Hi, so today we continue our journey to improve our relationship with money.
If financially you are not in a place where you feel you should be,
this video is for you.
My name is Katherine from About Retirement
and I am a Certified Financial Planner helping you reach your financial
potential, and happy and successful life.
please like my video subscribe to my channel and
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Last time I was talking about one thing, one thing that you can do
to guarantee your financial success. Please go and check out that video
it might actually surprise you.
It always makes me question why lives of some people of similar backgrounds
and circumstances might be so vastly different.
Here is Kate, a smart young lady working in the office,
responsible position, good income of let's say $40,000.
Kate loves fun and friends and going out and partying,
socializing, spending money on makeup and shoes and handbags. You get a picture.
You might tell me: "Katherine so what's wrong with that? Isn't that normal?"
Well let's look at Kate after 10 years.
After 10 years of that lifestyle, Kate not only doesn't have any savings
but she is $20,000 in debt on her credit card.
And now let's have a look at Tom.
Tom, the same age, the same income, very similar circumstances.
Tom for the first year, five years of his work is saving 20% of his income.
That's after five years approximately $40,000.
After having saved that money, Tom decides to go and buy a little one bedroom flat
Because it's not really enough for big property
he will buy a small, little apartment in not very expensive area of his town.
But all his friends are laughing because all of the sudden
John moved out from bay area which was a poshy lovely area
he moved to the dumpster and they just don't want to even visit him.
Another five years go by during which
time John was making all extra repayments on his mortgage
but after another five years of extra repayments
John decided he has enough equity in that little apartment
that he can go and buy a better, bigger apartment in the area, where he really wants to live.
All his friends all of the sudden now are jealous thinking
how is that possible that John can afford such a place.
So let's compare the pair.
OK, after ten years of work
the same income the same responsibilities
Kate is twenty thousand dollars in debt on her credit card
and John just purchased second property
and now has a total equity of over $400,000.
Kate really has no chance to catch up with John.
So why am I telling you all this story?
It's not because Kate is dumb and John is smart or maybe a little.
But really the decisions that we make are all based
on our upbringing, where we come from, how we were taught about money
and it's all about our emotions.
There are a lot of reasons why we behave in a certain way
but most of our behavior is completely unconscious.
And unless we stop and analyse our character
and why we behaving in a certain way we will continue behaving like little machines.
Completely unconscious with no barriers.
Those are examples of emotions that impact our money behavior
Fear- we always worry about money we always worry that we're not gonna have enough,
that we won't have enough to pay our bills, to retire.
We go through anxiety we go through panics
and God forbid if we're talking about investments.
Investments are risky it's safe to keep money in cash.
So that fear drives every single decision of ours meaning that we are unable to
make any good financial decisions.
And we have - Emotional Spending - this is irrational, emotional spending to make ourselves feel better.
Exactly the same like overeating or drinking.
And then we can see Emotional Hoarding, which is exactly the opposite to emotional spending.
You might think that the person is financially responsible
by not spending any money, but that's a very good example of a person,
who is unable emotionally to make any decisions.
This person is constantly stuck in the area of research, research, research.
Because emotionally is scared that will make a wrong decision.
Therefore will never make any decisions at all.
Some people will justify any decision or any mistake that they make.
It might be the economy that is bad.
Money is evil, or the competition is high.
Unfortunately, if we realize that we've made a mistake, sometimes it goes further.
Which means that we might start feeling anger and regret and God forbid
if it goes even further, then it can follow with shame and embarrassment.
And because of those feelings
We just make ourselves feel so terrible that we have to somehow
make ourselves feel good now therefore we will go back to the shop and spend more
and the wheel just keeps on going.
The good news is that you can change all of this.
You can review your behavior you can adjust it to your advantage.
Money is all about emotions but the first thing is
you have to recognize it and you have to recognize the source of that destruction.
So you really have to go back and analyze your past.
Did your parents agree about money or they were fighting about money?
Did they for example say things like: "Money is difficult to come by?"
"Money is really no good". "Money doesn't live on trees"
or maybe it was quite the opposite.
Your parents were spenders and they never saved any money.
They've never really thought about tomorrow.
At that point review your behavior.
Are you following the behavior of your parents or have you become a rebel
and you do right the opposite?
If you really want to become financially successful, you need to recognize some of those behaviors,
some of those blocks in yourself and verify them.
So the best way is to go through the exercise.
Number 1 - review your family money behavior.
Number 2 - are you emotional spender or emotional hoarder?
What triggers you? Are you in constant fear about money,
that you will never ever have enough?
Do you justify your extravagant spendings or being a scrooge?
Do you feel anger or regret or feeling shame or resentment?
Or do you simply sort of like "oh this is too hard basket, I can't worry about it,
our life will just resolve it on its own."
Once you answer all those questions you will understand the reason for your behavior.
And you can very easily at that point make decisions as to what steps you need to take
in order to rectify this.
If you enjoy that video please like it. Subscribe to my channel
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I will be creating more videos about steps you need to take in order to
create financial success.
Leave comments below.
Do you find this video beneficial? interesting? informative? Any surprises?
Give me suggestions what else would you like me to talk about.