Personal Finance = Emotive Finance- 7million7years

Posted by
Adrian in
Rich on
Nov 19th, 2012 |
no responses

How many of you can honestly ? and, I mean honestly ? say that you are totally rational about money, and your personal relationship with it?

If that?s you, think again ?

All financial decisions are made emotionally, then justified rationally later.

Of course, there will be a very few, clinical souls out there who are able to be totally rational about their personal finances: they read all the (good) books and blogs; they follow the experts; they max their 401k?s (at least to take full advantage of the company match); they examine investment classes and returns; and, they (generally) make sound investments.

But, they will never be rich.

Here?s why: in order to become rich, you need to drive your required annual compound growth rate sky high.

That takes passion ? the passion that drives massive action ? and, it?s the massive action that will eventually lead to outstanding results.

But, passion is fueled by base emotion.

And, the two most powerful emotions ? when it comes to money ? are:

Fear and Greed.

I think, by far, the most useful of these two emotions is Fear.

You see, Greed will drive you to take speculative risks that may (highly unlikely) make you rich, or may (likely) send you broke. Even if you fail, Greed will make you try and try again, until you become rich ?

? or, we simply never hear from you again.

But, Fear is the slow burn.

It drives some of us to:

- Create emergency funds: because we fear that we?ll run out of money

- Diversify: because we fear the market will tank

- Pay Off Debt: because ? well ? just because!

- Max our 401k?s: because we?re scared of retirement

- Live Frugally: because we?re simply too scared to spend money

Unfortunately, these tactics simply pander to your fear; the irony is that these are the exact same financial mistakes that will ? for most of us ? bring about the outcome that we most fear: lack of financial security.

But, Fear also drives a fortunate few??of us to succeed, because we fear:

- That we won?t be financially secure

- That we will have to work for the next 40 years in a job that we will grow to hate

- That we will be overtaken by others

- and, so on ?

So, we use that powerful emotion to help drive us to the only rational solution: making the short term sacrifices, and taking the short-term (but, calculated) risks, that will ensure that we never have to worry about money again.

Still, if you discuss your wealth ? or, desire for wealth ? with most people, they will assume it?s Greed that drives you; typical is Kevin (@ Ask For Benefits) response:

Even 7 million is not enough if you allow your net worth and lifestyle to become your idol. At 7 million you begin to think, ?if only I had 8, then I would be happy?.

True, for the person driven by money and Greed, $7 million won?t be enough ? and, neither will $8 million. They?ll keep going and going until something stops them.

But, for the person driven by Fear ? like me ? we stop exactly when we have what we set out to get. And, that amount has been carefully calculated in advance to match exactly what we need for a financially safe, and fulfilling life.

No more, no less will do ?

?

Source: http://7million7years.com/2012/11/19/personal-finance-emotive-finance/

tim thomas oral roberts les paul fred thompson fred thompson red hook romney tax return