Many people wait for some external force to solve their money woes – a lottery win, a partner with their money sorted, or the hope of a future pay rise.
This type of wishful thinking can extend even further. We have all heard terrible tales of people who invested in something exceedingly risky, or something way out of their comfort zone, only to lose all their investment, and possibly their children’s futures.
Often we sit back and look at those stories in the news, wondering how they possibly believed:
That making their money back four times over in one year was realistic;
That buying a property completely with debt and renovating it with more debt was a sure thing; or
That borrowing to buy a house when they couldn’t even make the monthly interest payments was sensible.
The truth is that they didn’t momentarily lose their minds; they were simply hoping for a quick win. To make a quick buck that would then put them on the path to being financially comfortable.
In other words, when reality gets too difficult, we hope to be rescued.
Aside from the very low likelihood of winning the lottery, getting an inheritance from an unknown relative or investing just prior to a massive spike in a particular share, all these people missed the fundamental point: there is no easy money. The only way to get your money sorted is to do the hard yards. Just ask Michelangelo. To us, his art seems so glorious, so wonderful ... so easy. However, he knows better. It took years and years of hard work to turn into the master he became. It wasn’t easy, he simply did the hard yards.
I can hear your thought bubbles from here ... “but what if I beat the odds and actually won the lottery? Wouldn’t that solve all my money woes? I’d never have to worry about money again.”
Makes sense, right? That massive inheritance, the lottery win, your shares in a private company going from $1 to $1000 overnight. All of these things would solve your problems immediately.
Unfortunately, this isn’t the case. Let me tell you why.
To provide you with some insight here, I need to swear you to secrecy. Please, please, please don’t share this particular piece of information with my personal trainer. The punishment is likely to result in extended bouts of muscular pain.
You see I have this particular food weakness – hot chips. Fries, patata frita, whatever you call them in your neck of the woods, I love them. Preferably wrapped up in white butcher’s paper, you rip the packet open to discover crispy parcels of golden potato, enveloping pillowy centres of white nothingness.
In embarking on my own adventure of self-discovery – getting fit and weight loss – I learnt something about my relationship with these flirtatious beauties.
I adjust how many I eat based on how many are available.
A small packet will be left with a few withering, funny looking chips that my chip connoisseur heart simply cannot consume. Interestingly, though, a packet twice that size will most likely be left with ... a few withering, funny looking chips that my chip connoisseur heart simply cannot consume.
So what’s that all about? I’m not starving. In that moment I didn’t NEED a large pile of carbohydrates dipped in oil.
But without a structure to guide us, we tend to adjust our consumption based on what’s available – the more we have, the more we consume. This not only applies to our food weaknesses, but also to our relationship with money.
You get a pay rise – you spend it without knowing how it happens. You win the lottery, and when your current spending level doesn’t make a dent, you start buying things you never even knew you wanted.
So, while human nature tells us that a quick win will solve everything, the truth is that whether you win the lottery or not, you need to get on top of your finances. You need to learn money habits that will hold you in good stead no matter what you come across. You need to take charge of your financial future.
Accepting that there is no easy money, will help save you from “the best deal you’ve ever seen”, “the investment that will set you up for life” and other vague, dodgy promises.
This is something I want to be sure to bring to your attention - the money scam. Now, most of us would assume that we are street smart enough to be able to spot one of these from a mile off, however when we are in desperate need of a quick win, these can start to seem like viable options. There are generally two levels of these:
Unachievable promises - often set up as actual investment schemes, they are generally designed to get you to invest in them rather than some plainer, simpler (and probably smarter) option. They promise the world, with marketing so slick you can feel like a complete dufus for not taking them up.
Cons - unlike their overly optimistic cousins above, these are set up with the one goal of separating you from your hard- earned money. Rather than numbers and complexity, these generally focus on pulling on those emotional heart strings and make you feel like you are the luckiest person alive.
There are some things to keep your eyes peeled for when something comes to your attention that just seems to good to be true:
A promise of very high returns;
Returns that will be delivered in a short period of time;
You can’t get your head around how it is going to work, and where the money will come from, or
The words “no risk” or “guarantee” are bandied about.
The only purpose for these types of challenges, as far as I can see, is to teach us. As children, if we touched a hot stove our undeveloped minds still managed to process that so we never did it again. So let’s make sure we learn from the money lessons that have burnt us in our past.
I was silly enough to think that this couldn’t possibly happen to anybody I knew. I was wrong, and someone close to me was taken in to the tune of hundreds of thousands of dollars. They are your neighbours, your friends and your relatives and, if you are not careful, you. Learn from their mistakes.
So, to summarise what we have covered so far: a big influx of money isn’t always a good thing, we adjust our consumption based on what’s available and, the underlying problems still exist, and will therefore resurface at some point.
Does anybody else think this raises some concerns for governments bailing out massive corporates?