Yes? You think we could?

Great, then join me now in making the declaration and spread the word to your friends, family and everyone you know. Blog it, tweet it and share links to those declarations in the comments below.

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Legal note: This is not a recommendation to buy long, sell short or hug your co-workers. Just spread the positive vibe man.

You may also enjoy these related articles:

1. Is your money mindset robbing you of riches?
2. Legal Notes
3. A view of the tax system

Michael Pascoe wrote an interesting article titled “Cop a dose of Harden Up”, which provides an alternate perspective. Read the article here. (Sydney Morning Herald; November 14, 2008)

Have you really been doing it tough? Or, by being led by your fear and letting opportunities pass you by are you ensuring that you will be doing it tough in the future?

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This is a very low figure given that most people, if asked, would say that they want to be millionaires. The figures is so low that it means that only 1.07% of adult Australians actually are at their goal. (Based on ABS population data at June 2007.)

So if you want to become a millionaire don’t benchmark your wealth creation activity based on what those around you are doing. Chances are that following them will lead you to a destination other than becoming a millionaire.

If you want to become a millionaire find some smarter friends to also hang around with – ones that expand your thinking and horizons. And if you have to (and you probably will), pay to hang around with smarter people who have achieved the goal; i.e. a mentor.

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Read the full article here.

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It is an excellent article that discusses behavioural finance and draws on research from Steve Utkus, the head of Vanguard’s US Centre for Retirement Research. You can read the full article here. Be sure to read the closing paragraphs suggesting strategies for guarding against overconfidence.

You can also watch an interview with Steve Utkus here. If you are already familiar with the context of behavioural finance then I recommend you skip to question 7 in the video.

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MOST Australian smokers are in denial about their habit.

A survey by the Cancer Council Victoria reveals that 60 per cent of smokers cling to “self-exempting beliefs” that smoking-related diseases such as heart and lung cancer are caused by air pollution or genetics.

Tamara Davis, The Weekend Australian, December 29, 2007

Self-exempting beliefs don’t just apply to smokers and are not limited to our health habits. The article headline could easily be changed to “Delusion lets us spend easy”

A non-smoker probably reads the above quote with disbelief. With all of the advertising over the recent decades how could anyone still think that smoking and lung cancer are not linked?

So, as we enter 2008 ask yourself if you have any self-exempting beliefs that are negatively impacting on your wealth.

For example:

I’m young so don’t need to start saving and investing for my retirement.

I invest in residential property so can ignore my superannuation.

I’m fighting fit, drive and live carefully so don’t need insurance because it’ll never happen to me.

You may also enjoy these related articles:

1. The Three Fatal Financial Behaviours
2. Take The Financial Pressure Down
3. The source of financial stress

It may be written with children in mind but both my wife and I agree that adults can eaily learn from it too. The book includes delightful illustrations by Julie that help to engage your children in the message and to make it memorable.

I love the book and highly recommend it as a gift for your children and for the children of your family and friends. (That’s what I have done, but I have to whisper as they are getting it for Christmas this year.) You can buy it online from Julie’s website which is: www.aforattitude.com

Give the gift of financial literacy – it’s like giving someone a division one winning lotto ticket.

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In a client meeting this morning something was said that reminded me how our nature is to measure ourselves against our observations of the experiences of those around us. I was also reminded how those observations influences our choices and behaviours.

For example, if it seems that most people can afford a plasma TV or the latest iPod then I guess we can allocate money to those purchases too. Or, if it seems that no-one we know has started planning and saving for their retirement then we don’t need to bother either.

But are the people we know around us really an appropriate role model for our financial behaviours?

Many of us seem to dream of being millionaires and wealthy enough to afford whatever we want. (It is no wonder that lotteries are booming.) However, most people never actually achieve this level of financial freedom.

Data released this morning by the Australian Bureau of Statistics demonstrates that less than five percent of Australians have net wealth in the millions. This has barely changed since the last data release despite the booming economic conditions over the past five years.

(I define Net Wealth to be the sum of your investment assets less the sum of all of your liabilities. It is your Net Wealth that creates your financial independence, not your net worth.)

So, if you too dream of becoming a millionaire with abundant choice and financial freedom what are you doing differently than most other people?

What different (rare) mindset and behaviours do you have that will place you among the 5%?

If you are benchmarking your progress against those you know around you, are they leading you to a future where you miss your personal lifestyle goals?

Can you find new benchmarks and role models that will lead you to be a member of the 1 in 20 financial elite?

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The women and children.

But why the children? They probably have very little knowledge and skills, will panic and once they get on the life boat will make life hell for all the other survivors by whinging the whole time. (Yes, I am a parent.)

So, why save the children?

Because they are the future. The embodiment of massive potential.

You were once a new born baby with massive potential for future greatness. Ask your parents what they were thinking when they first held you in their arms.

What Happens?

Why don’t so many people achieve their stated dreams?

According to the great achievers the key ingredient to wealth is our minds. And conversely the greatest obstacle to wealth is ourselves.

What happens is…life happens, and the choices we make in interpreting each life event. The choices create positive and negative beliefs about success, achievement, wealth, and what it means to be “rich”. The negative beliefs become blockages to achieving the level of financial success we desire.

Just walk into any good book store and there is ample information about how to get rich. You can easily discover what to do and how to do it. So why aren’t more people really wealthy?

…well the excuses are endless. But they all boil down to the same thing – they made choices away from wealth rather than towards it. And most of our choices have a large emotional undercurrent.

To get wealthy the most important thing to master is your own mind and your own emotions.

An Example

Conceptually most of us understand that we can achieve higher investment returns and greater wealth by investing in more growth oriented investments, compared with investing in income oriented investments. So if you want to get richer you would invest maximum amounts in growth investments.

However research shows that most people cannot emotionally handle the short-term volatility of growth oriented investments. They are more comfortable having at least 30% of their long-term investments in defensive assets.

In other words, most people are allowing their short-term emotions to compromise their long-term wealth creation potential.

Does that sound like it could be you?

You can still achieve what you want

Do you still feel that you have the potential to achieve greatness? To achieve whatever you dream. To be as wealthy as you desire and to use that wealth to live the life you desire. Do you still believe it?

I believe you do have massive potential, no matter what age you now are.

As well as learning about the details of investment strategies and products, invest in learning about yourself. That will have the greatest return-on-investment. And you will reap the rewards in many diverse ways, including wealth.

P.S. Thanks to Colin James for sharing the sinking ship story.

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Gareth Abley, Senior Asset Consultant at MLC Implemented Consulting has written this interesting article which includes an examination of the links between our eating behaviours and our financial behaviours. Read the article.

(The article appears to be inspired by the observations of James Montier in reading Brian Wansink’s book called “Mindless Eating“)

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