Author: businessminded

What’s something you wish you knew in your 20s?

   I was reading the forums this week, when this question popped up. Sure there are some generic answers: “you’re young, enjoy life”, “don’t worry so much”, etc. But there was a couple of answers that hit right at the heart of what we talk about at Business Minded.

“Spend less time worrying about investing small sums of money and focus on growing my career. Must have spent 100’s of hours reading forums, reading books, local real estate listings and figuring out which ETF was perfect for my small amount of savings.”

   This lady, or gentleman, is not your typical internet forum troll. The lesson that they are trying to impart here is both essential and ageless. No matter how old we are, if you are working in a career, you can increase your earning potential. We can increase what we are worth, by being able to bring more value to our customers, whether those customers are inside a company or external clients. By increasing our value, we are rewarded far in excess of the rate of return on the stock market.

   The earlier we begin to invest in ourselves, the more we will be able to earn in our lifetime. And that can have a dramatic effect over the course of several years. 

   There is no better example of this than a situation I advised one friend on. Andy (not his real name) found himself in a particularly wonderful situation early in his career. He had two opportunities on the table, his current job (Job A) at $ 70,000 annually, or an offer on the table (Job B) for more responsibility and a $ 85,000 annual salary. Seems like a no brainer right? But as always, there’s a complicating factor. Job A was offering an investment opportunity for equity in the company. The expected return was 400% after 5 years. With an astronomical return like that, the decision just became a lot more complicated. 

   From a numbers standpoint, the opportunities would be equal if Andy made 15,000 * 5 years = $ 75,000 on the investment deal. At a 400% return, that means an initial investment of $ 18,750. Andy has on hand approximately $ 30,000 to invest in Job A’s equity, which would result in $ 120,000. With a 5 year lens, which for many of us is beyond where we can reliably predict, Job A is far superior, to the tune of $ 45,000.

But what happens after 5 years? How far does that $ 45,000 advantage go?

   The skills we develop pay off now, but they keep paying us dividends into the future. A higher earning potential leads to our ability to generate substantial resources over the course of our careers. The job experience alone from an earned promotion can raise our financial outlook to untold heights, as we grow and increase our value. 

   Back to Andy, assuming his earning potential increases at the same rate for the rest of his career, 20 years from now with $ 15,000 extra per year leads to a gain of $ 300,000. That far in away exceeds the return of the $ 45,000 investment from Job A. When faced with the numbers, the decision became clear, Job B was the better route.

   How much time do we spend worrying about our investments right now? How valuable could we become if we spent that time learning, growing, increasing our earning potential?

   Investing in ourselves has the highest return on investment out of any investment we could possibly make. And the right time to invest is now. Invest in yourself. You can increase your value, and improve your future for the rest of your life.

Unsure of what the best way to increase your value is? The Career Growth coaching platform is designed to help you take control over your professional growth. Check it out here, or send me an email directly to [email protected] to discuss if our program is the next step to take you to greater professional heights.

3 Questions to Align Your Goals

Are your goals really going to take you to the good life?

We all have goals in some capacity, focused on each of the areas of our life. Maybe that’s more money, a healthier lifestyle, more close friendships, or more impact in our careers. Many of these goals were set either some time ago, and we’re working towards them. Or they came about through social pressures; I should be healthier, I should chase more career success, I should save more money. Both these reasons for setting goals are valid and effective, but only when they are aligned with your values and your vision for your life.

And it is this alignment that we need to ensure exists.

But how do we know if our goals are aligned?

We can do this by looking at three different questions. These questions have been cultivated by some of the iconic thought leaders and speakers of our time, Jim Rohn, Zig Ziglar, Brian Tracy, and others. By spending time reflecting on the answers, we can determine if our current goals are in alignment with our life plan. Let’s look at the questions, and how they help us find that alignment.

What would you set as a goal for yourself if you won 5 million dollars? What would you do differently?

This two part question eliminates some of the constraints that we often consider when setting goals. Often times our goals, and the action plan associated with them, are influenced by our limited resources. Of the three limiting resources, this question reduces the impact of the financial side.

Take a look at your list of goals that you have today. If money wasn’t an issue, what would you change about that list? How would your goals be different? What would that do to your action plan, how you spend your time and energy each day?

What would you do if you only had 6-months to live?

A real eye-opener, which unfortunately some people actually do hear. Many of our goals are set with a long time horizon in mind. Saving for retirement 30 years from now, living a healthy life so we can experience those years with energy and vitality. Or climbing the corporate ladders to reach our highest levels of impact 10 or more years from now. But what if that time wasn’t there?

How differently would you act? How would your priorities change? This question helps clarify what is truly important in our lives, so that we can include more of that in today’s plans. If your answer involves adventure, what adventures can you take now? If your answer includes family and friends, are you spending enough time with them now? Are you showing them how much they mean to you?

What one great thing would you dare to dream if you KNEW you could not fail?

This final question asks about our current goals. Are they big enough?

Again, our current goals are often constrained by certain elements; our time, our energy, and our money. But there’s one other constraint we often don’t consider, but one that shapes our entire existence. The thought that maybe we might not succeed. This fear stops us from attempting those grand schemes and desires that would really make our lives great.

If you didn’t have that fear, what would you dare to dream?

Finding alignment between our goals and how we plan for life to turn out can be hard. By asking ourselves the right questions, we are able to find clarity over what is truly important. Knowing what we find essential to our lives helps us build more of that into our goals and vision for the future. Answer those questions, identify what is important to you. And most importantly, dare to dream that it is possible. You can have that life you dream of.

Action Item:

Break out a sheet of paper or a new word document. Answer the 3 questions:

  1. What would you set as a goal for yourself if you won a million dollars? What would you do differently?
  2. What would you do if you only had 6-months to live?
  3. What one great thing would you dare to dream if you KNEW you could not fail?

Now reflect on the answers, are your goals leading you to the life you desire? And one last challenge; I dare you to dream of what is possible for you in your life.

5 Benefits of Credit Unions

   As we grow in our ability to bring value to the marketplace, we earn more money. Knowing what our options are to handle that money is therefore an essential starting place. While we all know about the big banks, there is an alternative to be found in Credit Unions.

What is a Credit Union?

   A credit union is a member owned financial institution, that operates similar to a bank. Historically credit unions have restricted membership on the basis of company worked for, geographical location, or any other criteria. In recent years however, membership requirements have been loosened, which provides many of us an alternative to the banks. In terms of product types offered, credit unions and banks are generally the same. There is one major distinction between banks and credit unions. Credit unions are not-for-profit entities. This leads to a myriad of benefits to using a credit union.

1. Lower Account Fees

   Banks are for-profit companies, and as such they levy fees for the services they provide, in an effort to increase shareholder returns. Credit unions, on the other hand are not-for-profit, so the fees (if any at all) are lower. Without the need to drive shareholder returns, credit unions are only trying to cover operating expenses. This allows credit unions to charge significantly lower fees for services.

2. Lower Interest Rates on Debt

   Similar to the above, without the drive for consistently increasing shareholder returns, credit unions are able to offer slightly lower fees on borrowings. A December 2018 report released by the American National Credit Union Association (NCUA) shows that credit union loans charged lower interest rates for a variety of products, including home equity loans, car loans, and shorter term mortgages. These lower interest rates could save you thousands of dollars, depending on your borrowing requirements.

3. Higher Interest Rates on Investments

   While saving money on interest is good, on the flip side, credit unions also can offer higher interest rates for deposits. On the same report by the NCUA, certificate of deposits paid out higher interest rates for any time duration. This means that your extra cash can be put to work, making you more money.

4. Better Customer Service

   Since credit unions are member owned, customer service is generally better than big banks. Members are able to vote on initiatives at the credit union, which leads to a bigger focus on customer service. Contrast this to a bank, which focuses on profits and often leads to cost cutting, especially in the area of customer service. If there’s one thing we can agree on, its when there’s an issue with your money, sitting on hold to reach an unresponsive call-center is not the ideal situation.

5. Expansive ATM Network

   Credit unions typically have fewer brick-and-mortar locations, and even those are centered in a specific geographical area. To deal with this level of access, many credit unions enter into ATM agreements, allowing surcharge free access to an expansive ATM network. These agreements often result in thousands, or tens of thousands of no-fee ATMs spread across North America.

   We work hard to earn our money, which means handling it well is important. Credit unions are becoming increasingly more accessible, and provide an alternative to traditional banking options. From higher interest rates on investments, to lower account fees or interest rates on borrowings, credit unions offer some distinct advantages for our financial well-being. Couple those financial advantages with excellent customer service and extensive ATM access, and credit unions might just make your financial life a little easier.

Valuable Decisions

   Knowing what to say Yes to is difficult. Being able to distinguish between what is often two good choices is therefore essential to achieving more.

So how do you make that decision?

   There are a few different approaches to decision making that are useful. One such approach is a values based decision making system.

What is a values-based decision making system?

   This system involves running each decision through your core values, and only taking action on the choices that support your values. By basing decisions on core values, you will never find yourself in a situation where your actions cause you discomfort, because if the choice doesn’t feel right, you won’t do it.

   This approach to decision making is able to be applied universally to every situation in whichever area of your life that is required. It also helps reduce the decisions to the same criteria, which makes it easier to evaluate when other options affect a different part of your life. For example, a career decision of working overtime can be evaluated against a health or social option much more easily. 

How does this work in practice?

   At Business Minded, some of our core values are Presence, Balance, and Growth. Each decision made must support one of these values for the action to be beneficial. For example, working late is run through the Balance value. If I haven’t been able to spend time with my significant other, or managed to get to the gym for a workout, working late is not conducive to finding balance in my life. For that reason, I will say no to working late in order to say yes to the gym or the girlfriend.

   The decisions we make don’t have to be monumental either, this could be as simple as abiding by the presence value, and not picking up my phone during time with friends and family. This small action helps me be more present, and hence strengthens my relationships with those that I value.

How do I find my values?

   We do not all share the same values, and that is good. Our values are what make us interesting and unique. To find your values, simply look inwards. There are things that you feel are important, and these are where you find your values. Soul searching can be hard though, so an alternative method is thinking about what other people do that irk you. Identifying what upsets you helps shine a light on the behaviors and traits that you value.

I know my values, what now?

   Once you know your values, run each decision through them. Is saying yes going to drive success for you based on your values? If not, what could you do with your time, money, or energy instead? Using a values based decision-making  system will help you stay true to who you are. 

A values based decision-making framework is, well, valuable.

   When you focus on doing things that support who you are, you’ll find more enjoyment in everything you are doing. There are so many options and choices in how we spend our lives. With the constant bombard of opportunities and requests of us, filtering each opportunity through our values will help clear out some of the noise. We might not always be able to avoid negative choices, such as having to work to meet a deadline when we’d rather be anywhere else. But when we are conscious of our values, we’ll be able to make choices that further reinforce who we are, and what we stand for. And I think we can all agree, living life on our terms is certainly important if we’re to make our life a successful one.

Action Item:

What are your values? Write out a few core values that define who you are, and use them to evaluate the choices that come your way. Remember, whenever you say “Yes”, you are also saying “No” to something else. Let’s make sure that the things you actually do help make you the person you want to be.

What are you saying Yes to?

What are you saying ‘Yes’ to?

   In today's world there are constant pressures to do this or that, read this, act on the right now moment. These constant pulls on our attention, our time, our energy, they leave us scrambling. We’re always busy.

But the question is, busy doing what?

   We have been conditioned to say yes. Yes to avoid conflict. Yes to avoid the FOMO. Yes, yes, yes. So often we’ve said yes, we’ve forgotten what it really means. Sure we’re busy, but we’re busy operating on someone else’s plan. And we’re okay with it, because we said Yes!

   From the time we’re old enough to start making decisions, we are being conditioned to say yes. This desire to please everyone starts to become ingrained in our minds, our operating system. Soon enough, we forget what it means to say no. 

   No is disappointment. No is conflict. No means we’re not part of what’s going on. These are the thoughts we have, this is how we’re conditioned. But we’ve got it wrong.

   We haven’t forgotten how to say “No”. We actually say no all the time. You see, every time we say yes, we’re also saying no. Yes to a social night out with friends means no to date night. Yes to that extra project or overtime at work means no to our passion pursuits at home. Yes to those unhealthy snacks means no to our health plan.

   The problem lies therein, to how we process decisions about saying yes. Because we all have limited resources, be it financial, time, or energy. And due to these constraints, we can’t do everything. Recognizing this, and understanding that every yes is a no to something else helps us regain clarity to the bustle of our daily lives.

What should we do?

   First, we need to work on our decision making skills. Making a decision is a skill, and through practice, we can become better at it. This means we need to step out of our default state of saying “Yes”, and give the request some serious thought. And once we know what to say yes to, and why, we get to the next step, saying “No”.

   Just as we need to practice making decisions, we need to practice saying no. After years and years of “yes” being ingrained in our behaviors, saying no will feel uncomfortable. We need to practice saying no to become comfortable saying no. And make no mistake, at first saying No will feel uncomfortable.

   As we take control over the small, seemingly insignificant choices we say yes to right now, we will start to see remarkable changes in our lives. We begin to find time, energy, even money that we can spend in areas that improve our lives. And that improvement? That is growth. That is success.

Ripples of Success

   Balance is essential in the pursuit of success. As we grow, we need to make sure our life’s pillars, the foundations that support our success, are strong. This ensures that instead of reaching for success over the precipice of cliffs, we have a firm place to stand as we reach for success.

   Achieving this balance sounds on the surface like a lot of work. Devoting time to our financial well-being, career advancement, physical fitness, mental or spiritual soundness, strength in our relationships, and love in our romantic pursuits. With a list like that, it is easy to become overwhelmed and forget one or two of our pillars. Fortunately, there is a way forward. As Mark Twain put it:

The secret of getting ahead is getting started. The secret to getting started is breaking your overwhelming tasks into small manageable tasks, and then starting on the first one.

   Taking one small action helps us start down the path. Continued by another action, and another. And the good news? These small wins enable us to win at other areas in life, almost without thinking about it. Like a single drop in the middle of the lake, our success ripples out in all directions.

What does this look like in practice?

   We start by walking around the block. And we do that simple, small action every day. Before too long, we start to feel stronger in our legs, our heart, our lungs. That physical win is noticeable. Before long we start to realize that we have slightly more energy at work, simply because we have better blood flow. The result is we get a little more done each day, nothing crazy, just an extra few minutes of productivity. Soon enough those extra few minutes mean we stop working late once or twice a week, and get to spend more time on social activities, and we’re still home in time for an extra meal or two with our loved ones. And we’re still walking around the block, so if we’ve taken that first step of getting moving, feeling healthier, we might just change our diet a little bit. Since we have extra energy at work, we cut back on that caffeinated soda at lunch in favor of water. After all, it’s healthier, and we feel great. 

   The above example is very real, I’ve seen similar results in my own life, where one small change seemingly changed the world. With the ripples of success washing over each other, it’s possible to see these incremental improvements. Seeing growth is both comforting and inspiring, which motivates us to keep going, and strengthens our own sense of self-worth.

   As our success ripples outwards from one small change we can make today, our entire lives are strengthened. These ripples of success lead to more balance, and a firmer foundation to stand upon as we reach for future successes.

   It’s your turn. What one small positive change can you make today, and stick to, that will start the ripples of success improving your life?

Walking to Success

Can walking make you smarter?

   In a recent study published on nature.com, scientists have concluded that “Significant positive relationships between endurance and cognitive performance[1]”. In non-science speak, walking makes you smarter.

What does this mean for us?

   Business Minded promotes success through finding balance in our lives; strengthening our finances, careers, physical bodies, minds and spirit, our relationships, and our romantic pursuits. This further bolsters our approach, adding science to what we already knew. Finding balance in our lives helps us be more successful. As each area of our lives builds on each other, we need a holistic approach to chasing success.

What can you do?

   Fortunately, this study focuses on the act of walking, and the corresponding improvement in both walking endurance and cognitive function. Since each of us can walk (except for those extremely rare cases of physical impairment), we can easily do a couple of laps around the block to make ourselves smarter. This isn’t a rigorous workout regime, and nobody is asking you to run an ultra-marathon. In the study, participants found an increase in brain function (they were smarter) after only a 2-minute brisk walk.

What is the take-away? Simply add a walk into your daily routine.

   Physical fitness is an important part of retaining our health, energy, and vigor. Taking a walk and elevating the heart rate is an important practice for restoring our energy, especially when we start to feel lethargic and tired. The importance of this study adds to the benefits that a quick walk around the block can do, improving cognitive performance as well as restoring energy.

   In practice, when you’re starting to feel drowsy, or if you have an upcoming meeting that you want to be at your best for, try taking a walk around the block, or simply a loop around the office first.  Elevating your heart rate will help you not only remain focused, it will also make you smarter.

   If you want to experience more success in your life and career, adding a little exercise can go a long way. So go out there, make some strides towards success (figuratively and literally)!

 

Action Item:

When are you going to devote some time to walk today? Start with only 5 minutes, you’ll be smarter, healthier, and more energetic because of it!

 

[1] https://www.nature.com/articles/s41598-019-49301-y, Scientific Reports Volume 9, Article number: 12885 (2019)

Stepping to the Finish Line

… and Beyond

   In our last article we discussed leading behaviors and the steps to achieving goals. This time, we’ll be hopping back into leading behaviors in a more practical way.

   As a recap, leading behaviors are the steps that you can take today and every day that lead to your next goal. Unfortunately, we at Business Minded cannot tell you what those steps are for each of your goals. This is something you need to figure out based on your own individual goals.

   And that’s where this article comes in.

   Think about your current goal. Now start to think about the steps that it will take to reach that goal. We’ll throw a couple of examples your way to illustrate, but likely our examples are more simplified than your goals.

   Let’s say you’re looking to save an extra hundred dollars per month, to put towards your passion project, your retirement, the uses are your goal. What do you need to do each day to reach that goal. That could be brewing your own coffee at home each morning (we hate that example, but in this case it could work). Or it could be making your own lunch every day. (This saves you money and helps you control your diet, a far better example than your morning cup of jo.) Making your lunch every day will save you probably $5 or more a day (if you live in a city). That’s an extra $25 a week to put towards your goal, or an extra $100 a month. Your goal achieved. But you don’t even need to worry about saving the extra $5 a day or the $100 a month. You just need to focus on making lunch for the day, each day. In that case, making lunch is the leading behavior.

   To see this in action we should look at James Clear’s book, Atomic Habits, and his research, on the paperclip strategy [https://jamesclear.com/paper-clips]. 

   Reading the article, we can see that the leading behavior was simply making a call. While James jumps into the various psychological cues of the behavior, the actual behavior itself is what drives success. [You can check out JamesClear.com for some advanced habit forming practices and rituals.] The behavioral trigger led to some incredible results, incredible successes, incredible finish lines crossed. 

   The habit, the progressive chase after the daily behavior trigger leads to successful accomplishment of goals. These are the steps that lead across the finish line. That’s why we have our daily and weekly checklist. This helps us track our daily behaviors that eventually lead to success. With enough check-marks in effective behaviors, success is inevitable.

   And so we leave on this; For each of your goals, for each of your pillars, what are the daily behaviors that you need to do that move the needle towards your next milestone? What can you do today to shape the future of tomorrow?

Steps to the Finish Line

   Goals are essential for achievement, which is why we’ve looked at setting SMART goals. The SMART goal setting framework is one of the most effective and most widely understood frameworks for goals, whether personal or professional. This provides us a clear “finish line” to reach. For our largest goals, we should break them down into shorter milestones to keep us focused. But even those milestones can seem out of reach sometimes.

   Achieving a goal is a lagging indicator. You see the completed goal when you sit back to reflect on your progress. All this happens after all the work has gone into your success. Therein lies the issue many of us face, we only see a positive result after we have worked tirelessly for an extended period of time. While it sounds easy to sit here and spout motivation for the grander vision, or talk of the success we feel when we accomplish something, real life doesn’t work that way. In real life, we could lose our drive from one day to the next, and have it back again just as fast. Real life is unpredictable. 

   To face that unpredictability, we can’t look only at the finish line, that marathon distance away. If we look too far into the future we will stumble. We need to know where we are going, looking down the road, but also be aware of what is happening right in front of us each day. That is why we need to focus on leading behaviors. 

   Leading behaviors are the steps that we take each day in the direction of our goals. These steps are few and small enough that we can count. And we need to, count that is. Keep track of the steps or behaviors we take each day, each week, as these will carry us across the finish line of our goals. 

   What does this look like? This is the salesman who makes 50 calls a day (insert a realistic number for your profession). These 50 calls, made with as much enthusiasm and energy as the first, will eventually lead to sales. This is the husband who shows his appreciation each day, leading to a long and loving marriage. This is the athlete hitting the gym each day (except for rest days, those are also important), striving to become better, faster, stronger with each rep. This is the monk, absorbing scriptures or meditating, or expressing gratitude. This is the banker, making her own lunches to have money to spend on what is truly important. This is the parent, carving out time each evening for their child’s development. This is the dreamer, putting in the unappreciated work after the sun goes down, or before the sun comes up, striving to build a better tomorrow.

   This is you, making the small daily choices that carry you across your finish lines, and beyond.

How to Answer Your Strengths Question

What are your greatest strengths?

   We’ve all heard that interview question at one point in our professional lives. The predictable strengths and weaknesses question, where we have the opportunity to highlight both achievements and character traits. The typical response to this question is to either grab from the top of the list of “traits every employer wants in their employees”. These overused and unsupported answers do little to further our cause. While the interviewer usually nods their head as their eyes glaze over with boredom, without some story that backs up the claim, these assertions come out as empty as an upside-down coffee mug.

   The other response is slightly better, we scramble through our list of professional achievements haphazardly, hoping we have done something that proves our value. Unfortunately, our memories are only effective at reaching some accomplishment in the last few days or weeks, and if we’re really lucky, a month or two. These accomplishments, while noteworthy, may not best represent the true value we can bring to the organization.

   Knowing this, we need a better approach to answering this question. We do this by routinely, systematically keeping track of the accomplishments we make on the job. By recording our successes and wins along the way, when that strengths question comes up, we have an answer ready.

   Just as you wouldn’t hire a photographer to capture moments with your children or at your wedding without first seeing some of their work, you also need a portfolio that showcases the fruits of your labor. This career portfolio helps remind you of your value, so when you sit down at your next meeting with your boss, or at that next interview, you can prove your worth.

So how do you create a career portfolio?

   I recommend each month writing down your biggest accomplishment of the previous month. You’ll need to record what the challenge was, how you reacted to it, and the result. This will provide you the flesh to your story that illustrates how you were able to create a positive impact. Any proof that you can show also goes a long way to building credibility. This could simply be an email of thanks from your boss, or an email you send to others that explains what the situation was, and how you resolved it.

   To get you started with your portfolio, you can also go back and write down accomplishments from the past. Even though you might not be able to find “proof” of your impact, you will still be able to showcase a pattern of value that you bring. Once your portfolio has some successes recorded, you are able to fall into the routine of adding to it monthly.

   Maintaining your portfolio monthly serves two purposes; recording achievements before you forget them, and focused on contributing some measure of success to your organization. Trying to have a positive impact monthly, even if it’s only because you want something else for your portfolio, will help you stand out among your peers. And because of this focus on achieving more, you will eventually be handsomely rewarded for your efforts, leading you to even higher levels of success.

   So next time someone asks you to “tell me a time when…” or “what are your strengths”, you’ll be prepared. Your career portfolio will help you ace those questions, with concrete examples of the challenges you overcame, and the successes you wrought. As you continue to seek new accomplishments to add to your career portfolio, you will stand out among your peers. Your pursuit of success will become a self-fulfilling prophecy, and your career portfolio will continue to grow, paying dividends with each new deposit.

Action Item:

Start your career portfolio today. Write down at least 3 examples of challenges you have overcome professionally. 

What was the challenge?

What did you do?

What was the result?

And for bonus points, what were the attributes you displayed in this example? (These are your strengths!)

Are you feeling Lucky?

   Have you ever met someone who is financially well off, and thought "Oh, they're just lucky"?

   The truth is, they probably are lucky. Luck plays an important role in everyone's quest for financial freedom. And for such an important factor, we had best uncover what makes some people lucky, and some people not so lucky.

So what makes people unlucky with money? 

   These are the people who search for financial well-being without putting in enough effort in first. We can see this all the time with lottery players and gamblers. Many people play such games of chance, and when relying on chance, the effort requirement for good luck to show up isn't fulfilled. As such, statistically speaking, nobody ever "wins" in these games. That's not to say they don't have merit, but if your reasons for playing are purely financial motivation, you will leave disappointed. But the horse races and gaming tables aren't the only places we look to luck to provide us a financial windfall. We also make investment decisions based on limited information, and hence rely a degree on luck to help us out. This could be as risky as investing in an unproven startup without first performing sufficient due-diligence on the business and owners. An investment like this is fraught with risk, but quite alluring especially for the ambitious young professionals looking to make a start in this world. 

   I know about this relying on luck from first hand experience. Many years ago I had the opportunity to invest in a startup company, and the silver-tongued promises of untold riches had me dreaming of how my life would be much improved. These dreams swayed me into making a risky investment, relying on a combination of hope and luck to turn those dimes into dollars. And therein I learned one of the hard lessons that Lady Luck teaches. Luck never comes to those who aren't deserving of it.

   We look for luck in other places too; there are whole companies built on selling you the latest, hottest stock tips. Making those rushed investment decisions based on a 3 A.M. hot-pick email, or the whispering you overheard from a couple tipsy bankers in a bar. This again doesn't fulfill the requirement of deserving luck, and as such your winnings will be lacking.

   If luck doesn't lie in those places, how are some people lucky?

   Luck is only a reward given to those who are prepared. Hard work will carry you to places where you might find good luck. I cannot tell you exactly where to look for luck, that is a function of the right time, the right place, the right people. But there are some places that you will have a higher chance of finding that good luck. These are the work opportunities that come about through hard work, impressing others with your knowledge, dedication, and character. I have met numerous people who embody those characteristics and ultimately find that good luck. 

   One such gentleman worked hard for years in a relatively unrewarding job. But through his perseverance, his dedication to his craft, he was ready when an opportunity came his way. This provided a substantial increase in his financial compensation. Already a financial win in his hand, his work performance continued to excel, and the reward was an ownership investment opportunity into company stock. This story isn't uncommon, but is only repeatable through consistent hard work. And that work is rewarded with opportunities that on the outside look like good luck. As Thomas Edison said, "Opportunity is missed by most people because it is dressed in overalls and looks like work."

Opportunity is missed by most people because it is dressed in overalls and looks like work.

Thomas A. Edison

   These opportunities are found in other places too. A chance encounter at a conference could open doors that you never thought possible, opening you up to financial abundance. Or a good idea from a course or book could completely change the way you see life. These experiences that we put ourselves in to grow and become more are the preparation you need to be ready to find good luck.

How do we get lucky?

   Looking for luck at the gaming tables or a chance email is as likely to pay out as those Nigerian prince's who ask you to hold their $ 50 million for them. Instead we should be taking advice from Thomas Edison, when we look for luck, we need only look at the opportunities disguised by hard work. Actively developing and growing ourselves will put us in the position to receive the boons of good luck, so when those opportunities come our way we are ready to step up to the plate.

   Perhaps we need to rephrase the question, instead of Are you feeling lucky? What we really need to ask ourselves is: Am I willing to do what it takes to be lucky?

The Resume on Your Casket

   How do we measure success in our lives?

   I talk often about the grand vision, the life-defining projects that shape our entire lives. The continuous pursuit of these lofty goals is a life well lived, a life of success. But there is more to it than that. The dreams we pursue leave a legacy. Our accomplishments are sweetest when they enable others to thrive in their lives. And we are remembered by both the accomplishment, and how we conducted ourselves as we chased those goals.

   To bring this idea into some clarity, let me tell you a story.

   Earlier this summer, I attended an event celebrating the life of my uncle, Don. For all that knew Don in his younger days, they knew a man of great strength and sharp wit. Those attributes helped him climb the rungs of his career ladder, eventually becoming Vice Principal at his highschool. To achieve these accomplishments, he embodied the qualities that lead each of us to success; a positive attitude, a vision of where he could take his life, and consistent action working towards that goal. 

   Like any accomplished professional, his resume was strong. Solid performance in academics, being awarded a degree from a reputable university. Excellent job performance, a proven ability to rise to new challenges. Coaching extracurricular events, and strong involvement in the school. But for all the bullet points on a piece of paper, none of these accomplishments were talked about as we remembered Don.

   You see, your accomplishments, the ones that really matter, are the ones that you leave written on other people's lives and hearts. 

   Hundreds of people filled the room, all the seats were taken, and many of us were relegated to standing room only as we crammed in the large auditorium to celebrate Don. Friends and family members alike took turns standing, giving speeches, remembering the man. Story after story, letters dug up from hundreds of young students that had been impacted over the years. Each of these stories touched on similar points; the kind words of encouragement that picked you up on your darkest days, the smiles that always seemed like they were saved just for you. The countless times Don had gone the extra mile for his students to see them succeed. The supportive friendships he developed with fellow teachers and school administrators.

   We laughed and cried, as grief mixed with joyous memories of all the good times. And there were so many good times. Through it all though, those same themes held true. The strength, kindness, his smile, a kind word, the little actions that seem so trivial but have the largest impact. These are the true bullet points on Don’s resume. That is the resume he wrote on his casket, that is the legacy left by the man.

___________________________

   For a man who did so much good in his life, it would be a lost opportunity to not evaluate how to measure success in our own lives. The career resume, the list of professional accomplishments were essential for Don. Those goals, that vision for a better, brighter future provided him the strength to see him through hard times. And by accomplishing those goals, he was in a better position to have a greater impact on others. By setting goals, and taking action in pursuit of those goals, Don was able to fill an auditorium to overflowing with the people whose lives were brighter thanks to his efforts. And that is why our goals are so important. They provide us the opportunity to impact more people in a positive way.

   And the other way we measure success is through the little actions that we do every day. If we can learn anything from Don, it is how you show up every day is important. The little things, like a kind word to a friend or stranger, or a smile to brighten someone’s day. Those little things, done consistently throughout your life, will build you a legacy that fills stadiums of people positively impacted by you being here. 

   So dream big, accomplish those goals that you have. Achieving those goals multiplies the impact you have on the world. But the impact, the true resume on your casket, will be how you show up every day as you strive for greatness. How can we measure success? We can measure success through the legacy that you leave behind. Let’s make sure that your legacy fills stadiums with joy and cherished memories.

 

Action Item: What can you do TODAY to build your legacy? A kind word for someone in need? A smile for someone who needs it most?

Do You Need A Budget?

   Almost every personal finance book you’ll ever pick up starts with the importance of budgets. This advice seems pretty universal among all financial professionals. So why is it that so few of us actually maintain a budget?

   For many of us, we seem to get by without a budget, and while few people are happy to admit they are right where they want to be financially, there isn’t enough pressure to change. Despite this lack of urgency, the best personal finance practices that I can recommend is this: create a budget, and stick to it. But we know that, and many of us still don’t have a budget. So what else can we do?

   To answer that question, we need to look at why budgets are so powerful.

   The act of budgeting involves planning, and keeping track of our progress towards the plan. Much like the way we pursue achievement in other areas of our lives. If we want to become healthier, we adopt a nutrition and fitness plan, and keep checking in on our progress. How much more can we lift? What is our weight? Our body fat %? These are measurable figures that help us know if we’re on the right track. Budgets work the same way. How much did we spend on dining out? Are our shopping impulses in check?

   These metrics are our analysis of performance. But the metrics didn’t just materialize out of thin air. The most powerful aspect of budgeting is not creating the plan, but instead of knowing where you are starting from. And there lies the glimmer of hope for all of us as we tackle our own financial futures. We can all take a look at where we currently stand.

   We are all creatures of habit, and because we are creatures of habit, our spending is fairly consistent. As a result, if we follow what we do for a couple of weeks, or even a month, we have a pretty good estimate as to how the next few months will play out. Tracking our spending, even just for a short period, will help us make more educated decisions about the financial resources we will need in the short term. Any surplus can be invested, and any deficiencies will cause us to pause before we become saddled with consumer debts.

   This tracking aspect helps shine a light on our spending habits, and that alone will help shape our future actions. If you realize that you are spending more than you want on restaurants, perhaps you’ll be more inclined to make your lunches several days a week. And while you won’t have the measurable insights brought about by a budget, simply knowing where you spend your money will help you make better decisions.

   To answer the question, “Do you need a budget?” we can summarize by saying No, you do not need a budget. Budgets are valuable in their own right, but you can start making better financial decisions simply by looking at where you spend your money right now. And those better decisions add up, bringing you closer to the financial freedom we all desire.

 

What about you? Do you have a budget? If so, how is it working for you? 

If you don’t have a budget, look at your spending from last week. What insights can you see? Does it surprise you where and how you are spending your money? Are there better choices you can make in the future?

Batching Your Success

   How are you batching tasks in your life? And how can you take that practice further, to take your success further?

   We all know about batch cooking, preparing the weeks meals ahead of time so that we save time during the week. This let's us focus on cooking when we're cooking, and the rest of our lives when we aren't. This practice saves us time when implemented well. And that valuable resource, time, can be reallocated towards our other goals. 

   So why don't many of us batch other tasks? 

   This is a practice I have been doing for years, and it works wonders for improving my outcomes professionally. I decide the night before exactly what related tasks I will be working on the next day. This helps me be more efficient, effectively getting more done. And because I am focused on one area at a time, the quality of my results improves as I don't need to switch cognitively between different unrelated action items throughout the day. 

   I do this by spending a couple of minutes preparing at the end of each day. Rather than grinding right until quitting time, I will take 15-20 minutes at the end of the day to get ready for the following day. This process provides some huge benefits in two main areas. 

   The first benefit, my efficiency. In those last 15 minutes, I can source the data and reports that I will need first thing the next morning. Having those files open on my desktop enables me to jump right into those important tasks without extra mental efforts the next morning. I don’t need to think about the long list of to-do items first thing in the morning, I already know what I’ve selected to do. And that simple process saves some of those important decision-making “juices” for later in the day. Prioritizing this way also helps me group my to-do list into general areas. As an accountant, I will batch tasks such as vendor expense reconciliations and payments, since these are both related to corporate expenses. Another day I will deal with invoicing, analyzing outstanding receivables, and forecasting future revenues. Again, these tasks all have a similarity. Once I know what the day will be spent on, I can forget about the other aspects of the business, knowing that the time for analysis and reporting is scheduled for another day.

   Many of the ultra-successful have practices like this. Joel Osteen, the iconic pastor and world-class orator, batches his tasks. Certain days are dedicated exclusively to reading, generating ideas. Other days are spent entirely on writing his weekly speech. And yet other days are dedicated to practicing that speech. By batching his tasks, he is able to produce a brand new key-note speech each and every week. That is the power of batching. That is how you can batch your success.

   The second benefit is more subtle, but exceptionally powerful. By spending the last few minutes every day closing down that day’s tasks, and planning for the morrow, I am effectively closing down my work day. This helps me leave work at work.

   We’ve all had days where we don’t get what we wanted done. We show up and it seems the whole business went up in flames since we last looked. All our carefully laid plans are thrown out the window. Spending the last few minutes of the day setting plans of attack for the following day helps us stay in control. And knowing you have a plan before you head home helps you leave some of that chaotic stress from the office at the office, and not bringing that frenzy of stress and negative energy into the home.

   Batching tasks helps us operate more efficiently, which allows us more time for everything else. Our productivity increases, and our results become of higher quality. This is an exceptionally powerful strategy for achieving career success, as getting more work done, of higher quality is certainly a way to increase our professional value. And once the day is done, we can plan our batched tasks for tomorrow. This helps us leave work at work, and promotes a healthier home-life. Success is sustainable only when we lead a healthy, balanced life. Batching for success can help us achieve that.

Fee’s, The Investment Killers

What is the greatest threat to your investments that you can do something about?

 

Nighttime news sensationalizes claims of impending economic recessions, trade-wars between economic powerhouses like the US, China, EU. Or failing crop yields this year, or oil pipeline issues, climate change. The impact of all of these sounds terrifying, and will certainly have economic consequences that ripple around the world. If these news anchors are to be believed, the days of doom and gloom are ahead. Religious fanatics also scream of the end of days, with judgement day fast approaching. But before we work ourselves into a panic, let’s look at what we can control in our personal economic lives.

 

I can’t tell you how to deal with any of the aforementioned scenarios. These issues, although very real, also have very uncertain economic consequences. Speculating about those impacts is a dangerous game, and ill-advised in any financial portfolio. And as such, personal finance advice remains the same, invest in a diversified portfolio, and avoid as many fees as possible. It is these fees that you can avoid; these fees that kill your investment returns.

 

What is the effect of fees on your investments? Let’s take a look.

 

For the purpose of these examples, let’s use “typical” investment fees to represent the offerings of most large financial institutions. These would be the big banks, pension companies, etc. Their fees, depending on the investment option you pick, are usually around the 2% mark, but can go much higher. Let’s see what those fees do to your investments. In the following vastly simplified example, we’ll start with a $ 100,000 investment and no further additions. This money will be held for 25 years, a good long-term investing strategy.

 

Typical Investment Fees

Investment

100,000

Rate of Return

6.50%

Annual Fee %

2.20%

25 Year Return

$286,488.84

 

This simple example shows the growth a long-term investing strategy can have, more than doubling our money over that 25 year period. But there’s more to it than that. A low cost investing option, like those now offered by many e-banks, will knock those annual fees lower, and the impact is dramatic. Let’s take a look:

 

Low Cost Investment Fees

Investment

100,000

Rate of Return

6.50%

Annual Fee %

0.50%

25 Year Return

$429,187.07

Here we can see the same investment, the same rate of return on the portfolio, and yet the annual management fee is 1.7% lower. The results? A whopping $142,187.07 over the course of 25-years. That means those fees that are charged by typical investments are stealing 33.25% of our overall returns!

 

This example, although overly simplified, shows the impact that fees can have on your investment portfolio. And that impact is huge. So large that you would be able to retire earlier on more money if you simply moved your portfolio to one of many low-cost investment funds.

 

So what’s the take-away here?

 

Fees are often displayed in complex ways on your statements, which makes it hard to determine how much you are actually being charged. But those fees do add up, so it is essential for reaching financial freedom that you look into all the fees that are out there, and minimize the cost of those fees. By doing this one easy step, you could end up with an extra 30% (or more) in your investments!

 

Action Item

Look into your investments, including (and especially) any work-provided retirement plan. What are the fees? If you aren’t paying less than 1%, you should look at similar portfolios in terms of risk tolerance from other institutions, as the fees alone could save you thousands.

Note: if you do have an employer created retirement account, often these funds are locked in while you are an employee. If the time comes where you are advancing your career elsewhere though, you should definitely look into transferring those investments into a low-cost provider to see significant savings on fees!

Is the Sacrifice too Great?

   Success comes as a result of sacrifices. Giving certain things up to grow allows us to achieve more in our lives. But sometimes the sacrifices that are required are too great a price to pay.

   As we decide what parts of our lives we want to change to experience more; more health, more love, more wealth, more peace, we also need to put boundaries on what we will sacrifice to achieve that. One of our Success Coaching clients recognized his boundaries and enjoys the extra accountability keeping him focused on his priorities. We joined his story as he steps into a new Director level role for a rapidly growing company, providing the promise of substantial career growth, and compensation to go with it. The allure of riches distracts many from the other pillars of their lives. 

   And this focus on career success and the pursuit of financial riches has cost many a man and woman their relationships; both family and friendships. But the cost is often higher than that. Many times we can witness those excelling to the top of their field with shaky foundations; poor exercise regimes, unhealthy eating habits, controlling stress with alcohol or tobacco. As we define success for ourselves, these crumbling pillars of success are hardly the inspiring vision we have. So where do we go wrong? Simply put, we sacrifice too much.

   Understanding what is important to you, and making those areas non-negotiable means you won’t risk building your success on shaky foundations. What does that look like? As we rejoin our coaching client, his success looks like; devoted time to his family each week, a non-negotiable dedication to his fitness, and healthy stress-management practices. These areas of his life are most important to him, and anything that would require him to sacrifice them is asking too high a price, regardless of the promised reward.

   This is why our Success Coaching program was designed to keep you accountable not only to your goals, but also to your boundaries. Knowing what you are sacrificing to enable growth will help you determine if the trade is worth making. We all need balance and boundaries; what is worth sacrificing to achieve more, and what is not. You can't walk the path of success if your health and relationships are crumbling all around you. That is why it is essential to keep track of all that you are doing, and all that you need to do to keep the boat the right way up. That chest of gold does no good in a shipwreck at the bottom of the ocean!

   As we strive for greater success, we need to make sacrifices, trade-offs that help us become more than we currently are. But before we get caught up in the pursuit of success, we also need to establish our boundaries. What are you willing to trade in, to sacrifice for more success? And what aren’t you?

 

Action Item:

Take some time this week to decide what your boundaries are. What are your non-negotiables? What are you not willing to give up, no matter what the promised reward is? Write these down. Commit to them, and as you achieve success, you’ll find yourself living that vision of your ideal future.

Paralysis of Information

You miss 100% of the shots you don’t take.

How do you make financial investment decisions? For many of us, the process of making a financial decision involves researching the available options. But can we fall into the trap of having too much information? We can. And this is the paralysis of information.

When you are starting out anything new, you always want to do research to find out a bit about your new endeavor. Investing is no different. But with investing, the options are nearly endless, and in that ever expanding universe of stocks, bonds, mutual funds, ETFs, derivatives, options, dividends, interest rates, etc we can find ourselves quickly overwhelmed. In this state, rather than follow through with our original good intentions, we hesitate, we become paralyzed by information.

To illustrate this point, we can look at the steps we need to take to learn a new skill. As we learn something, such as driving, the list of steps and elements we need to remember is overwhelming. Turn the ignition, put the car in reverse, release the parking brake, ease off the pedal brake, slowly apply gas, turn the wheel, brakes, change gear, check mirrors, signal, check mirrors again, ease off the brakes again, apply pressure to the gas pedal, turn off indicators, check mirrors again.

When we look at a list of what we need to do, the process seems alarmingly complicated. And that’s if we already have an automatic-transmission car. But for many of us, driving is second nature now, so much so we have the confidence to talk and eat while driving too. How did we get to that stage of knowledge and familiarity that we can approach any vehicle? By actually driving. We overcame the paralysis of information by taking action. And our decisions and choices got better over time.

The same applies for financial decisions, especially investing. As we begin our research, we will undoubtedly come across talks of management fees, market swings, dividend yield, historic growth, and many other elements that help us evaluate different investment options. These are all incredibly important to know when making a decision. Charting these elements for the available options is an effective way at determining what investment will be right for you. But the most important part is taking action. As you make more investment decisions, you become more familiar with the elements that are important to you. And as a result, you make better decisions.

 

Application Steps:

How do we overcome this paralysis of information?

  1. Set a deadline for when you will have research conducted by.

  2. Perform research up to that deadline.

  3. Make the best decision you can with the information gathered in your research. You won’t have all the information right now, and you never will. The most important aspect is that you make a decision.

  4. Take action! Now, today, right this minute!

 

What decisions have you been putting off because you don’t have all the information? Set up a deadline for how long you’ll allow yourself to research. Then research until that deadline. Finally, on that deadline, a decision must be made based on the currently available information.

Remember, not making a decision is still a decision. And that inaction costs far more than any investment fee or poor market timing.

Giving Up to Grow Up

“We can achieve more than what we have because we can become more than what we are.” Jim Rohn

   Have you ever thought about what you would give up to achieve more success? What you would be willing to not have in your life to be able to live out your dreams?

   It is often said that success comes as a result of sacrifice. That when we give up certain elements of our current life, we are able to fill those gaps with things that mean more to us. These sacrifices are present in all areas of our life. We give up on being single in order to pursue a relationship with people we love. We give up on watching TV in order to read books and learn new skills. Or the sacrifice of late nights socializing so we can get some much needed sleep and exercise. The sacrifices we are willing to make help determine how far we will be able to go.

   My girlfriend Marianne recently made a sacrifice with the vision of a better career. In her sacrifice, there are lessons we can all learn from. You see, Marianne had grown over many years to become an exemplary performer in her job. Ultimately she found herself in a place where she had earned the respect and friendship of those around her professionally. Many of us will find ourselves in similar positions in our careers, where the right now is comfortable and profitable. But right now is just that, a good place to be right now. If we want to reach our potential, we need to continually look for the next opportunity. 

   One such opportunity presented itself to Marianne, in the form of a career change into management consulting. Embracing this opportunity would mean giving up on her current successes, in order to achieve more in the future. Giving up the close working relationships she had with colleagues (who she could also consider friends), giving up the comfort of familiar where she knew she excelled. This “give-up” list was extensive, and that is frightening. To replace all that she would be giving up was an equally extensive list of new challenges, knowledge she didn’t possess yet, new professional relationships to be cultivated. 

   So how do you move forward when what you have to give up, or sacrifice, seems so daunting? Turn that fear into excitement.

   By re-framing the opportunities, not by what you are losing, but by what you are gaining helps put into perspective the sacrifices that are required. You are not giving up that TV show, but you are gaining strength and vitality from the combined time in the gym. You aren’t giving up freedom as you gain the close companionship of a relationship. And for Marianne, the sacrifice was re-framed into excitement. Excitement for the chance to learn and grow, excitement for future opportunities, excitement to achieve more for her career and herself.

   We all have to make trade-offs in our lives to become better, what do you need to give up to become better? What's holding you back? Sometimes growth is held back by our comfort and familiarity with our current situation. Turn fear of failure into excitement to achieve more and you'll see the benefits of making these trade-offs. That excitement will help you through the often difficult immediate transition, and keep you focused on your path to success.

Understanding Income Taxes

   You know, taxes are unavoidable. And if you have to encounter those taxes (free tip: you can't escape taxes), you might as well understand what the implications are for your financial well-being.

   Income taxes are one of the most common taxes we all encounter. And unfortunately, there are some serious misconceptions about how taxes are levied against us. This is brought about by the marginal tax rate system, as well as some payroll practices that feed our misconceptions. Let's take them in turn.

Marginal Tax Rates

   Much of the world uses marginal tax rates, and while the percentages may vary from country to country, and even province to province (state to state), the system is the same. Governments provide us a tax break for a certain income amount, and slowly increase rates the more we make. The increases in tax rates fall into "tax brackets". The marginal element means that the tax rates only affect income in that tax bracket. To understand how this works, let's look at the 2019 Canadian Federal tax rates. (Note: if you are reading this from another country, the process is the same but the percentages are likely different.)

2019 Marginal Tax Rates

   Taking a look at the Federal Marginal Income Tax rates we can see that if we make more than $ 47,631 in income in the 2019 calendar year, we only pay 20.5% on any earnings above the $ 47,631 mark. For the first $ 47,631 in income, we are only paying 15%. This scales as we earn more and more. Let's look at how this tax system works for someone making $ 100,000.

Marginal Taxes on 100K

   In this example, we work through the tiers and end up with a total amount of tax paid to the Federal government of $ 18,140.90. There is a common misconception that earning more money means the government takes a higher percentage of every dollar. In the above example, the misconception is that making $ 100,000 the combined tax rate is 26%, meaning $ 26,000 in tax paid. The difference from this misconception is an extra $ 7,859.10!

Taxation Myth: The more I make, the more taxes the government takes on all my money. 

   We can see that this taxation myth is dispelled! But we need to pass the word out. I have heard people working for hourly pay actually giving up shifts to not reach the next income bracket, thinking they are saving money in taxes! Let me simply sum up the math by saying, earning more money is never worse for you financially.

   But these myths did start somewhere, so let's look at why that is!

Income Taxes and Payroll

   Income Tax is usually automatically calculated each pay period by payroll software. The software makes an important assumption: that current earnings are the level of earnings you will earn all year long. Now let's say you receive a mid-year raise on July 1st, with your salary increasing from 70,000 to 85,000. Your income for the year will be $ 77,500. Unfortunately, the payroll system will be taxing the last half the year as if you are making $ 85,000 in annual income. This means for 6 months you will be paying too much in income tax. 

   This same situation can have an even more skewed result for certain types of compensation as well. This can be seen in bonuses, commissions, and overtime. These additional one-time compensation line items can inflate your earnings for the current pay period substantially, which puts you into a much higher marginal tax bracket for that pay. Explained another way, most payroll software calculates your one-time earnings as being received each pay. If you earned an extra 25% in overtime this pay, your income tax paid will be as if you make an extra 25% each pay (wouldn't that be nice?).

   The good news is, this will be refunded as soon as you file your taxes the following year. Unfortunately, the fluctuating tax payments and clear as mud explanations lead many people to jump to the wrong conclusion about how income tax works.

Key Take-Away

   Income Taxes are levied against all of us as we earn income. These taxes are based on a tiered system, called marginal tax rate system, where any income in that given tier is taxed at the same rate. If you go up an income tier, the tax rates levied against those additional dollars earned changes, but only against the extra dollars above the tier minimum! Pro tip: Knowing these tiers is vital for planning your investments!

   When calculating income taxes, most payroll software calculations annualize the earnings from the current period. That means if you make more money on one pay cheque, you will pay tax as if you make that amount each pay cheque. These extra taxes paid will be refunded to you when you file your taxes the following year. Earning more income will never be worse for you financially.

Note: Personal tax credits also have an impact on the amount of Income Taxes you owe. For simplicity, tax credits have been left out of this discussion, as not everyone is applicable for the same tax credits.

How to Create Career Success

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   Do you have a career plan in place? If so, what is on it? What should be on it?

   As we approach our professional lives, we need to understand the various elements that lead us to greater career success. To do this, we need to understand a few things, some unique to each of us, and some are shared.

Our Unique Talents and Abilities

   Our strengths and weaknesses will help define our areas of focus when it comes to our careers. Building off our strengths, we can leverage existing and inherent traits about ourselves. Leveraging our own unique strengths will enable us to out-perform others in similar roles and situations. We do this simply through accomplishing more, in a shorter period of time. The less effort required for us to produce the same results as someone else means we have more time and energy to devote to more projects or continued development. This is the beauty of leveraging our strengths, and also a reflection on how to treat weaknesses.

   Knowing our weaknesses usually highlights areas we should not be doing. If we can outperform by leveraging our strengths, then taking on tasks that are negatively influenced by our weaknesses means the same results will take us more time, and more energy. Since both time and energy are limited resources, we will fall behind as we try to compete against others that are leveraging their strengths. 

   What does this actually look like? I am a strong writer. When I sit down with a keyboard, I am able to produce written material quickly. In contrast, I do not have a strong sense for music. While I could learn, I will forever be slower than someone who is musically gifted. My strength lies in writing, and when I focus on that, I am leveraging that strength. If I have a need for music, rather than do it myself (which would take forever) I am better off outsourcing those tasks so I can continue to leverage my strengths.

   To highlight this point, we can look at a quote from actor Will Smith:

“The separation of talent and skill is one of the greatest misunderstood concepts for people who are trying to excel, who have dreams, who want to do things. Talent you have naturally. Skill is only developed by hours and hours and hours of beating on your craft."

Will Smith

   Focusing on your strengths, your talents, will help you out-perform and out-produce all those around you. Do you know what your greatest strengths are?

Action Item: Ask 3 friends to tell you what they think your greatest strengths are.

Necessary Skills for Our Path

   The second element to creating career success is in the pursuit of the skills that you do need. The development of these skills should be pursued with a focused, planned growth strategy. Many times we simply try to learn a skill after we are presented with a new problem. This slows us down, as we then begin learning from scratch right when we need the skills the most. A clear growth plan will help alleviate this bottleneck of skill vs. need. With a growth plan, you can start developing your understanding, and practicing the skills before you are put in a position to use them. In this way you can respond faster to problems, and be more comfortable taking on stretch projects that really advance your skills, both in your eyes and in others. 

   How do you know what skills you’ll need? Almost nobody is walking a path that hasn’t been walked before. Even on the cutting edge fringes of science, there are parallels between different career paths. It is these other examples that you need to seek out. Once you have sought a good example out (one that is doing what you want to do), analyze the skills that they utilize most to be successful. Do you have those skills? Are they something you should be working on?

   Knowing the skills that are used on your next step will help you frame a growth strategy that aids you in your career growth. Armed with this knowledge, you can start developing those skills now. As Will Smith said, “Skill is only developed by hours and hours and hours of beating on your craft."  Starting early, you will surpass everyone else simply as a result of your extra hours devoted to learning and growing. 

Action Item: Find either job postings or example persons to determine the skills you’ll need most at your next career level. 

How do you create career success? 

   Leverage your strengths, and don’t try too hard to improve your weaknesses. This will ensure everything you do, you’re the best at. And for the rest? Leave it to people who are better suited for those tasks. Your success will skyrocket as you out-perform everyone else! And as you leverage your strengths, be sure to keep an eye on the skills you’ll need in the future. Developing these through your own professional growth plan will help you get a leg up on the competition, as the hours you’ve spent preparing for future obstacles will give you an incredible head start over anyone else!

Asking for Wealth

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   Have you ever asked for a lower price? 

   A gentlemen I spoke with recently told me a story where he tried this for the first time. He was in a store with his daughters when a sweater caught their eyes. But after looking at the price tag, no matter how his daughters begged and pleaded, no matter the pouts and puppy dog eyes, there was no way he was spending that much on those sweaters. As he headed for the checkout, without the sweaters, he ran into the store manager. After the quick pleasantries, he simply asked, “Are those sweaters going on sale anytime soon? My daughters would love them, but I am not prepared to pay full price for them.” 

   Have you ever asked for a discount? In some cultures the process of bargaining and haggling over prices is part of every economic transaction. But in other cultures, like North American culture, that simply is not the norm. While this is not a commentary on the diverse cultures of the world, asking for preferential pricing is a strategy that could save you some serious dollars. 

   Even in cultures where asking for discounts isn’t common on everyday purchases, we’re still prepared to do it for certain items. We couldn’t even imagine buying a car without first talking the price down at the dealership. Or buying a home without making a few offers and counter-offers. But if we start applying that same mentality to our everyday purchasing, we might just be able to make our hard earned dollars stretch just a little bit further.

And for the really advanced readers, if you take those savings that you asked for and invest them, you’ll be on a greatly accelerated path to financial freedom.

   So what happened to our friend buying sweaters for his daughters? Well, his daughters have a couple of brand new sweaters with matching smiles to go with them! The savings were almost 50% of the price tag, which of course feels pretty good. And the store manager made a couple of sales that he otherwise wouldn’t have. I’d say the whole situation turned into a win-win.

   Stepping out of our comfort zone and asking for a discount is an important, and often overlooked strategy. Rather than waiting for things to go on sale, we can simply ask for preferred pricing. This helps us save money, which we can put to better use as we continue our pursuit of financial freedom.

Dressing for Success

How often do you go for a haircut?

   This question sparked a pivotal learning point for Jay Abraham as he divulged in an interview with Ramit Sethi. The learning from Jay resonated deeply with me in relation to a topic one of my coaching clients asked about. The topic of dressing for success. 

   How often do people get their haircut? The answer, gave the stylist: it varies greatly between people. Some people come in every month, every 3 months, every 6 months. With such a discrepancy in the frequency of visits, one must ask the question, why? It is usually very obvious when people come in from visiting a stylist, they look fresher, cleaner, more professional. Despite the cliche, "Don't judge a book by it's cover." We do judge. And when someone takes time to dress well, we notice, and it reflects well on them. There are a few elements at play here:

Confidence

   Think of a well dressed lady or man. Their stature improves. They stand taller, smile broader. When someone knows they look good, they exude an aura of confidence that lets the world know, "Yeah, I've got this". Confidence itself leads to a wealth of benefits, all of which can be externally triggered by the simple act of dressing for success. These benefits include; openness to tackling challenges, increased professional performance, happiness, and health. Not only are we more willing, and even more capable of taking on our obstacles, our performance also increases. Without self-doubt, we end up smashing through obstacles that otherwise we would have turned back from. You can see the impact of confidence in a common martial art demonstration, punching through a plank of wood. The key to success in this maneuver is to strike through the wood, embracing the confidence that you can break through the wood. On the flip side, if you don't believe you can break the wood, you'll hesitate slightly which will reduce force, and the obstacle won't be broken. This analogy perfectly illustrates the benefits that confidence can have when facing professional challenges. And through this, confidence brings us to the other benefit of dressing for success, competence.

Competence

   We need to dress the part for success, however that looks in your profession. You would be skeptical taking fitness advice from an overweight personal trainer, you may also discount any health advice received from a sick doctor. We expect people of their own craft to look and act the part. And that starts the moment we first see them. I would be concerned if my surgeon showed up to the operating room in sneakers and gym shorts, regardless of how talented she claimed to be. That same surgeon though, dressed in scrubs, would give me confidence that she knew her business, simply from how she dressed. 

   As the world becomes more progressive in their tolerances, some things will always hold their merit. And dressing well is one of those items. Regardless of the dress code for your profession, when you show up looking good, that speaks volumes.

   So if there is one take-away here, keeping up with your appearance grants you confidence and an air of competence that immediately sets you at the front of the pack. Dressing for success is an easy way to get a leg up on your competition, and look good doing it!

The Cost of Borrowing

   Last week we looked at interest rates and their impact on our financial accounts from the perspective of an investor. Even more common in our financial lives though, we use borrowings from the perspective of a borrower. Understanding how interest works before we are charged is imperative to avoiding the slippery slope of consumer debt that plagues many individuals. As a recap, interest is a charge on borrowed funds. 

   In its most simplified terms, borrowing with interest means paying back more than you borrowed. The difference is the interest paid. The lending/borrowing arrangements are incredibly diverse, but can be evaluated based on the Annual Percentage Rate of interest. UK and North American consumers are fortunate in that respect, as interest rates must be displayed in that form. This standardizes the cost of borrowing on most consumer loans by showing the annual cost of the loan. As the interest rates indicate the cost of the loan, the higher the APR, the worse the loan terms are.

   The most common source of short term borrowing we see are credit cards. The interest rates on these cards are astronomically high, often ranging from low double digits all the way to 20% or more! At interest rates like these, failing to pay off your balance before interest is charged dramatically increases the cost of your purchases. Other common sources of debt are; vehicle loans, mortgages, lines of credit, store financing, to name a few.

How to deal with Debt

   When paying off debt, your primary goal is to pay off anything with the highest interest rates first. This will reduce the cost of interest, and ultimately save you money in the long term. This is the mathematically best solution, and goes contrary to some other strategies. When available, you should also try to consolidate your debts into one single, lower interest rate loan. This can be especially hard to do if you already have poor credit, as banks and other lending institutions will charge you a higher interest rate to account for the extra perceived risk, or they simply may not lend anything at all.

Pro Tip: If you don’t have an emergency fund, you need a line of credit.

   Getting a line of credit when you don’t need one will result in more favourable interest rates. The line of credit costs you nothing if you don’t use it, but in the event of a financial emergency, being able to pay off credit cards using a lower borrowing cost option will save you potentially tens of thousands of dollars on interest in the long run. Note: this is a last resort backup plan, and shouldn’t be utilized to finance any purchases that are not absolutely essential to living.

When to use Debt

   Debt can be used for our financial benefit. We are well aware that home ownership for most of us is only attainable if we finance through a mortgage. This use of borrowed money allows us to enjoy assets that we otherwise wouldn’t be able to afford. There is one main reason to use debt, and that is leverage for an investment. Leverage simply means borrowing to purchase something. In the case of real estate, we often expect the value of our investments to increase over time, and if the gains surpass the interest costs, we come out ahead. 

When to pay off debt

   If you have debt, there are times when it is more advantageous to not pay off the debt. Incurring interest expenses intentionally may be the right financial move if you can make more money by investing than you would save by paying off the debt. If you can invest at a 10% return, and only pay 7% in interest, you are ahead 3%. Unfortunately the future is never certain, so you should also take a risk premium into consideration. If in the above example, the investment return under performs expectations and results in a 6% return, you would have paid more in interest than you earned. 

   As a result of future uncertainty, to make the equation equal you need to assign a risk premium. To display this in a formula, we would look at the decision like this:

Expected Return = Cost of Interest + Risk Premium

   In the above example, we can use the 7% interest and a 2% Risk Premium. If our expected return exceeds 9%, we are comfortable taking the risk for the extra returns. If the expected return is less than 9%, we should pay off the debt for the guaranteed cost savings of 7% in interest charges.

Take-Aways

   Borrowing money is an important part of our personal finance journey. Understanding when and how to use debt, and how to evaluate different options will ensure we make the right choices on our path to financial freedom. Some of the key take-aways from this article are:

  1. The higher the APR, or Annual Percentage Rate, the more interest you will be paying, and by consequence, the worse the debt is.
  2. Paying off the highest interest rate debt first will save you the most money.
  3. If you don’t have an emergency fund, get a line of credit before you need one. Your terms will be better, and in case of an emergency, those better terms can help keep you from financial ruin.
  4. Use borrowings to invest in assets that will increase in value. This is called leverage.
  5. Pay off debt first unless the investment return is more than the interest rate on debt plus a Risk Premium that suits your investor type.

Pick your Poison

Pick your Poison

   Marketers describe us as consumers, and we are. We are all creatures of consumption, from what we eat and drink, to the appointments we fill ourselves with, and the information we digest. And when it comes to the things we ingest, either physically, mentally, spiritually, we need to be vigilant about what enters our bodies. 

   Of course words of wisdom like this are easily passed over as too basic or trivial to even worry about. We all know that excessive alcohol consumption is bad for our health, or smoking carries serious long term risks. And these are all true! But the pitfalls of our pervasive over consumption goes far beyond the studies mentioned on the 6 o’clock news.

   Of the list of things that we consume, food and drink certainly picks up the lion’s share of the blame tab. Every week a new study is released discussing the negative elements of too much sugar, too many carbs, fats, acids, the list goes on. These studies can be summed up rather succinctly by saying: Too much of anything is bad for you. But aside from the food plate (formerly our well known food pyramid), what other areas of consumption should we be wary of? 

   The poisons we pick fall into two categories; time, and information.

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Time:

   The alarm clock buzzes, we reach over and hit the snooze button. Wait, this isn’t the early 2000’s anymore. Our snooze button is actually a finger slide on our touchscreen. A few minutes later, the electronic rooster is at it again. Grumbling, we roll over and open our eyes, picking up that phone and sliding the screen up. First thing, let’s check social media, and probably our inbox to see what happened in the overnight hours. Great, calendar invites for today.

   Within 15 minutes of waking up, we already see 4 meeting requests, that’s half our day gone in meetings that we probably shouldn’t even be in. One of the most venomous poisons that we willingly consume is these irrelevant demands on our time. And not that we aren’t important, but a 4 line email or a 5 minute phone call would likely straighten out our issues without the need for an hour long meeting. 

   The consumption of time is incredibly poisonous for two reasons. First, it kills our productivity. As we run from meeting to meeting, we hardly have time to sit down and focus on our important tasks of the day/week/year. And secondly, consuming our time by running around being busy feels good. We love the feeling that we are important, that someone needs us, and by stepping in to be their hero, we forget about our own quest. 

   Over-consumption of time is a devastating poison to swallow. And this problem is only going to get worse as we become increasingly connected. 

It’s Time We Took Back Our Time.

   So what can we do to take this time back? The best strategy is to plan out your day the night before. Put on your calendar non-negotiable time to work on your priorities, on the tasks that are most important to your goals. Taking back your time before someone else tries to will vastly improve your success as you strive for greater and more abundant achievements. 

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Information

   Perhaps the most pervasive of all poisons is actually information. Think back to that electronic rooster crowing. As we load up our calendars with irrelevant meetings, what else do we consume? Social media captions of celebrities, news feeds full of stories of the latest tragedies around the world, and all sorts of horrific incidents. The same is portrayed on breakfast TV and 6 pm news. Sensationalist headlines all striving to out-do one another by bringing us the most corrupt and terrifying stories. Once we start down that slide of human suffering and misery, it becomes almost impossible to then take on the day’s challenges with an open, positive mindset. 

“It doesn’t matter where you get the bad stuff, it will still do it’s damage.” ~ Jim Rohn

   As we strive for achievement, we need to be conscious that negative stories and news will fill us with negative energy. This energy is not optimal for producing creative solutions to problems. In information, as much if not more than anywhere else, do we need to pick our poison well. 

What Poison Should We Take?

   As we each pursue different interests, and have different life experiences, the level and content of information we need differs greatly. If you have small children, you’d be well off to know about unsafe roads in your neighbourhood. Or the happenings overseas where a family member is vacationing. Or the government regulations that might affect your business. But none of us needs to consume all of the information we currently do. If you aren’t an aspiring Hollywood actress, knowing the habits and routines of the Kardashians is probably not helpful for our growth.

The Antidote:

   We can’t steer clear of all negativity. There will certainly be days were we eat too much, or have one too many drinks. And for almost all of us, we can’t reasonably control our entire calendar. But we do need to exercise some careful planning in all of these areas. Pick your poison. Choose what you want to consume, and what you don’t. Making these choices before they are made for you will vastly improve your rate and level of success. 

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Action Exercise:

There are two things we can do this week to start picking our poison:

  1. Block off an hour each day to work exclusively on your priorities. This is a non-negotiable calendar slot where you focus entirely on your goals.
  2. Start unsubscribing from email threads that don’t serve you any more. Start small, with only a couple this week. Do you miss getting the emails? Do you even notice not getting them?

Understanding Real Interest Rates

Understanding Interest Rates
Why Stuffing Cash in Your Mattress is a Bad Idea

   Interest rates are one of the most commonly advertised terms in the financial world. High interest savings accounts, low interest credit cards, high interest rate bond yields, low interest rate mortgages, the list goes on and on. But what does that actually mean for us? And how do interest rates fit into our personal finances?

   Interest rates fit into our finances in two ways, the cost of borrowing, and a return when investing. We'll look at the two here.

The Cost of Borrowing

   Interest is charged on the principal, the amount borrowed, and is usually expressed as an annual percentage rate (APR). If the interest is compounded, the interest is added to the previous principal, and interest is charged on the cumulative balance. This is essentially charging interest on interest, and is how many people end up drowning in vicious consumer debt.

   We’ll take a deeper dive into the debt side of personal finance next week. For this week, let’s look at the other side of the equation, lending money for interest income.

Interest as an Investment

   There are essentially 2 ways to generate interest income, lending money, and storing money. Almost all bank accounts provide a small amount of interest income. To increase that interest income, we can lock our funds into a bond or loan of some form. With innovations in FinTech, there are increasingly diverse options for lending outside the traditional realm of corporate and government bonds.

   Bank accounts provide an excellent way to hold emergency funds, and funds used for day-to-day needs. I recommend at least 2 bank accounts, one should be a high interest e-savings account for your emergency fund, and the second should provide you no fee transactions for your daily needs. Both these options provide you liquidity, the ability to quickly retrieve your money, but the trade-off is a lower interest rate. 

   To receive a higher interest rate, we can invest in bonds and loans. The money here is set aside for a pre-defined period of time, and to compensate for your loss of liquidity, the interest rate paid to you as income is higher. For example, a 5-year bond might pay you 3% interest, while a 20-year bond may pay you 5% interest. The extra interest income is paid to you to compensate you for using your money for a longer period of time.

Learning point: Interest Rates (income) increase to pay you for the use of your money for a longer time-frame.

   There exists one more consideration when looking at these interest rates. That is the difference between the Nominal Interest Rate, and the Real Interest Rate. The real interest rate takes into consideration inflation, and is more important to an investor than the nominal interest rate. They are tied to each other by inflation.

   Real Interest Rate = Nominal Interest Rate - Inflation Rate

   When evaluating your bank accounts and debt investments (bonds and loans), often the Nominal Interest Rate is stated. Your purchasing power, or your economic result will be impacted by the Real Interest Rate. 

   To see this in practice, let’s look at a few examples:

Understanding Interest Rates Examples

   As you can see, the real interest rate means you only make money when the Nominal (or Stated) Interest Rate is higher than the rate of inflation. Or put another way, the purchasing power of your dollar decreases over time. 

Learning Point: If the Nominal Interest Rate is lower than the Inflation Rate, you’re effectively losing money.

   For this reason, storing the extra cash under the mattress is a bad idea. Not to mention, mattresses these days are quite comfortable without the extra padding. 

Key Personal Finance Strategy Take-Aways

   Carrying a large balance in your regular bank account does you few favors, as Example 1 above shows, inflation is slowly eating that money up (even if it doesn’t look like it!). To ensure your emergency fund is available, and able to stretch as far in the future as it does now, I recommend a high interest account to counter some effects of inflation. And finally, when investing in debt or loans, to ensure that you have a profitable investment the Nominal (Stated) Interest Rate isn’t the right interest rate to look at. Instead, you need to calculate the estimated Real Interest Rate. 

   Don’t worry, we’ve thrown enough math at you for now. If you want speculation on what inflation rates will look like in the future, a quick google search will provide you professional estimates. 

   Equipped with this knowledge, as you engage in debt investing (bonds and loans), you’re ready to make a calculated decision!

Formula Recap:

Real Interest Rate = Nominal Interest Rate - Inflation Rate