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Money Questions You Need to Ask

Money Questions You Need to Ask

Money Questions You Need to Ask

Asking better money questions is one of the keys to getting the future you want, says Veronica Karas, author of the new book, Money Matters: Everything You Should Have Learned in School but Didn’t.

On The BIGG Success Show today, we talk with Veronica Karas, CFP, about her new book, Money Matters: Everything You Should Have Learned in School, but Didn’t*. Here’s a summary of that discussion…

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The Only Two Sources of Money

money | BIGG SuccessBIGG success is life on your own terms. Money is one of the five elements of BIGG success.

When you look at the essence of money, you realize that it comes from only two sources.

Money for time

Time is another one of the five elements of BIGG success. You can trade your time for money.

This is the first source of money. For millions upon millions of people, it is the only source of money.

For the most part, these people will never get ahead. In fact, they will probably end up worse off than they are now.

Once they are unable to trade time for a paycheck, they will be destined to scrape by for the rest of their lives.

Money from money

Your money will work for you if you let it. When you save and invest, you make money on your money.

This is the second source of money. It’s how most wealthy people got rich.

Every human being has the same 24 hours a day. So the only way to get ahead is to get your money working for you.

The starting point of riches

How do you get money to go to work for you?

You must understand this concept:

What you make matters much less than what you keep.

You can’t always control your earnings. However, you are in full control of your spending.

The key to getting started on the road to riches is saving money, month after month. It leads to BIGG success!

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Ramp Up Your Savings

uptrend.jpgBigg success is life on your own terms. One of the five elements of bigg success is money. We need to plan ahead so we have enough money to live our golden years on our own terms once we no longer work, another one of the five elements. Otherwise, it’s hard to imagine our golden years being golden.

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The silver lining

There’s at least one silver lining (boy, we’re hitting all the precious metals today) in the dark cloud we’ve been experiencing with the economy – we’re saving money again! It’s not easy to save money, but many of us have realized how important it is to have a reserve.

Financial planners say we should save at least ten percent of our income to put toward retirement. We’ve even heard some recommend twelve percent.

A lot of us face a bigg challenge in socking away that amount of money. Some people may get discouraged because they can’t come close to saving ten percent. So they just don’t save at all.

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georgeI can relate to that because I’m somewhat of an all or nothing guy. But as my dad used to say, “Fifty percent of something is better than a hundred percent of nothing!”

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marylynnAnd nothing is what we end up with if we don’t stash some away now! But there’s no need to get discouraged if you’re not saving all that financial planners recommend.

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Ramp up your savings pain-free

Let’s consider a hypothetical couple that has a household income of $100,000. They should save $10,000 according to the experts, but they’re only able to save $3,000.

However, they are determined to find a way to get to that ten percent. They decide that, one way or another, they will make an extra $2,000 every year, year after year, for the next five years. So they plan to make $102,000 next year, $104,000 the following year and so on. This may come from pay raises, bonuses, or a part-time job or business.

Let’s assume that they’re able to invest all of this extra money in a tax-deductible retirement account so they don’t have to pay any taxes on this income now. They also keep investing the $3,000 base they started from.

By the fifth year, our hypothetical couple is making $108,000 and saving $11,000. So they’re now actually saving a little more than financial planners recommend and they did it relatively pain-free!

Ramp up your savings pain-free

Let’s consider a hypothetical couple that has a household income of $100,000. They should save $10,000 according to the experts, but they’re only able to save $3,000.

However, they are determined to find a way to get to that ten percent. They decide that, one way or another, they will make an extra $2,000 every year, year after year, for the next five years. So they plan to make $102,000 next year, $104,000 the following year and so on. This may come from pay raises, bonuses, or a part-time job or business.

Let’s assume that they’re able to invest all of this extra money in a tax-deductible retirement account so they don’t have to pay any taxes on this income now. They also keep investing the $3,000 base they started from.

By the fifth year, our hypothetical couple is making $108,000 and saving $11,000. So they’re now actually saving a little more than financial planners recommend and they did it relatively pain-free!

  • not being discouraged at what they could save now
  • saving every bit they could now
  • improving it a little bit every year

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The underlying secret

In this simple example is a secret that can help you with all your goals, not just your financial ones. Bigg success is life on your own terms. If you think about “terms” as time frames, you can reach bigg success faster.

We’ve said that you are the entrepreneur of a very important enterprise – your life. You may or may not be an entrepreneur in the traditional sense of the word. That’s immaterial. What’s important is that we can learn a lesson from successful entrepreneurs, particularly those who work with outside financiers like venture capitalists.

Milestones

An entrepreneur and a venture capitalist come to terms and strike a deal. The venture capitalist will invest a large amount of money in an entrepreneur’s company. However, the entrepreneur only gets a certain amount of it upfront. He or she must complete some agreed upon action – for example, get a customer – by a certain time to insure the venture capitalist puts in more money. These agreed upon actions with a deadline are called milestones.

As the entrepreneurs of our own lives, we think it’s helpful to set milestones in all areas of our lives.

Think about your bigg goal.

Then carve it up into milestones – specific activities you will complete by a certain time.

By breaking your bigg goal into little actions with deadlines, you can achieve things that you would think were impossible otherwise.

You can measure your progress each step of the way. You can take corrective action if you’re off the mark. Or if you’re ahead of schedule, you can celebrate your bigg success!

Do you set milestones?

Tell us how you do it by leaving a comment below, calling us at 888.455.BIGG or sending us an e-mail at bigginfo@biggsuccess.com.

Thanks so much for reading our post today!

Please join us next time as we build on this subject of milestones. We’ll talk about creating a cumulative advantage.

Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00371-041309.mp3

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Want to be a Millionaire? Here’s How to Think Like One

saleCNN Money recently asked forty people for the best advice they ever got about money. One of the people featured is Bill Nygren, the great manager of the Oakmark Select Fund.

He refers to an episode of the Johnny Carson show, where Johnny asked financial guru Andrew Tobias how someone with only $1,000 should invest it. Andrew Tobias said they should buy non-perishable items.

The crowd got quite a kick out of that answer!

Here was this great financial mind suggesting that people, with only a small amount of money, buy common, every day items instead of investing it.

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Saving money beats making money

There’s incredible wisdom in his answer. After all, whether we save money or invest it, we end up with more money. In fact, we end up with more, by saving it, because we don’t pay taxes on what we save; we only pay taxes on what we earn.

So if we save $100, we’ll be ahead by $100. If we earn $100 and we’re in the 25% tax bracket, we’ll only be ahead by $75.

Trading time for money

We all face tradeoffs. One of those is saving money by spending time or vice versa. For example, we often eat out to save time. But eating out costs more money than buying the groceries and cooking for ourselves.

Thinking like an investor, we have to ask ourselves how we’re spending that time. If it’s not productive – if it’s not saving us more money or making us more money – we might as well spend that time dining in.

Of course, it’s not just about money. We do understand quality of life! We just had to throw this in here to let you know we are human!

Weighing now vs. later

Another trade-off we have to consider is now vs. later. If we spend money today, we won’t have it tomorrow. But instead of spending it today, we could invest it. If we do that, we’ll have more money tomorrow (the original money plus whatever we earn on our investment).

Every outlay is an investment

Taking the advice Tobias gave, if I can save enough on the non-perishables I buy, it may be worth it to buy them now so I don’t have to pay more tomorrow. It’s just like investing the money now to have a greater amount later.

Millionaires get this concept

In his great book, The Millionaire Mind, Thomas Stanley talks about how millionaires spend their money. Of course, they invest. But millionaires are also very frugal.  Some examples that Stanley points out are:

  • They tend to buy used cars. New cars depreciate too quickly for millionaires.
  • They buy couture clothes, but usually buy them second-hand. They want the quality, but know they will pay much less this way.
  • In what you might think is a contradiction to these previous two, they buy high quality furniture, which tend to go up in value.

So you know you’re thinking like a millionaire when you’re looking at every dollar you spend as an investment. Are you getting the return you want?
 

Get the tips and tools you need to be a BIGG success.
Subscribe to the Bigg Success Weekly – it’s FREE!

Next time, we’ll talk about getting ahead by getting out. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

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(Image by nazreth)

Want to be a Millionaire? Here's How to Think Like One

saleCNN Money recently asked forty people for the best advice they ever got about money. One of the people featured is Bill Nygren, the great manager of the Oakmark Select Fund.

He refers to an episode of the Johnny Carson show, where Johnny asked financial guru Andrew Tobias how someone with only $1,000 should invest it. Andrew Tobias said they should buy non-perishable items.

The crowd got quite a kick out of that answer!

Here was this great financial mind suggesting that people, with only a small amount of money, buy common, every day items instead of investing it.

——

——

Saving money beats making money

There’s incredible wisdom in his answer. After all, whether we save money or invest it, we end up with more money. In fact, we end up with more, by saving it, because we don’t pay taxes on what we save; we only pay taxes on what we earn.

So if we save $100, we’ll be ahead by $100. If we earn $100 and we’re in the 25% tax bracket, we’ll only be ahead by $75.

Trading time for money

We all face tradeoffs. One of those is saving money by spending time or vice versa. For example, we often eat out to save time. But eating out costs more money than buying the groceries and cooking for ourselves.

Thinking like an investor, we have to ask ourselves how we’re spending that time. If it’s not productive – if it’s not saving us more money or making us more money – we might as well spend that time dining in.

Of course, it’s not just about money. We do understand quality of life! We just had to throw this in here to let you know we are human!

Weighing now vs. later

Another trade-off we have to consider is now vs. later. If we spend money today, we won’t have it tomorrow. But instead of spending it today, we could invest it. If we do that, we’ll have more money tomorrow (the original money plus whatever we earn on our investment).

Every outlay is an investment

Taking the advice Tobias gave, if I can save enough on the non-perishables I buy, it may be worth it to buy them now so I don’t have to pay more tomorrow. It’s just like investing the money now to have a greater amount later.

Millionaires get this concept

In his great book, The Millionaire Mind, Thomas Stanley talks about how millionaires spend their money. Of course, they invest. But millionaires are also very frugal.  Some examples that Stanley points out are:

  • They tend to buy used cars. New cars depreciate too quickly for millionaires.
  • They buy couture clothes, but usually buy them second-hand. They want the quality, but know they will pay much less this way.
  • In what you might think is a contradiction to these previous two, they buy high quality furniture, which tend to go up in value.

So you know you’re thinking like a millionaire when you’re looking at every dollar you spend as an investment. Are you getting the return you want?
 

Get the tips and tools you need to be a BIGG success.
Subscribe to the Bigg Success Weekly – it’s FREE!

Next time, we’ll talk about getting ahead by getting out. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Related posts

Print Your Own Money Legally

63 Moves to Stop Living from Paycheck to Paycheck

Getting Aggressively Passive: Creating A Passive Income That Sets You Free

(Image by nazreth)