Welcome to the first official post of ‘Finances for the
Everyday Canadian’. I thought about
calling it ‘Diary of an Angry Financial Planner’ but thought it better to stay
positive and keep my blood pressure down so my wife doesn’t nag me. The reason this is being posted for the
everyday Canadian and why I’m angry is because I feel Canadians aren’t being
educated on their finances. Canadians
are not being taught how to preserve and grow their wealth. I truly believe that the current financial
system is run by the greedy elite and is structured to hold the everyday Canadian
down, sucking people dry and making them little more than slaves to the elite
and our governments. What’s worse is that
we don’t even realize it because the only financial education we’ve received is
from these very slave-drivers. Ask
yourself: What did I learn about finances while at school? From my parents?
From the banks? Is it the same financial
education that the wealthy receive? We’ve
been conditioned to expect little, procrastinate, fear “risk,” and give up on
our dreams. A baby elephant in captivity
has a chain put around its ankle and a large spike nailed into the ground so it
can’t get away. Then, when it reaches
adulthood, because it has been bound its whole life, whenever it feels the tug
of the chain on its leg, it stops; its mind says, “No, you can’t,” even though
this powerful animal has the strength and ability to break free anytime. And it’s the same with us! By the time we
have been brought through the system, we don’t see past the “spike in the
ground” (See Napoleon Hill’s book “Outwitting
the Devil”).
Now you might be telling yourself: “Wow ... Tyler, those are
some strong words!” I know, I know. And I will try to tone it down a bit, but
sometimes my passion for financial education can bring out fighting words! Stay
with me here and you’ll see why.
Have you ever felt like no matter what you do or how hard you
work you never seem to get ahead financially? I know I felt that way for years;
I was even working three jobs for a time and just ended up owing more taxes; it
felt like the harder I swam, the faster I sunk.
If you have ever felt this way, this blog is for you.
Over the next thirty days, I’m going to try and hit as many
topics as I can and then every Friday afternoon I will post something
meaningful and practical for you and your personal finances. Then YOU will have the weekend to build a
plan and implement it in your own financial life.
Whenever I sit down with a family, the first thing I ask
them is: “Have you ever heard about the ‘one-percenters?’” Most of them have no
idea what I’m talking about but in the world today about 1% of the population
have all the true wealth and the rest of us “99-percenters” fight over the
crumbs that drop from the table.
Please don’t take this as an exact statistic, but you get
where I’m going with this; most people don’t have real wealth in this world,
even in Canada, arguably the richest and most abundant country in the
world. We as Canadians are always topping
the charts as the most desired place to live, the most stable banking system,
the friendliest people, etc, etc .... Oh Canada. But then why have so many fallen through the
cracks? The answer to that question, in
my opinion, is with another question: Do you think the 1% think the same way
about money as the 99%? Almost everyone
says no, hopefully you did too. The
third question then is do you think the 99% get the same advice and information
about their finances as the 1%? Almost
everyone says no again.
The real divide between the middle class and the wealthy is
not money ... it’s knowledge. We have
sayings like “they come from old money.”
How did money age? The Canadian
mint almost always takes old coinage out of circulation! What the saying means is that for generations
the wealthy have been able to pass on their wealth to their heirs and more
importantly, they have passed on their knowledge about how money works and wealth
is generated. The most important thing
the wealthy teach their heirs is how money can WORK FOR THEM.
How many of you have stayed up late worrying about money?
Worrying about how you’re going to pay those bills? How can I work harder to earn more
money? There lies the problem. You’re wondering about how YOU can work instead of wondering how
your MONEY can work. It’s actually a philosophical problem that
you have, not a money problem.
We have all heard that ‘Knowledge is Power’ but as a mentor
of mine, Ed Mylett, told me: this
statement is false; knowledge is not power – knowledge is potential power but if no one acts on that knowledge then nothing
is released into the world and no power comes forth. Therefore, ‘Knowledge is power when
actualized.’ Knowledge becomes power
when people take action with that knowledge!
Sorry – I got a philosophy degree before I became a
financial planner so hopefully this isn’t boring you. Hopefully, it’s inspiring
you to become more knowledgeable and then act upon that knowledge.
DISCLAIMER: READ NO FURTHER UNLESS YOU AGREE TO THIS:
I listened to Kevin
Trudeau’s ‘Your Wish is
Your Command’ CD series. Yes, Kevin
is controversial, but he makes a lot of sense when he talks about the “teachability
index.” The teachability index is a multiple
scale from 1 to 10 based on two principles:
1.
First, you need to have the ability or yearning
to learn. The desire for knowledge. On a scale of 1 to 10 how much do you desire
knowledge on building wealth? Hopefully 10.
2.
Secondly, you need to have an ability to
change. Albert Einstein said the
definition of insanity is: “doing the same thing over and over again and
expecting different results.” Have you
changed nothing in your financial practices but kept hoping something would
give? Have you gone to the same job day
in and day out hoping your paycheque gets bigger? Do you feel now that might have been
insane? Sometimes we get stuck in such a
rut we don’t see the daylight anymore.
We don’t see how to get out, so we just keep plugging away hoping things
will change or work out. Guess what? That never happens. Knowing this now, what would you say your
ability to change is on a scale of 1 to 10? Hopefully again it is a 10!
Now to see how teachable we are, multiply your two scores: desire
for knowledge X ability to change = teachability. If you had 10 X 10 = you are 100%
teachable. If you had 5 X 5 = your only
25% teachable.
I would say if you are anything under 75% teachable you should
seriously stop reading this blog and wasting your time. You need to go and figure out how to work harder
for your money and then keep doing the same thing over and over again. Reading this would be a waste of time because
man, you are going to be busy!
If you are still reading then maybe you will be ready to implement
some ideas into your financial planning. But first we have to understand why we need to
have a financial plan.
Another mentor of mine Xuan Nguyen loves to say: “people don’t
plan to fail, they just fail to plan.”
Let’s be honest, how much time have you really spent learning or
planning what your financial future will be?
Have you ever thought of how you will pay the bills and keep up your
same quality of life once you retire?
Woody Alan said, “Showing up is 80% of life;” so many of us have just
failed to show up to the financial planning party. The everyday Canadian spends more time
planning their summer vacation than they do for their entire financial future. That being said, even if we give our 80% by
showing up, the other 20% isn’t even taught to us and when it is, it’s a myriad
of bad advice (most of it fear based) that keeps Canadians stagnant in their
financial positions. But don’t be afraid! We’ll get there together.
Evelyn Jacks,
president of the Knowledge Bureau,
teaches her future financial planners that there are three main documents you
need to focus on for your financial future:
1.
Your Notice of Assessment: this is the bad boy
you get in the mail after filing a tax return.
It has a number of stats on it like how much RRSP and TFSA room you have
available and most importantly how much tax you have paid. (The goal of this document is to stop paying
taxes! Legally, of course.)
2.
Your Financial Plan. When you were planning that great vacation
down to Disneyland for the kids, did you just jump in any plane without
worrying about where it was headed? What
if you ended up in Siberia instead of sunny California? I’m sure the borscht is great there but - come
on - it’s not going to be fun for the kids (my heartfelt apology to any
Siberians I may have offended). But as
Canadians we don’t want to be impolite, so far be it from us to demand more
from our financial planners and banks and accountants. We just jump in any old plane dangled in
front of us and hope it will get us there.
What did Albert Einstein say again? ....
3.
Your Net Worth sheet. This is the terrible piece of paper where all
your assets are on one side and all your liabilities on the other. Pretty simple math one minus the other and
let the proverbial chips land. Assets
good, liabilities bad. You want this
number to be positive and to have it keep going up positively each year. So stay positive and we will get you there!
Now the blue arrow is the Law of Decreasing Responsibility: presumably you pay off your mortgage and other debts, the kids move out and are educated, life hopefully slows down a bit and the pressure is taken off; big time. Now you don’t need as much as when you started out.
The grey arrow is the Law of Increasing Wealth. Finally, the sweet spot! We need to make sure that while those responsibilities are being taken care of, we are growing wealth so that one day we won’t have to worry about ANY responsibilities and they will all be taken care of. You see on the far right it says wealth and Net Worth – that means that over time, your net worth sheet has shown that your liabilities have gone down and your assets way up! Won’t that feel amazing?
Congratulations! Now
that I’ve taught you about the three most important financial documents and the
X-Curve, you now know more than the average Canadian about financial planning. Scary isn’t it?
I know you are reading this feeling, “Thanks a lot Tyler! All you’ve told me here is WHY I need a
financial plan you haven’t told me HOW to make a financial plan and get to all
my lofty goals and dreams. Relax, young
padawan. The road to the lightside of
finances is long and requires discipline. The darkside is easier but less powerful and
you usually end up in a dumpy government subsidized apartment working as a
Walmart greeter, **enter the Simpsons shudder** uhhhuhhh...
We need to understand the WHY before we can learn the HOW;
because if we don’t know the WHY, we can’t make the tough decisions of HOW, and
we soon lose focus. In fact, I challenge
you to write down WHY you want to become more financially literate. WHY you want to achieve certain goals, WHY
you want to retire, WHY you want your money to work for you instead of you
working for it, WHY you want to think and act like a “one-percenter” and have
wealth rather than acting and thinking like the other ninety-nine. WHY is the only thing that will move us
through the HOW. Because the HOW can be
a lot of work.
Tomorrow find out how the banks and major corporations are
raping and pillaging your savings and how to end it. The Vikings have nothing on the banks; just
look at the old Capital One commercials.
We will arm you to the teeth!
If you would like to speak with me more in-depth about
building a financial plan, please click here. But don’t waste my time or yours – only click
here once you’re ready to move forward; both of our time is valuable!
If you aren’t quite ready to move forward with a plan,
scroll down and subscribe so you can read the next blog on finances till you’re
ready to move forward.
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