Reason You're Not Rich, Christine Luken, Financial Lifeguard

The Number 1 Reason You’re Not Rich (Podcast)

Reason You're Not Rich, Christine Luken, Financial Lifeguard

Today’s episode is “The Number 1 Reason You’re Not Rich.”  Now I know what some of you are thinking.  “Being rich would be nice, but I’m just trying to get financially healthy.”  Stay tuned because what you will hear today, if you apply it, will improve your financial condition whatever it may currently be.

  • As I’ve discussed in previous podcasts and blogs, unhealthy financial habits can wreak havoc on our physical health, our relationships, and our emotions. Money and personal finances are intertwined with almost every area of our lives, so wouldn’t it be wise to make a study of it?  The very best investment you can make is in your own financial education.

  • Currently there is no formalized program to teach even the basics of personal finance in America’s schools. When I was in the 5th grade, I remember just one instance of a lesson that remotely taught me anything about money.  Our teacher told us we had a certain dollar amount to “buy” groceries for the week.  We looked through weekly grocery circulars and cut out pictures of the food we would buy to feed ourselves.  That was the first time it dawned on me that groceries were not cheap!  In high school, we were taught how to balance a checkbook.  But that’s it!

  • Some of us were lucky enough to have parents teach us about money at home. My parents taught my brother and me the value of work and money by allowing us to earn up to $5 a week doing chores.  In high school, my Dad delegated a new chore to me: writing out the checks for the household bills, which he would then sign.  When I turned 16 and inherited my mom’s old car, one of my responsibilities was grocery shopping.  My mom would give me the list and a set amount of money.  She said if I was creative and used coupons and sales, I could keep what I saved for gas money.  Those real life lessons from my parents were very valuable.  However, I still think that I was ill-prepared to really handle money on my own when I graduated.

  • In my years of financial coaching, I’ve realized that the difference between people who have money and people who don’t is financial literacy. Of course there are some people with high incomes – athletes, movie stars, and lottery winners – who are financially illiterate.  If they don’t make an effort to learn how to handle that money, it will soon be gone!

  • Can a poor person become rich through financial education? YES!  I once heard a financial planner tell a group of people an interesting story.  As a boy, he was raised by a single mother and it was a struggle just to make ends meet. He remembered an investment salesman visiting his mom and telling her how if she just invested a small amount every month that she could retire a rich woman.  His mom told the salesman that she didn’t even have enough money to pay the bills, much less invest.  She tossed the investment brochure in the trash.  Her son fished it out and studied the chart of the compounding power of interest on it.  He decided then and there that he would learn all about money so that he could understand that chart and be rich.  He wanted to be able to take care of his mother and never live hand to mouth again.  Guess what?  That man studied hard, put himself through college, and became a stock broker.  He’s now a rich man who trades stocks and owns multiple businesses.  Why?  Because he put in the time, effort, and cash to educate himself about money.

  • The great news is that you don’t have to spend a fortune – or even go to college – to educate yourself about personal finance. If you have internet access or a library card, you have everything you need to get rich!  The problem is that most people don’t want to spend the time or effort to increase their intellectual capital.  Don’t think you have time for an education?  The average person spends 1 hour and 45 minutes on social media sites per day plus almost 5 hours watching TV.  Just think what would happen to your finances if you spent 1 hour per day – or even 30 minutes! – reading, listening, or watching something that expanded your thinking and helped you manage your money better! One my favorite quotes from the late great Jim Rohn is this: “If you want to earn more, then you’ve got to learn more.”  As your financial understanding grows, so will your bank balance.

  • Don’t just listen to one person’s perspective about money – even mine! Robert Kiyosaki, author of Rich Dad, Poor Dad, says that there are 3 sides to every coin, not two.  The third side is the edge of the coin.  The wise person can stand on the edge of the coin and see both sides.  This means that you can objectively listen to both sides of an issue and evaluate both perspectives before making a decision.  This is a smart thing to do when it comes to money and life in general.  Don’t just blindly follow just one teacher or expert on finances.  Listen to multiple perspectives and come to your own conclusions regarding what’s best for your particular financial situation.

  • There is one ingredient that you must add to your learning, and that is ACTION. You need to practice, apply, and try the things you learn.  In Rich Dad, Poor Dad, Robert Kiyosaki talks about a 3 day real estate investment class that he attended before he started buying rental homes.  The final instructions from his teacher were to go out and evaluate 100 properties using the formula they’d learned in the class – BUT don’t buy anything.  This was a great way to practice without spending any money.  Robert didn’t put any real money down until he had practiced on those first 100 properties.

  • Where do you start? There are many great books, podcasts, blogs, and classes on personal finance and investment topics.  Everyone should have a basic education on the following topics: budgeting, debt, saving & investing, the banking system and taxes.  Get together with a group of like-minded people and talk about these topics.  I belong to a monthly book club comprised of other business owners and we read or listen to books on personal finance, sales and marketing, and business success.

  • When do you finish learning about money? You don’t.  When I graduated from college, my dad gave me some words of wisdom.  He said, “You don’t stop reading and learning when you finish school.  In fact, your education is just beginning.”

  • A few great websites to check out to get you started:

Thank you for listening to this episode of Financial Lifeguard on Duty. You can find out if financial coaching is right for you by scheduling a 15-minute chat with me.  I look forward to talking with you next time.  Until then, have a great week!