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DR JOHN DEMARTINI - Updated 3 weeks ago
I recently saw something on Instagram that stated that the average American carries about six and a half thousand dollars in credit card debt, and that they keep rolling their credit card and getting further into debt. It’s apparently estimated that 10% of their gross annual income typically remains as credit card debt.
If you take a moment to think about it, credit cards are designed for banks to make money, and not you. They offer immediate gratification to spend money on things and pay for them 30 days later, effectively separating the pleasure of reward with the pain of parting with your money.
Anytime you separate pleasure from pain, you activate your amygdala, a subcortical layer of the brain that is associated with addictive behavior. So by the bank allowing you to buy now and pay later, they increase the probability of you displaying addictive consumerism. This benefits investors and stockholders who are smarter with money, who own shares, but not the spender.
Your money can be perceived in two ways:
- You can master money, manage it wisely, and have it work for you; or
- You can be a mass conscious individual like most people, in debt, a slave to money, and having to work for it.
The decision is entirely up to you. People who work for OTHERS are most likely to pay more taxes, get into the most debt, and effectively become slaves to money. Those who OWN businesses or INVEST wisely, on the other hand, tend to pay less in taxes, have far less debt, and become masters of their money.
Your relationship with money boils down to your relationship with your unique set of highest values.
I talk about values during almost every presentation I do because values underly all human behavior. So, where do wealth building and intelligent money management fit into your hierarchy of values?
Each individual, including you, has a set of priorities – a set of values that is unique to you. Whatever is HIGHEST on your values (imagine the top rung of a ladder) is where you have the most discipline, reliability, and focus. Whatever is LOW on your values (imagine the lower rungs of a ladder) is where you tend to procrastinate, hesitate and frustrate on.
If something is high on your list of values and you act on it, your self-worth tends to increase and you become self-appreciative, while acting on your lower values tends to decrease your self-worth and you become self-depreciative. When you are spontaneously inspired by something – your highest values – you likely become more efficient, whereas low-priority actions mostly result in you becoming less efficient.
How you manage money is a reflection of your highest values.
Valuing yourself means that you are more likely to pay yourself first, while devaluing yourself means you will likely pay yourself last. People who value themselves and wealth building tend to buy appreciating assets, that have capital gain and that appreciate in value over time, reducing their need to work for their money. However, those who devalue themselves and money usually spend their cash on items that provide immediate gratification and quick fixes to try compensate for their unfulfillment, usually buying things and filling their homes with depreciating items.
When you think about it, probably a quarter of your home is used for storage. So, if you spend half a million dollars on a home, you are essentially paying $125 000 to store items that are depreciating in value. I don’t believe that this is the wisest use of your money. Immediate gratification might feel good in the moment, but it’s not likely to help you get ahead financially and more likely to increase your probability of getting into debt.
So, where is wealth building on your hierarchy of values?
I've taken thousands of people through the Demartini Value Determination Process and found that a very small percentage actually have wealth building as one of their top four values. In my observation, people who don’t have a value on wealth building tend to end up in debt for most of their lives. Statistically, that's the case.
If wealth building is NOT in your top four values, you're unlikely to become financially independent.
Every decision you make is based on perceived benefits versus drawbacks, advantages versus disadvantages. In other words, if you don't stack up enough benefits to deferring gratification so you can let your money grow through compound interest, dividends or capital gains, you're not likely to become financially independent.
What is the wisest way to build wealth and become financially independent?
There are two key ways that people achieve financial independence:
- By building businesses that generate passive income, and asset accumulation. Selling these businesses helps increase their net worth;
- By first saving a cash reserve, and then investing in quality companies, acquiring real estate; or other assets that compound over time to generate passive rental income.
If you don't have a value on deferring gratification for long-term asset accumulation, you'll likely not to build lasting wealth or attain financial independence.
Did you know that less than 1% become financially independent? Most people are in debt and face financial decline or decrescendo as they get older.
So, once again, what's your relationship with money? Where does it fall on your hierarchy of values? I really encourage you to take the time to take the value determination I offer online as you’ll have a certainty where you stand right now. You can access it here and it’s free so you have nothing to lose.
If you look honestly at your own life, are you buying things that APPRECIATE in value or DEPRECIATE in value? If you are patient and inspired to let your investments grow, you are more likely to attain financial independence.
On the other hand, if you are looking for quick fixes and immediate gratification, you will most likely accumulate debt and add significant financial strain to your life. To become financially independent start by living within your means, then prioritizing saving and investing wisely.
Time is ticking. If you wait too long before taking steps to manage your relationship with money, you can significantly increase the amount you need to save and invest per unit of time in order to achieve financial independence.
Think of it this way, if you start at 20 and invest 10% of your income, you could be financially independent by 65. Waiting until 30 means investing 20%, and by 40, you'll need to invest 30%, and so on. Every day, month and year that you delay taking action will likely make your financial situation more challenging.
I was 27 when I had a wake-up call about my value on wealth building, which inspired me to begin saving and investing. I actually started small, saving and then investing $10 a day, $50 a week, $200 a month. At the time, it was quite a stretch for me to save this amount of money, but I was focused on the long term and not the short term, so I made a plan. I then began gradually increasing my savings and investments to $300 a month, then $500 a month, and eventually to $750 and month and then $1000 a month. I kept increasing it by 10% every quarter until, it was $2000, then $4000 then $8,000, then $16,000, then $32,000 then $64,000 a month…. after 9 years, I was financially independent. Now I am many multiple times financial independent.
Over 42 years, I've continued this practice and have been financially blessed because I deferred gratification and kept methodically doing what worked. It's not rocket science; it requires patience and the discipline to live simply until you can afford progressively a higher lifestyle. I am certain that by living within your means, caring enough about people to serve them to generate an income, and by saving/investing wisely the difference, you can accumulate wealth.
The question is, do YOU value deferred gratification? If you do, you have the potential to build wealth. If not, you might have a decent lifestyle but it will likely plateau and you could face financial difficulties later in life.
At 70, I still work because I love it, not because I have to. But imagine being 70 or 80 and unable to work without savings or investments. You may even end up borrowing money from your children or facing large amounts of debt, which could add a financial burden to your children that you likely don’t want them to have.
Do you have foresight and think in advance about what's really a priority to you?
Immediate gratification costs you economically, while long-term gratification pays. The question is, have you identified enough advantages and written down the benefits of taking the steps that have been proven to work financially?
Building a business that serves ever greater numbers of people or working in a business that does, earning an income, living below your means so you have extra money to save and invest, automating those savings and investments to avoid having your emotions interfere in the process, setting up a cash cushion for emergencies, and investing the difference to allow it to compound and grow are wise steps towards mastering your money.
It is also wise to avoid trying to get rich quick, and to instead be a patient, methodical investor in quality companies or real estate holdings that serve people. If you serve people, you are more likely to create sources of income. When you do that, magic happens - money works for you, and compound interest starts accumulating. Compound interest, as Einstein called it, is the 8th wonder of the world. Over four decades or more, it really takes off. But it takes patience. If you're not patient, then it may be a wiser choice for you to consider building a massive company that you can later sell.
Do you have a higher value on the outcome of wealth building than you do on immediate gratifying consumables?
I’m often amazed at how many people spend large amounts of money on things they don't need so they can impress people who don't really care, filling their homes with possessions that depreciate instead of appreciate. This is often a sign that they are feeling uninspired and unfulfilled, and so are turning to things that provide instant gratification like food, drink, alcohol, and other addictive behaviors.
It’s also worth noting that banks love to encourage you to stay in debt and actively encourage you to go into more debt through mortgages, car loans, and credit cards. Why? Because they make good money from your desire for immediate gratification.
If you truly value wealth building, you are more likely to defer gratification and instead buy assets.
The rule is simple: if you don't put your money into assets, it tends to end up in liabilities.
If you don't fill your day with high-priority actions that inspire you, it tends to fill up with low-priority distractions that don’t.
I am certain that temporary highs from consumerism cannot compare to the fulfilment that comes from mastering your life and finances.
In my Breakthrough Experience program, my signature seminar that I teach almost every week, I teach about self-worth and living by priority. Every time you live congruently with your highest priorities and if you have a value on wealth building, your self-worth goes up, and your feeling of worthiness to hold onto your money goes up.
There are six common traits I've found among wealthy people:
- They care enough about humanity to build a business that serves an ever-greater number of people.
- They master the efficiency of their business, making it effective and profitable.
- They save a progressive portion of their profits to make sure they have financial stability.
- They invest in ever greater degrees of leverage and keep buying quality assets.
- They allow themselves to accumulate and maintain a simple lifestyle while building assets until their lifestyle can incrementally be raised.
- They have an inspiring, meaningful cause to dedicate their life and wealth building towards.
I firmly believe that you deserve to empower all seven areas of your life, including wealth. I encourage you to take the time to transform your relationship with money, to prioritize wealth building, defer gratification, and follow the six steps listed above This will help you become a master of money, not its slave, so you can go and do something extraordinary with your life.
To Sum Up
Less than 1% of people become financially independent. The majority of people are deeply indebted and face a financial decline or decrescendo as they get older. The question is, are you part of the 1% who achieve financial independence or the 99% who remain in debt?
You have a choice to learn to master money or be a slave to money, Mastering money means managing it wisely and having it work for you, while being a slave to money means being in debt and having to work for money for the rest of your life.
Your relationship with money reflects your highest values. People who value themselves and money tend to buy appreciating assets, while those who devalue themselves often spend on immediate gratification and accumulate debt as a result.
Your highest values are where you tend to be the most disciplined, inspired and focused. It is wise to identify your unique set of highest values and highest priorities if you would love to build wealth and financial independence
In my program, the Breakthrough Experience, which I teach most every week, I help people identify their unique hierarchy of values. You can also take the time to do the Demartini Value Determination Process on my website - a free questionnaire that takes about 30 minutes to complete
It is wise to start saving and investing early. Living within your means and investing wisely can transform your financial situation, as can being patient and methodical in your investments instead of trying to follow a get-rich-quick scheme.
Taking the steps to identify and then avoid immediate gratification is key to mastering your financial status and relationship with money.
By transforming your relationship with money, prioritizing wealth building, living congruently with your highest values, you can become a master of your money and achieve something extraordinary in your life.
Are you ready for the NEXT STEP?
If you’re seriously committed to your own growth, if you’re ready to make a change now and you’d love some help doing so, then book a FREE Discovery call with a member of the Demartini Team so we can take you through your mini power assessment session.
You’ll come away with a 3-step action plan and the foundation to empower your life.
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In 2 days you’ll learn how to solve any issue you are facing, transform any emotion and reset the course of your life for greater achievement and fulfillment.
You’ll unlock your true potential and lay the groundwork to empower all 7 areas of your life.
Get ready to take your life to a whole new level of meaning and purpose.
Today is the day you step into your power and value yourself by investing in your inspired life when you sign up for Dr Demartini’s signature seminar the Breakthrough Experience:
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