The Last Time You Lent Someone Money…What Happened?
“Saving must become a priority, not just a thought. Pay yourself first.”
~Dave Ramsey
Hey,
When people ask to borrow money, I have a standard answer:
“No.”
It doesn’t matter who it is, or what they say the money is for, that’s my default answer.
And as a result, rarely do people ask to borrow money from me.
It’s not that I don’t care or don’t want to help them…
It’s just that I know from experience most people will not pay me back, and then I’ll have to waste even more money (in the form of my time) chasing them down.
Besides, the people who most often ask others to borrow money are the same people who struggle the most with keeping money.
They are often perpetually broke. They might mean well, but they have bad financial habits.
More cashflow to them just means they have more money to spend faster.
I’m sure you’ve heard how most lottery winners who win million dollar jackpots are broke within 5 years. It’s very true. At my mastermind events, which are all about wealth-creation, wealth-retention, and investing, we actually show studies that talk about this phenomenon.
Despite what most believe, more cashflow is not the answer to becoming financially free if you have poor financial habits.
I’ve found that the majority of the population are terrible when it comes to money. Not just average, but terrible.
They struggle to make it. And they struggle even more to keep it.
It’s no surprise though. Their habits around money have formed from decades of conditioning. Conditioning from their parents, the education system, and society – who, for the most part, also have no clue about managing money.
So please don’t take this as me judging broke people or thinking I’m any smarter than them.
I was just taught good financial lessons from a young age.
My parents were not wealthy. They were, and still are, wheat and sheep farmers.
Supporting 4 kids was really hard for them. They had to be careful not to waste money.
For example, I’d never get new clothes – I’d always get hand-me-downs.
Not the clothes first worn by my older brother either, but the clothes from our even-older brother. By the time they got to me, they’d be full of holes.
So I learned to save money well, and to be comfortable with the idea of accumulating cash without the urge to go immediately spend it.
When I was 9, my brother and I started selling potatoes on the side of the road.
Some parents might stop their kids from doing that, thinking it’s too dangerous. Not mine. When we had our first $9 day from 3 customers, they celebrated that with us.
After that, I had these huge ambitions to build my potato stall empire.
I planted a whole garden of potatoes and waited months for them to fully grow… then, just before harvesting them, my sister ripped every single one of them out of the ground in retaliation for some argument we had. The business never recovered.
There were lots of little business’ like that, and I was always encouraged to pursue them.
I was told to constantly ‘save’ and not waste money – so I was, and still am to this day, very frugal.
Most people are the opposite.
I know people who’ve made in the high tens of millions of dollars who are close to broke. They’re unable to pay vendors, affiliates, and the rent on their extravagant homes.
They have a talent for generating money, but no clue on how to manage it.
My point is, most people (maybe even you) have a very different experience when it comes to learning about making and keeping their money.
If you weren’t as fortunate as I was in that area, don’t worry too much. You can learn new financial habits.
The first thing you’ve got to do is stop wasting money on things you don’t need.
For myself, I spend aggressively on things which can generate more money, and which I enjoy. I buy a lot of assets. Like the piece of real estate I’m on right now typing this to you.
Most people spend aggressively on things that don’t generate more money, but which they enjoy. They buy a lot of liabilities. The latest set of golf clubs. The new purse from Louis Vuitton. A brand new top-of-the line BMW.
I’m not saying you shouldn’t enjoy your money.
But what counts is that your net expenditure is in favor of assets, not liabilities. As long as you consistently invest more of your cashflow into assets, then it’s actually difficult for you to end up poor.
Of course, you’ll need to be generating enough cash where you’re able to fund a modest lifestyle and have some left over to invest in those assets.
And that’s the second thing you’ve got to do; start a business. Do it part-time in the beginning, but move to full time as soon as you have consistent cash coming in.
~Dave Ramsey
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