What Separates Those Who Build Wealth From Those Who Do Not?

I am not talking mechanics here.  I know the people that save, invest, postpone gratification are those that get ahead financially. 

However, alot of people know the mechanics of the system, but not alot of people apply the basics.  Why do some apply the basics and not others.  What causes lack of discipline in spending? Do we blame it on marketeers?  Do we blame it on parents?  Left brained People versus Right Brianed? Do we blame low self esteem? Internal vs External Locus of Control?

My guess is locus of control.  As defined by Wikipedia:

 Locus of control theory is a theory in psychology that originally distinguished between two types of people – internals, who attribute events to their own control, and externals, who attribute events in their life to external circumstances.

 How can I incorporate this into my Financial Health 101 course? Help! I’m stuck!

March Madness Post – Money Musings on the NCAA

It March kids, and that means one thing – March Madness.  The first discussion that comes up year after year among my friends and family is: should players who can declare for the draft do so or finish their college degrees. In addition, should high school seniors be eligible for the draft. 

My feelings on this are quite definitive.  Yes and Yes.  The players who have a good shot at a first round draft pick should without a doubt declare themselves eligible.  Players who would secure a first round pick out of high school should also do so.  From a financial perspective it is a no brainer.  Greg Odom and Kevin Durant are losing about $4.5 million dollars by having to “attend” college for one year.  Not to mention the fact that either one of them could get hurt and lose their opportunity to play pro at all.  But what about a college education?  Excuse me, I know college is expensive but I think 4.5 can still pay four years of tution at any college in America. 

Who really gains from the players playing at least one year in college?  The NCAA of course.  Do you think more people tune into Ohio State games because of Greg Odom? Do more people buy Texas gear because of Durant.  You better betcha.  Case closed on this end.

Can We Trust The Bank To Know What an IRA IS?

I got a frantic telephone from a good friend this afternoon.  She and her husband had just left the bank in a failed attempt to open a joint Roth IRA.  She said, I need you to calm me down. 

The short versoin of the story is they entered the bank, sat down with a representative and explained to her that they would like to invest $8,000 in a Roth IRA.  She said the representative seemed puzzled and fumbled around for awhile telling them that she was having technical difficulties with the computer.  My friend started to suspect that something was amiss.  After about a half hour of fumbling, the representative pulls out a brochure with investment options that range from 3 months to 8 years.

 My friend asks, aren’t IRAs supposed to be long term investments?  The representative tells her, no after the IRA matures you will either put it in a similar investment or another investment.  The woman was selling her a CD!!! 

The analogy I used to my friend was, imagine you walk into Best Buy and ask to see the laptop choices and instead, the associate show you the flat screen tvs.   That is basically what happened to my friends at their bank.  Not only would my friends have bought the wrong product, they would have suffered tax consequences as well.

It is completely baffling to me that a bank representative does not know the difference between a CD and an IRA.  Just another proof source that we need to be armed with as much personal finance knowledge as possible so that we are not misled by “experts” to make costly mistakes.

The Psychology of Money

If there is one thing that my new business is teaching me, it is that there is a POWERFUL psychological connection between people and money.  This is a huge hurdle for me to get over.  I am beginning to think that the majority of people need not only a financial planner but a money psychologist.  I think the package deal would really be the best approach to people righting their money ship. 

What types of irrational approaches do folks have? Generally, they divide into a few categories, what Olivia Mellan, a Washington, D.C.-based psychologist, in her book Money Harmony: Resolving Money Conflicts in Your Life and Your Relationships (1994, Walker & Co.), calls “hoarders,” those who can’t part with their money; “spenders” (just what it sounds like); “amassers,” those who create wealth for the sake of it; and “monks,” those that regard money as evil.

 These “financial personality types” all have to do with how we were raised, our past experiences with money.  But the real question is, how do we deal with this so we can thrive financially?

I think a great first step in the process is to answer the following questions:

What are the uses of your money that have made a significant positive impact in your life?

What are the uses of your money that have added little quality to your life?

What are the uses  of your money that will affect your life positively a decade or more from now?

What are the uses  of your money that will affect your life negatively a decade or more from now?

Once you answer the questions.  Try to redirect your money to those things that will affect your life positively.

Hello world!

Let me take this opportunity to introduce myself, my name is Nicole and I have a passion for personal finance education.  I own a company called Dollars & Sense Education that provide personal finance education in the workplace.  The purpose of my blog is to rant about personal finance topics of interest.  Enjoy!