Thursday, March 8, 2018
My Money Karma Theory
What does this title mean? Has the Budget Boss gone crazy? Possibly, but hear me out. It’s the one-year anniversary of Budget Boss tomorrow and after a whole year and 290 plus posts about personal finance, I figured I would speak about money karma. Now I do not believe in superstition, but I do believe in money karma. I believe how you treat money will ultimately be how money treats you. Think of your wallet as an ex-girlfriend. If you keep going back to it and leaving it empty-handed, soon when you go back there will be nothing left. You are better off just letting it be, believe me. When it comes to money, the better you are with it, the easier life will be on you. I believe this full heartedly. Now don’t get me wrong, bad things do happen to good people. It just turns out they are better equipped to handle them than those who are hanging on by a thread. In this post, I will explain my money karma theory and how it pertains to personal finance. Listen up because it just might be the most important thing I have ever written.
Why do money problems seem to follow some people around?
You wouldn’t believe how many times I have heard someone say, “Well I am just not good with money.” Wrong! I think everyone can be good with money. I just think some people have their priorities straight while others don’t. Let’s start with those that don’t. In my opinion, most people who are “Bad with money,” do not understand the ramifications of their actions when it comes to money. Where does this disregard come from? Hard to say, but chances are it was part of their childhood. Not knowing how important the decisions you make on a day to day basis will most certainly lead you to be bad with money. For instance, someone who eats out for lunch every day is more likely to use credit for their purchases. This same person who is more likely to use credit for their purchases is in turn more likely to be in debt. This person is more likely to have a negative cash flow every month which inhibits them from making important purchases, like investments or insurance. Those who do not invest for the future and do not protect those investments with insurance are likely to not retire comfortably, or at all.
So, is this person not good with money, or do they just not realize that the decisions they make on a daily basis affect their life in sometimes drastic ways? Let’s look a little further into this issue.
Money issues are the number one cause of stress in adults. Stress is a major cause of health issues in adults. Money stress is the number one cause of divorce for married couples. Why does all this happen?
Emergency Funds
I speak about them a lot, but they are vitally important. Why might you ask? Here is my reason. I have an emergency fund of 1 year’s living expenses sitting in the bank. Why would I do this and not invest it? I do this because it relieves stress for me. I know if something happens I can live for a whole year and plan my next move. This money serves no purpose, except to relieve my stress. I have yet to have to use this money since I saved it up, over 5 years ago. When I only had 300 bucks in my account, it was always being used. Coincidence? I think not.
8 Reasons You Need an Emergency Fund – The Balance
Savings and Investment
When I first started saving money I was always excited about hitting new savings levels. When I was broke, I would think about what I would do with $1000 or $10,000. When I finally saved some money and invested it, I now have no desire to touch that money. In fact, I will do almost anything possible to not touch my Tax-Free Savings Account. What happened to all the things I wanted to do with money when I used to have none? They just aren’t that important anymore. Coincidence? You tell me.
Insurance
Back when I was struggling, health was always a factor. I had no medical insurance and no disability coverage at work. Now, when I have some savings built up, a job opportunity arose where I now have health benefits that pay for my pricey prescription plan and disability coverage should I get terribly sick. Have I gotten seriously ill since joining my new career? No, and in fact, I feel healthier than ever before. Suddenly when I have coverage, I need it less. Weird, isn’t it?
7 Life Insurance Myths – Budget Boss
Happiness
Does that person at work who is always happy just make you sick? It used to do that to me too. I always wondered how someone could be happy literally all the time. Now I think about what makes me happy and the things that could make me happier. What changed? I guess seeing someone who is happy when you are unhappy would irk just about anyone. Are they different, or are you? Well, chances are it’s you, and if you haven’t changed even a little you are probably the one who needs examining. I know that’s true about me. I have things in my life that bother me, but the fault lies with me and no one else. Sure, there are bad people out there, but they don’t control my life. I can be gone from them when I choose, so if I chose to not be gone, that’s my choice. That is a concept that escaped me years ago when it seemed everyone was out to get me. Everyone is not out to get me, or you for that matter. Truth be told, they could care less.
Opportunities
Do I believe in luck? I certainly do. But I also believe in putting yourself in a position to be lucky. Here is an example. What if I told you I could give you a 75K annual salary for life and all you had to do was give me 50K right now. Would you do it? Well, of course, you would. You would be stupid not to. Here is the problem: Do you have 50K? If you don’t, the deal is off. A lost opportunity. Okay, so what if I told you that you sell a rental property for 350K profit 25 years from now and the sale of that property would facilitate you being able to retire early. The catch is you must work very hard for those 25 years and sacrifice luxuries so that you can be mortgage free, debt free, and investment flush by the age of 57. Would you live below your means for 25 years if it meant early retirement? Did that person get lucky because of the recent real estate boom? Were they the benefit of dumb luck or the beneficiary of hard work? If they did not buy the property when they were young, work hard to service the debt and sacrifice to pay it off on time, all would be for not.
Saving money got him the down payment on the rental property. Hard work and sacrifice helped him build up savings while paying down his mortgages. Selling at the right time helped him secure a decent profit. Protecting what he earned helped him keep what he had. Was it someone who was good with money? Or was it someone who prioritized their future over their present? By the way, this is an actual person I know very well. Why do some people have all the luck and others have all the bad luck?
10 Key Steps to Financial Independence – Budget Boss
The moral of the story is that no one person is immune to bad luck, and no one person has a stranglehold on all the good luck. From personal experience, I have noticed that less shitty things happen to me when I am prepared for shitty things happening. Murphy’s Law is less prevalent. Murphy went on vacation. I remember how I dreaded rent day, scrambling to find the money the night before or even worse, the week after. Now I go pay my rent early to get it out of the way. Am I rich? Not even close. But I am prepared. When you have to solid financial base, you focus on building, not surviving. The base is simple:
- Emergency Savings – Protect your day to day life
- Saving/Investing – Protect your future
- Insurance – Protect your income and investments
- Your home – Protect yourself and your family from poverty
Protect, protect, protect. I say it a lot, but that is what it is all about. When you have very little, you value things with little value. Things like your cell phone, or your clothes, or your car. When you are focused on growth, you value things that are priceless, like your health, your family, and your future.
Ever wonder why 2 broke people will fight over 5 bucks and rich people will smile at those who owe them thousands? The reason is simple: Their priorities have changed and therefore their outlook on life and money has as well. It all gets better when you get better. That you can take to the bank.
Thanks for tuning in today as Anniversary Week continues at Budget Boss. Don’t forget to tune in tomorrow as we conclude the week with what the future holds for Budget Boss. If you would like to get Murphy the hell out of your life, send me a message at joe@budgetboss.ca. Let’s tell that jerk what’s up. Have a great day Bosses!
“Coincidence is the word we use when we can’t see the levers and pulleys.” – Emma Bull
Email – joe@budgetboss.ca
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