Lesson Three: You Don't Need to be Good at Numbers to be Good at Money

In many of my money mentoring sessions, my friend will undoubtedly begin by saying:

"Thanks so much for helping me; I'm just not good at numbers."

Since personal finance was never covered in school and it certainly isn't coming across our Twitter feeds every day, I don't know where we have all learned the above perspective, but I assure you, its one of the largest, most pervasive money myths out there - so let's tackle it head on.


Money Myth 1: You Can't be Good At Money if You Are Bad at Numbers

As grandma would say: "That's just hogwash!"

When it comes to "personal finance"... its more personal than finance. If you haven't noticed, we are three lessons in and I haven't flashed a math equation at you yet. That's because building personal wealth is:

50% Mentality
30% Behavior
10% Know-How (a.k.a the dreaded math)
10% Creativity

Yes! That means for you "right-brained" people out there, you have just as much an advantage as the Mathletes.

More importantly, I want it to sink in that 80% of your personal financial success is driven by just your mentality and your behaviors. 80%!! That's a passing grade in the strictest of schools for even for the worst human-calculators out there.

The reason why so many of us "fail" at finances is because we focus all our efforts on becoming wizards of strategical nuance on the remaining 20%, leaving us little energy for the majority of the action. Its the equivalent of picking paint colors before you've built the house. Some of us even get to the point of painting the dirt before we realize it just isn't turning out the way we pictured it.

So there you have it, "the numbers" play only a supporting role in determining your success in building personal wealth...and if you still really hate math, well I'm sure there is an app for that...

Lesson Two: Focus on Building Wealth and Stop Trying to Get Rich

Before we move forward, I thought it best that we all get on the same page...

This is not a blog about how to get rich.

Surprised? Shocked? Disappointed? Don't be. Wealth is what we are after here and there is a core shift in mindset that occurs when we stop focusing on getting rich and start focusing on building wealth.

What's the difference?

Well, Merriam-Webster won't be giving me any high-fives for the definitions below, but in the cause of our Millennial to Millionaire journey, these descriptions will help us stay aligned and you stay on target:

Poor People... Can't GET money

Broke People... Can't KEEP money

Rich People... SPEND (lots of) money

Wealthy People... Have Money MAKE MORE MONEY

For the visual learners out there :) 

Some of you looking at your debt are saying... "I don't know Katie, I think I could be OK settling for 'rich'."

That is absolutely your prerogative, but let me show you what you're in for by telling you an all-too-common tale about my friend, Mr. Jim Jones.

Jim is a smart & hard working guy. He went to a great 4-year school, had some nice internships, and is now on the fast track at his company, Big Firm, LLC. After 2 years as a Senior Analyst, he thinks he is in for a promotion this year... and boy could he use it. Jim has $15,000 in student loans and a $230 car payment every month. He still rents, living downtown close to work and all his friends, James Jones, Rachel Jones, & Chris Jones. He is thinking about returning to get his MBA and would also like to stop renting and buy a house. Plus, his car that he started driving in college is looking a tad dingy.  

Congratulations! Jim gets his promotion and is now a Manager of his team. Jim is so thrilled that he can finally afford the life he deserves. To celebrate, he goes out to dinner with his friends, and like many of the other managers at the firm, leases a shiny new BMW with his raise.  

A year later, Jim is feeling disappointed. He now makes more money, but it doesn't feel any different. After all, he still has $13,000 in student loans, has a $400 car payment, and wonders why even after the raise, his friend Chris Jones, still an analyst, can afford that $800 watch and he can't. 

Sound familiar?

Jim is officially in what many call, "The Rat Race," but what I like to call, "The Rich Race."  The thing is, once Jim got more money, he just spent more money, leaving him NET ZERO. Like most "Joneses" he believes the solution to his problem is making even more money, so he begins to work harder in his new role, for the next promotion, for the next raise, and so on. Jim keeps "moving up" but doesn't actually go anywhere.

We do have a marathon to run if we are going to become wealthy, but running "The Rich Race" is not going to help us A) train for it or B) win it.

So that's it for today - stop working around-the-clock to get rich, and start working around-your-life to get wealthy.

Happy Pay-Day Friday!!

Lesson One: Stop Learning How to Become Wealthy from Broke People...or BuzzFeed

For the past few years, I have mentored half a dozen friends and colleagues on their personal finances. In the beginning, I was always amazed that they came to me for such advice, after all, what did a new college graduate just starting their lives know about building a lifetime of wealth? However, I quickly realized that unless your dad forced you to go through the Boy Scouts Financial Merit Badge before leaving home like mine did, rarely does anyone ever really takes the time to teach you how to manage your own wallet.

So I did what any Millennial would do... Went to the internet to learn!

Wow, was I disappointed. Here we are in the golden era of quick & easy to access information, but the "learnings" about how to manage my own finances were confusing at best and misleading at worst. I found sites and articles that were:

a) Too vague to actually help me ("Start Investing Early!!"... Um, thanks Forbes, but how do I do it and where does the money come from?)

b) Published by credit card companies. (Don't they make money off me being broke?)

c) Get Rich DVD Ads (Building wealth is like loosing weight, and when did you last lose weight from watching a DVD...)

d) Articles/Apps teaching you to save 10 cents at a time (Sneak Preview... no one gets rich saving 10 cents at a time...)

No wonder we Millennials are stuck in a cycle of debt and dashed dreams!!

Which is why I began writing this blog and leads us to our first Lesson:

Lesson One: Stop Learning About Personal Finance From Broke People or BuzzFeed.

Most people are B-R-O-K-E. The "Jones" we are all trying to keep up with... are broke. Your economics professor, he was likely broke too. The guy driving the leased BMW in the lane next to you, he's definitely broke. Don't believe me?  Let's look at the facts:

The Average American Household has roughly:
- $15,000 in credit card debt
- $17,000 in an auto loan
- Pays $18,000 per year in mortgage payments
- Has $15,000 outstanding student loan debt

For a grand total of $65,000 in payable debt.

AND MAKES ONLY $50,000 A YEAR.

The Average American is BROKE. Hell, America is broke. Just take a peek at this WSJ article:
WSJ.com "US Household Debt Sinks 18 Billion"

Look, I think your family is great. And I think your mom makes a damn good chocolate chip cookie. But if your parents have any debt other than a mortgage (or if they have 2 mortgages) then you might want to stop listening to them when it comes to personal finance.

Millennials... listen closely. I know we are the social media generation. But please, leave BuzzFeed, Pinterist, & Twitter to introducing you to cute cat videos and 10 ways to make your wedding beautiful with mason jars. There just ain't no way you're going to learn personal finance in 140 characters.

So that's step number one and you are done for this week - stop listening to broke people about what to do with YOUR money.

About Me (a.k.a What Do I Know About Becoming a Millionaire)

Great! You've decided to finally put "CFO of Your Life, Inc" as one of your job descriptions. So, as the responsible CFO you are, you wonder, why in the world should you listen to this random girl on the internet?

Here is a 101 on me, Katie Sequeira:

Yes...my parents managed to find me a Cornell
toilet bowl cover after my graduation...

I'm 26 and graduated with "Honor and Distinction in all Subjects" from Cornell University in 2011. I majored in Business, concentrating in Food & Beverage (because its delicious), Finance (because numbers just make sense to me), and Consumer Behavior (because it was so freaking interesting).

But honestly, my resume really means little in the world of building long-term stable wealth.

Why? Because there are more than several of my fellow "Top 10% of Graduates" that are honestly "Top 10% Broke".

So to give you an idea of why I know what I'm talking about, I'll tell you the story of the beginning of my personal finance journey...





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It was April 15th, 1997. The day prior for my birthday I had received an American Girl Doll Personal Journal, titled "All About Me" and was quickly going through its pages filling it with drawings & descriptions of my thrilling life as a new-found 8 year old.

I came to the page where the journal prompted me to write down my biggest fear & what my mom/dad say when I have this fear (deep stuff for AMG I might say). After running to my mother for the latter, here is what I wrote (with corrected spelling):

"My biggest fear is...Having no money and having to live on the side of the road.  

When I have this fear, my mom/dad say...My Mom says the government will take care of me on taxes and welfare."

Quote in quote.

Looking back now, I can easily envision my mother doing dishes after a stressful day at work with a small blonde-hair Katie pulling on her pant leg asking what would happen if I became homeless, answering the above, and chuckling to herself about the sarcastic comment she thought I would forget come bed-time.

For me... the fear was real. I had heard my republican father rant "over my head" about how the government was inept with money and how social security would be gone by the time he retired. If I wanted to avoid being homeless, I needed to start NOW.
-----------


I'll skip the years where I took "diversifying" to mean hiding allowance & babysitting money in different places around the house and skip forward to the Katie of today...

- I graduated under-grad with slightly above the average $26K in federal student loans, and paid them off completely in 60 days.

- Now 4 years after graduation, I have over $100K invested in tax advantaged retirement accounts, with a solid 6 month fully-funded emergency fund and another few thousand in a "for fun" investment account.

- I have sold no start-up to Yahoo, have no trust fund, and work a regular M-F job.


But what you, Mr./Mrs. CFO care about is this:

If I don't save another dime myself for the rest of my life, given the historical long term average of 12% growth for mutual funds*, I will become a millionaire by the age of 46, and will have 4 million dollars for when I retire.  

I am an every day Millennial going on Millionaire.

Sources:
* The Total Money Makeover. Dave Ramsey. September 2013

Why Millennials Need a Tutor in Personal Finance

Ah, my fellow Millennials... we are the generation of "new era" business, the generation that all HR & Marketing professionals are desperately trying to attract, the generation that has more education than any that has come before us!!

.... and the generation with the most debt in collective history.

Yes friends, "Congratulations!", we are the smartest, poorest people of all time.

It doesn't take long to see how and why we Millennials have racked up over $1 TRILLION of debt*. We began our lives in the "pre-internet" area, going to school to prepare us for "pre-internet" jobs. While we all saw the massive change coming, we stayed the course and completed our studies like our parents taught us, graduating with around $25,000** average in college student loans; but we weren't too concerned. With our shiny framed receipts (I mean, degrees...) we would find safe jobs at large corporations with great benefits that would help us pay off our loans...

Only that didn't happen.

With the multiple "pops" in the economy (Internet Bubble & Real Estate Bubble/Great Recession), we went back to school to "wait it out" and racked up more debt. Except the jobs still didn't come. Now we have moved back into our childhood bedrooms, working minimum wage jobs, and thinking the American Dream didn't go "new-age"... it went "by-the-way-side".

Yet, while we have been so busy & stressed trying to find corporate jobs to pay off our mounting debt, we have missed the reality that we are not showing up to work for the one job we already have... Chief Financial Officer of OURSELVES.

Great! We have a job and the complete control & flexibility (finally!) to do what we want with it.

Sad Face... our expensive degrees were in just about every subject but personal finance.

That's where I plan to help. My goal is to teach you, my friends, about easy things you can do to regain control of your financial future. I promise, you don't need any shiny diplomas or expensive loans to learn these lessons.

It's time to go from Millennial to Millionaire.

Let's Get Started...

Sources:
* Fifteen Economic Facts About Millennials. Council of Economic Advisers. Presidential Executive Office. October 2014
** Millennial Generation Research Review. US Chamber of Commerce Foundation