circumstances to see what I can do to help and assist. Do they need directions to a homeless shelter? Do they need food, water, wet wipes, a place to stay, a hug, handshake, what do they need or want? I can say that money is rarely the answer.

Money is a tool. And if used improperly, it simply will not work or create solutions to problems. Think of money like a fire. A fire can keep you warm, it can cook food, ward off baboons in certain Disney films, it can be exciting like in a firework – or it can be devastating like a forest fire that ravages homes and properties and takes lives. Fire is absolutely a tool. So is money. Both can be used incorrectly. If someone is a drug addict, money rarely solves the issue. If someone is homeless, money rarely solves the issue.

Back to budgets, because that was a bit of a tangent. Rich people are usually quite smart. That’s how they became well off. And rich people know the above situations are often accurate. You probably have seen someone you thought was rich not give to a singular person in need, but you probably didn’t see the same person make a $10,000 donation to the organization that helps those in need. Wealthy people budget. It’s as simple as that. And budgeting is easy… ‘spend less than you make.’

You can get more strict with it, and I suggest you do, especially early on in the journey. You need to know how much money you spend on every activity. Most banks will do this for you. Any good bank has a budgeting section where you can set alerts, alarms, or text messages if you are spending too much in a given category.

When I was younger I loved booze. Probably too much and I realized it early. One of the first things I did with my budget was only allocate $100 for alcohol for a whole month! For some, that is shockingly high and for others…haha, and you know who you are, that will be wildly low. I also determined how much I need to spend on food per month, entertainment, clothing – I mean, I created a legit budget.

This really is something you want to do. One thing I help clients with all the time is to carve out extra money and time that they didn’t know they were spending frivolously. A fun fear your brain has created is that of running out of money. I say ‘fun’ because it’s both a conscious and subconscious fear.

Here is an example: Your brain doesn’t want to lose. No one actually likes losing, ever. And if you have not shown your brain that you can manage money wisely and effectively, it knows (often rightfully so) that if you receive all the money you could ever want, it will eventually be gone. Poof, squandered. Because a tree can only produce so much fruit. You can always get more trees, but there will be a time where you sow and where you harvest. Bottom line, it is certainly possible to spend more than you make.

There can come a point where the scale gets skewed. If your net worth is $100,000,000,000, it’s going to be very hard to spend all of that. But it’s possible! For most humans out there I’m truly hoping we will be floating around that $100,000,000 mark, which can easily be spent. LOL! that’s right. I had to drop one of those in the book.

Creating a budget is a great way to begin to show your brain that you can handle money. It needs to be confident that you will not just blow it. As Chris Rock said on stage once, “Wealth gets passed on from generation to generation…rich is something you can lose during a crazy summer and a drug addiction.”

It’s wildly true. Wealth is money which creates more money constantly and consistently. It’s because there are processes and procedures in place that keep the money churning. It is similar to constantly planting, watering, taking care of, and harvesting more and more trees. We have to think about where our money is going and what’s happening with it. Are we spending it, or investing it? When we buy something, are we a consumer or an owner? Do we own or do we buy?

There are countless schools of thought on this topic! Some mentors I follow say ‘do not buy a home until you are 40 with a family. Keep building cash until you know exactly what to do with it.’ Other mentors say ‘own real estate and pay it off quicker with a first position HELOC’. Others say, ‘save your 20%, buy a house, rehab it, live in it for 2 years, fix it up, sell it, and use the cash to do it again and continue fixing and flipping houses for 4-8 years. Save up and start flipping homes.’

Who do you listen do? Which path do you take?

The answer: which one makes sense to you, right now?

At some point, we have to chose, we have to make a decision, and we have to go with it. No one knows if the decision is the right or wrong one until later. If the decision turned out to be the wrong one or simply not the best choice, learn from it, regroup, and move forward.

When picking a path, a direction, you will begin a certain chapter in your life. Eric Thomas says “If you want a hard life, do what’s easy. If you want an easy life, do what’s hard.”

What the heck does that mean? Tons. I could do a whole book on just that quote. Hmmm. Not a bad idea. BUT, I’ll certainly do a quote of the week video about it.

Here’s my take on that quote. It seems obvious as we can easily say there are certain mentors, information, books, approaches and suggestions that will be less work than others. Obviously saving 20% down for a home is harder than buying one through FHA, which is just 3.5% down.

And of course renting is actually massively easier than buying a home – especially if you are self-employed. Both have various pros and cons. My advice, just research it all. Watch YouTube videos, Tweet at me @newsomenuggets, and we can chat about which might be best for you. I’ll help guide you towards the best choices.

The most important lesson is to know how much you spend, and on what areas of your life. Some have said ‘what you spend most of your money on can show you what you find most important in you life.’

Now, obviously the majority of people will be spending most of their money on their home. I get that. Makes tons of sense. But look closely at what else you spend money on. How much do you spend on alcohol per month, relative to buying books? Just that one small metric alone might shock you.

Since marijuana is now legal in the vast amount of places that people might be reading this book, how much do you spend on weed, per month? Or sweets? Or cigarettes? Or 126 cigars? Or other drugs? Simply, how much money do you spend on vices and ‘escapes?’ If the answer is none, I can assure you that you are better disciplined financially than the vast majority of humans on this planet.

Another cost that really inhibits people from financial freedom is their transportation. Too many people factor in just the cost of their vehicle. You also have to consider gas, maintenance, insurance, tag renewal, and the small cost of keeping it clean and tidy.

Unfortunately, this becomes a trap for far too many people. Someone will purchase a super cheap vehicle that constantly breaks down (which in turn costs money to repair), and they will not keep their insurance or tags up to date (because it costs too much money), which in the long run will cost them massively if they get pulled over. Speeding tickets, DUI’s, parking tickets, and other random bills will really stack up! Avoid this trap by taking care of your vehicle, keeping everything clean, tidy, and up to date. And of course, never drive intoxicated, don’t drive recklessly, and don’t speed! Getting just one ticket can increase your insurance cost significantly, and is often an extra $150-$350 that you totally did not anticipate spending. This lifestyle can keep many people poor. Speaking of, I’m going to go get my registration renewed right now! (I’m head out the door to get that taken care of).

Go through your spending and see what ‘sectors’ of your life you can reasonably cut back in (rightfully so), and increase spending in other areas, such as investing in yourself and your future. This practice is to prove to your brain that you are able to handle larger sums of money. The more you can reassure yourself and your internal mind that you are able to handle money, protect it, and spend it appropriately, the more likely you are to receive more of it!

• Do you have a budget?
• What is one area in your life you admittedly spend too much money?
• What is one area in your life where you spend too little money?
• What happens to be something you’ve never spent money on, but you should?