CHAPTER 1
The Problem with Money
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Money, by itself, is good for very little. These words may seem odd coming from someone whose career has been rooted in the financial world. But Iāve learned that our personal views and how we interact with money are what give the almighty dollar the immense power to create happiness or cause suffering.
From the moment we can understand language, weāre presented with conflicting views about money. On one hand, it makes the world go āround, and on the other, itās the root of all evil. If we love money, weāre greedy; if weāre indifferent to it, weāre irresponsible; and if we hate it, weāre card-carrying communist party members.
The truth is, most of us were raised without really talking about money or learning how to make decisions involving it. As a result, figuring out what money means to each of us often seems like an impossible task. And more importantly, our uncertainty has forced many of us to find our own way, which has most likely led us to make many mistakes throughout our lives.
MONEY: WHATāS IT GOOD FOR?
Hereās the simple truth about moneyāit can really only help you do three things in your life:
- Avoid paināby protecting you and helping you to take care of what youāre afraid might cause pain in the future
- Feel goodāby getting you the things that provide you with happiness and satisfaction
- Take care of the ones you loveāby meeting your obligations to family, community, and society at large
So how do you unravel what money means to you in order to improve your financial life?
First, you need a desire to create lasting change. Second, you need a guide. The fact that youāre reading these words points to your motivation to bring about better outcomes, and as far as guidance is concerned, the goal of this book is to provide the lasting financial solutions youāve been looking for.
REALIZING THE AMERICAN DREAM, VERSION 2.0
As a whole, the financial services industry is accustomed to talking about money in mathematical terms. No doubt this has improved the lives of people across the country. But the science of numbers and quantity has been insufficient on its own.
In fact, survey after survey reinforces the same fact: People feel that they are not well trained when it comes to making financial decisions. In addition, many feel that the only winners are the big institutions selling investment solutions, and theyāre convinced that theyāre not doing as well as others when it comes to money and investing.
As a financial professional, I have firsthand experience with the broad discontent that many people have. Innumerable individuals and families express the following frustrations:
- I donāt really have control over my financial life.
- It feels as though I never have enough money.
- I wish I could have a simpler financial life.
- Making big financial decisions makes me nervous.
- I keep making the same investment mistakes.
- Iām sick of arguing about money with those closest to me.
Amazingly, many of these individuals are wealthy and have worked with some type of financial adviser for years.
TIME TO GET HONEST ABOUT MONEY
The core of this book lies in the Money Code, which comprises 5 Money Secrets. The five secrets will provide insights into your decision making and help you evaluate how you think and feel about money and assess the way you make financial decisions. These simple, eternal truths have moved countless individuals and families away from the belief that finance is a strictly intellectual endeavor. More importantly, these five uncompromising truths have put people, just like you, in the driverās seat of their financial lives, which has given them genuine, lasting control over their money.
The 5 Money Secrets are as follows:
- Your life will be filled with tough choices.
- Your entire life is shaped by how you make decisions.
- Your biases will affect every decision you make.
- You will be distracted by things that really donāt matter.
- You must have a good process to make good decisions.
Our feelings and beliefs about money are highly personal. Thatās why, in the next chapters, youāll see how the 5 Money Secrets work through the eyes of Jack, a fictional character whose encounter with a benevolent friend dramatically changes how he makes decisions about money. Through Jackās example, youāll understand how the Money Code can play a key role in improving your financial life. In addition, youāll receive a checklist that you can use whenever youāre faced with an important financial decision, and youāll discover how to apply the checklist to yourself as well as someone you care about.
This book isnāt intended to change your feelings or thoughts about money. Rather, itās meant to help you understand yourself and those around you as well as to provide you with a road map for making sound financial decisions. In the end, you only have one financial life, so why not make the most of it?
CHAPTER 2
The Journey of a Lifetime
āEver since we separated, itās been hard for me to make decisions, especially when it comes to money,ā Jack said.
āIām really surprised to hear that because I never thought you worried about money,ā said Claudia, Jackās younger sister. She was at his house visiting her young niece, who was napping upstairs.
āI didnāt, and thatās probably one of the biggest reasons behind our splitāOlivia got fed up with my lack of discipline when it came to our finances,ā he said.
Throughout their marriage, Olivia constantly complained about how Jack spent too much and didnāt plan enough about saving for the future. At the same time, he dreaded having financial discussions, which would usually become deeply frustrating for both of them. Now the small business owner found himself 40 years old and with a shrunken nest egg, thanks to the separation and a series of bad investment decisions. He knew that from this point on, reaching his financial goals would require him to pay more attention to his spending habits.
āThe breakup has really hit me hard. Iām constantly second-guessing myself whenever I have to make decisionsāeven small ones,ā Jack confessed. A few weeks ago, he agreed to take a trip with his best friend. He now wondered if he should have said yes so soon. Despite his doubt, however, one thing was for sure: The knot in his stomach was all too familiar.
āYou were talking about visiting Machu Picchu long before you two separated. So why the worry all of a sudden?ā asked Claudia.
Jack couldnāt pinpoint the source of his concern. Perhaps he was preoccupied with what Olivia would think about the trip. But at the same time, he really needed to get away in order to gain insight into himself and what had gone wrong in his marriage.
āThis is going to sound horrible, but I partly blame Mom and Dad for a lot of the confusion Iām having these days,ā he said.
āWhat do you mean?ā
āSo much of my recent stress boils down to feeling lost when it comes to money,ā Jack replied. āThey never talked to us about it. In fact, the only time I remember hearing about money was when theyād argue. Donāt get me wrong, I know that they were pretty amazing parents. But the older I get, the more Iām seeing that for all they taught us, they left us completely unprepared in one crucial way.ā
He thought about his father, who worried about money incessantly when they were young and still did. Jack vowed never to do the same. Lately, however, his anxieties mirrored his dadās. āMom and Dad never taught us how to make good financial decisions or even how to think about money and its role in our lives,ā he said.
Now that he was a parent, Jack felt responsible for teaching his young daughter to make better choices than he did. But he was clueless about how to start.
JACK AND CLAUDIA FIND COMMON GROUND
Claudia considered Jackās observation. āBetween the two of us, I always felt like I was the only one who was completely lost when it came to money. Remember the mess I was in a few years ago?ā Back then, Claudiaās anxieties had reached a tipping point: She was buried under student loans and credit card debt and felt as though there was no way out.
Jack responded, āI remember Mom and Dad telling me that they were worried about you. They even asked me to talk to you. But I didnāt want it to seem like your big brother was interfering, so I didnāt bring it up.ā
āI nearly asked you for help,ā Claudia said. āBut at the moment when I was barely treading water, someone tossed me a lifesaver, and things havenāt been the same since.ā Claudia shared that sheād met with a guide who had changed her financial life forever. He was called the Alchemist.
āWhatās up with the name?ā
āHe has a real one. But he goes by the Alchemist, and I think nowās the perfect time for you to meet him,ā she said.
Jack wasnāt sure what was so perfect about the timing. āCan you tell me a little more about this guy first?ā he asked.
āThe short answer is no. But before I explain why, let me ask you this: Since that time five years ago when everyone was so worried about my future, have you noticed a change in me?ā she asked.
Jack reflected on the financial milestones that his sister had reached during the past few years: She took a trip to celebrate paying off her student loans and credit card debt, and she bought a two-bedroom condominium. He also noticed that she seemed happier and more focused and at ease.
āSo if I were to say that I had the Alchemist to thank for the major turnaround in my life, would you believe me?ā she asked.
āOf course I would. But how does that help me?ā
āBecause the Alchemistās advice applies to anyone whoās ready,ā she answered.
āHow can you be sure about that?ā he asked.
āHe taught me that for everything weāre conditioned to think about moneyāwhat it can and canāt do, how itās good, how itās evil, how it corrupts, and countless other magical powers we attribute to itāit can really only do three things: help protect us from pain, help us do the things that make us happy, and help us look after the people we love. Thatās itāeverything else is nonessential,...