Here’s Why Your Friends Are
Most of the time when we talk about personal finance,
topics including credit card debt, savings, investments,
insurance, and coupons creep into the discussion.
Since nobody wears their net worth pinned to their chest, we
truly have no inkling what our neighbors real personal financial
situation is at any given point and time. What we promise you to
be true is that what appears to be an ocean of success around
you is merely nothing more than a mirage of many people living
on an obligatory basis to pay their bills. Your friends will never
tell you they are drowning in quicksand, but people around you
are going broke every day and here are the reasons why.
Your ego is something that can make you stronger or become an
insurmountable obstacle to achieving success. Remember, your ego is
the part of your mind that contains memory. It is ultimately what shapes
your planning and your reality. When it comes to money, ego is one of
those drivers that make people you know broke. This doesn’t mean that
they are living out in a trailer park, but it does mean that they are fulfilled
by keeping up with the Jones’ and eating out at the latest and greatest
restaurant. How will your ego react when your neighbor buys a new
Range Rover? Or puts in a new pool in their backyard? Or takes a 10 day
vacation come Christmas time in the British Virgin Islands?
A great book is ‘Predictably Irrational’ by Dan Ariely. The book has
some fascinating stories, but the truth is that most of your friends make
irrational decisions around their money in spite of the facts in front of
them. Some people don’t take advantage of the ‘free’ match from their
401(k) at work because they don’t believe they can save money. We are
talking about FREE money! People don’t take gains in their investments
after a great run because they believe their portfolio will go up
forever. It’s similar to being at the black jack table and thinking you can
beat the dealer forever. They’ll convince themselves to buy a pool telling
their brain that the value of their house will go up when all other
statistics say otherwise. This is why having outside counsel is so important
when making big financial decisions.
Time is now the number one money killer in today’s society in our opinion. There is so much information coming at the average
consumer, it’s very difficult to decipher fact from fiction. People you know who are broke (or going broke) are too ashamed to
ask for help because they went to a top ranked college or have an MBA behind their name. They just assume a quick search on
Google will help them get all of the information they need. However, both purchasing decisions and investment decisions have
become more complex. Benefits at work are more difficult to understand. Credit card contracts require you read the fine print.
Just because you are college educated doesn’t mean you are financially educated. In fact, when was the last time you took a
serious personal finance course?
The reality behind all of this is that knowing and doing are two very different concepts. We all know we need to lose weight,
yet without a program most people fail. We all know we need to exercise, yet without a weekly regimen most of us get off
track. If you meet someone in their 40’s or early 50’s and ask them what their biggest worry is in life they won’t say their health,
but instead they’ll respond “money”. If that’s the case, then why are so many people going broke and living just to meet the
standard of life that they have built for themselves? Ask your friends . . . that is if they are willing to put their ego on the table!