Andrew Woodward on Why Financial Literacy Has Never Been More Important

A scary statistic suggests that less than 5% of people will retire with enough money or assets to live their desired life in retirement.

Ponder that for a moment… that’s not a very positive outlook for retirement, let alone the balance of your working life. Money stress is a real issue in society, especially in these times of rising interest rates and cost of living pressures.

With the dream of retirement being when you finally have the time to enjoy life and all that it has to offer, getting there with no resources to take advantage of that time is not a very exciting proposition.

So what can you do about it now?

The Importance of Financial Literacy

As I was growing up the common piece of advise from parents, teachers and family members was that you should get an education, a good job, get married, buy a house, work hard to pay it off, and everything would be just dandy in retirement.

Unfortunately, that advice wasn’t entirely helpful then and is completely useless now. The world has changed.

To have the lifestyle of your dreams, to be comfortable in retirement, you need to be a lot more proactive with your money.

Now there are two main options when it comes to being proactive with your money. You can outsource your money and therefore your future to someone else, or you can get a financial education and manage your money yourself.

As a Wealth Coach, I am obviously going to persuade you to take the later option. But here’s why…

Nobody cares more about your money than you do!

So why would you outsource control of your most valuable resource to someone else. If you want a detailed analysis of why I make this statement, check out the book, ‘Where are all the Customers Yachts’ which explains it in a very simple but effective manner.

Suffice to say, the impact of outsourcing your money to someone else could cost you hundreds of thousands of dollars, if not more, over your working life, and you don’t want that, right?

By spending a little bit of time and money now getting a financial education, learning how to grow and manage your money yourself, not only will you save a small fortune, but you will learn how to create a secure financial future so that you are not one of the 95% who will retire without the resources required to enjoy life.

Effectively a small investment in your financial education now could effectively be priceless over the term of your working life. A no brainer, right?

Now if you are a little closer to retirement than the start of your working career there is no need to despair. It is never too late to get started. The key is to get started and get active. Sitting back and bemoaning that you didn’t start soon enough, or that you don’t have enough time, isn’t going to get you any closer to your dreams.

The first key to financial security is ACTION. Let’s get to it.

Start with the End in Mind

One of the most common challenges that I hear from clients and people in my community is that they don’t know where to start. I get it, without a financial education it would be difficult to know where to start.

A trap that a lot of people fall into when starting out is to invest without any real plan or understanding of their destination.

Therefore, the best place to start when looking to secure your financial future is to understand your end goal. What is your destination? It’s like trying to drive across the country without a map, sure you might get their eventually, but it would be a whole lot easier with a map that shows you where you want to arrive and the most direct route to get there.

When it comes to your financial security, the end that you have in mind is financial freedom. Now there are many definitions of financial freedom, however for me it is where your investment assets generate enough income after tax to meet your lifestyle expenses.

This is where you have true freedom. You can choose to work, choose what you work on or who with, and how you want to experience life because you know that your assets will meet your living expenses.

I have a calculation that I call your financial freedom number that tells us what your end goal is, and this is how you determine where you want to end up and what you need to do to get there. It’s the destination that determines the road map required.

The road map comes from gaining the financial literacy, how to manage and grow your money, so that you can achieve your end goal.

And I will let you in on a little secret, most of the time the financial freedom is a lot less than you think it needs to be. I’ve seen people have complete transformations in their persona when they discover that their a lot closer to their financial freedom number than they thought they were. It’s like seeing a weight removed from their shoulders, and so exciting for them and me.

How Mindset Fits the Wealth Equation

Now you have probably heard this before, and maybe you’ve brushed it off as just another so called guru banging on about some woo-woo stuff. But hear me out…

Your mindset about money and your future wealth is in my opinion greater than 95% of the solution when it comes to financial literacy and financial success.

Everyone has heard about the book ‘Think and Grow Rich’ by Napoleon Hill, and most people here the title and say that you can’t ‘think’ your way to a rich life. And you would be 100% correct.

However, they are missing the full story. Like I mentioned earlier, the most important step to securing your financial future is ACTION, and this is the part that most people overlook, ignore or discard when looking for the lesson in Think and Grow Rich.

Your mindset toward money and wealth is crucial to your success, there is NO sugar coating it. Think you can or think you can’t, and you are probably going to be right. I think it was Henry Ford who said that.

The great power of our mindset is that it will deliver us what we ask of it, what we focus on, what we visualise, day after day.

Let me give you an example. Do you know someone, or is this person you, who no matter where they go, no matter how busy it is, they always manage to get a car park right where they want. My father in law was like this, he would also get a park at the front door to anything.

How is this possible you ask. Well, it’s simply their mindset, they believe and visualise the car spot being where they want it when they need it to be there. They have belief and faith that it will be theirs, simple as that.

The same mentality is what will get you your wealth goals.

If you focus on all the negativity in your life, you are going to get more negativity. What you focus on expands, it’s a natural law, just trust me on that one.

If you focus on the positive, visualise the things you want to bring into your life, you are using our most powerful tool to bring these outcomes into your life, your mind.

Success in anything in life starts with a thought. Your thoughts lead to actions, which lead to outcomes.

Another great example of this concept is Walt Disney. He saw Disneyland in his mind long before he created it, but without the thought, it would never have come to fruition. He then focused all his energy on bringing it to life, and you know how the story turned out, pretty well, right?

To bring this section to a conclusion, understand that the message from Think and Grow Rich was that your financial destiny starts with your thoughts, then you need a plan (we talked about that above), then you need to implement that plan.

To implement the plan, you need a financial education. So let’s get you started with a couple of simple tips…

Budgets are Not the Solution

To give you a practical starting point, I’m going to suggest that a budget is not the solution.

Budgets are like diets, great on paper but useless when you need them most. If budgets and diets where the solutions, everyone would be wealthy and there wouldn’t be any health issues relating to our eating!

Instead, you need a plan for your money, one that directs your money to where it needs to be when it needs to be there. This I like to describe as creating an environment for success with money.

By creating a plan, and automating the money transfers to different bank accounts, you are creating an environment that breeds success with money. You can design the lifestyle you want, while at the same time ensuring that you are putting some of your money to work for you in the plan to secure your financial future.

Eliminate Debt for More Wealth More Quickly

The final tip I want to share with you relates to debt.

We live in a society that values instant gratification, the buy now pay later era. The simple truth is that non investing debt is the biggest drag on your wealth, period!

To achieve your wealth goals, live within your means and use debt for good only, that is, for investing into quality investment grade assets. This type of debt can accelerate your path to financial freedom, the buy now pay later type of debt will accelerate you to a life of money stress and lack.

Again, harsh but fair, I know.

By now I hope that you see the importance of financial literacy to your current and future lifestyle.

Like I mentioned at the beginning, nobody cares more about your money than you do, so why would you hand control of your money to someone else.

The solution is to gain a financial education that shows you how to manage AND grow your money over time so you can have choices and enjoy the life experiences you truly want, which is what it is really about.

So, what are you doing to gain a financial education?

 

By Andrew Woodward

Andrew is a mindshift.money certified wealth coach and passionate cyclist. As a ‘financial educator’ with over 25 years’ experience he teaches business owners, entrepreneurs, and household CEO’s how to grow their wealth across multiple asset classes, without the need for someone else to do it for them. For the last 7 years he has been teaching people in Australia, New Zealand, Canada and the US, using his unique 3 pillar framework incorporating his money management and investing courses, to secure their financial future – knowing that nobody cares more about your wealth than you!

 

Website: https://theinvestorsway.com.au/