The road to financial freedom is difficult and fraught with risk. Reaching financial independence means managing risk. In this episode, Patrick Donohoe talks about risk management, investor wisdom and due diligence. He shares an experience with a bad investment and what he learned from it. Tune in to learn more about what you need to keep in mind when investing.
Watch the episode here:
Listen to the podcast here:
Investor Wisdom: Sound Judgment, Due Diligence And Managing Risk
This episode is sponsored by the new and improved Financial Independence Calculator found at TheWealthStandard.com/calculator. One of the driving forces of human beings is freedom, which infers financial freedom too. Several years ago, I set out to discover how any individual, regardless of their financial situation, could evaluate their finances in five minutes or less and have a firm date when they could achieve financial independence. The calculator is going to take you just a few minutes to complete and it’s going to provide you with a specific financial independence date. Go check it out now.
“Life is a series of sensory experiences, then you die.” This statement sunk in at a pretty deep level. Time sneaks up on us. Our survival instincts make us believe that we’re going to live forever. We get those momentary glimpses of our child’s faces, who are now more adult than they are kids. It’s conversations with family members that are in their fourth quarter of life or you hit marital milestones that are calculated in decades instead of years. We can’t get our time back and exchange it for the meaningful experiences we want that were most likely taken up by the mundane work or wasteful, meaningless activities.
You may not consciously link the fleetingness of time to wealth-building and investing, but I want you to consider the possibility that there is almost a direct correlation. In my experience personally and with clients, urgency will breed complacency and impulsiveness when it comes to making financial decisions. This urgency comes from the unconscious realization that you may not have enough money to retire or be financially free. In order to have more money, you must invest and investment requires risk. This urgency is, in my opinion, amplified by the unfathomable amount of information and perspective we are constantly bombarded with, which further limits our capacity to think critically.
We’re all in this tractor beam of stimuli and without awareness and discipline, we have little control over filtering what is constantly fighting for our attention. I saw this report by Statista, a data analytics company, about what happens on the internet in just one minute. It blew my mind. Look at some of these statistics. Two hundred million emails, 69 million messages on Facebook and WhatsApp, 2 million Tinder swipes, 5,000 hours of YouTube videos are uploaded, 695,000 people share a story on Instagram and 9,132 new connections are made on LinkedIn. There’s more. It’s crazy. How do you step out of this tractor beam to make wise financial decisions? I’m going to tell you a personal story to illustrate this.
In 2006, I was introduced to an investment opportunity in a new oil and gas company. The principals had worked at one of the largest oil companies globally. They were stationed all around the world in the Middle East and parts of Texas and Oklahoma. They stepped down to form their own company and were raising money to acquire these unproductive, inefficient oil and gas operations in Texas. I ended up investing almost everything I had initially. I was very compelled by these guys, but I didn’t understand successful business operations, let alone an oil and gas company. I didn’t know even what the word assay meant. I couldn’t begin to understand what an assay report was, the legalities of mineral rights, contract law or the fact that the investment I was putting money into was debt and not tied to any underlying asset, but I invested anyway.
Leading up to the craziness in 2008, I was getting cashflow every month. I felt like this was a wise investment and I was a good investor. I decided to invest even more. I borrowed money to do it. This was when cashflow stopped. It was devastating. I won’t go into that. I tell the story in the book. After the initial emotional meltdown from 2008 to 2011, I went on this witch-hunt to figure out what happened. I learned a ton about business operations and the cost of lousy operations. An example is the discovery of this oil field operator coincidentally having ownership in a trucking company that was transporting the oil. Apparently, they thought it was okay to charge five times the going rate to this specific operation.
I also learned from the assay and financial reports that the interest that was being charged on these promissory notes would inevitably result in ongoing negative cashflow. There were a dozen other discoveries. I’m not going to get into it, but I’m going to segue into the lessons and apply them to your investment experience. First, one of the biggest skills of an investor is knowing how to think critically, which to me is an inhibitor to impulsive response and irrational behavior when it comes to making financial decisions. Why? All investments originate from a hypothesis perspective. The hypothesis is simply an interpretation by an inherently fallible person who won’t tell you that they’re fallible to highlight all the things they’re good at.
The lesson is to evaluate the team that will execute the investment, “Are they green?” If you don’t understand business fundamentals or the industry that you’re investing in at an operational level, at least stay out. You don’t have business there. It’s a huge risk. The principals in this specific investment, I trusted them and that’s why I invested for obvious reasons. They were successful specialists in their respective careers, but they didn’t possess the adequate business acumen to make the investment successful on a business scale. If they did, there were so many red flags that I was able to find as a neophyte that they would have found out if they knew how to do proper due diligence.
Managing Risk: We can’t get our time back and exchange it for the meaningful experiences we want that were most likely taken up by the mundane work or wasteful, meaningless activities.
I would also say that private investments like this one don’t have the level of regulation that a publicly traded investment has. That’s why there’s a greater upside, but also it carries a huge amount of risk because of the downside. There’s still risk in publicly traded investments, but what minimizes that risk is the regulatory criteria that come with severe consequences if it’s not met. There’s a high degree of built-in accountability with publicly traded investments. In order for someone to be successful in that arena, they have to consistently meet these criteria. It includes accounting, legal, business operations, executive levels, managers and hiring, which adds to the expense. That is why dividend returns on publicly traded companies in the oil and gas industry like Exxon or Schlumberger are typically always in the single digits.
The next lesson is to know your asset allocation based on risk and control. That was another error where I invested way more than I should have given the amount of money I had at that time. This is one of the reasons I came up with the Hierarchy of Wealth. I wrote about this extensively in Heads I Win, Tails You Lose, which is the book I came out with that tells you more about the theory behind it. The Hierarchy of Wealth has four tiers. It will help you easily look at your asset allocation so that you know the appropriate amount to invest in these higher-risk assets.
What do you do with the lesson? First, we have a free calculator for The Hierarchy of Wealth. You can put your assets into it easily. The idea behind The Hierarchy of Wealth is to go in a sequence of priorities. You build your tier-one capital, which is your foundational capital. Your reserves and sleep well at night account. You do this before investing in anything else. Next, instead of investing outside of you, you invest in yourself. You figure out how to earn more money by being more valuable in the marketplace. As you go through this hierarchy, you invest in more safe assets that have good returns, individual rental properties that have at least 20% equity and a 0.8% rent-to-value ratio. I talked about that in the book as well.
When you get to that point, invest in what you understand. My brother came to me and was a great example. He was through his Hierarchy of Wealth and ready to invest maybe with more risk to get the better upside. We had a conversation about his expertise which is mergers and acquisitions, especially in the healthcare industry. He knew it forwards and backward. Understanding the financials, business plan and team involved, he would be able to go in and do due diligence on a very high level. It’s investing in those areas and companies. It could be a REIT in the healthcare space, Real Estate Investment Trust. It’s something that he was familiar with that he can take his knowledge and expertise and do the proper due diligence to figure out if it’s the best place to put his money that will mitigate risks.
There are other examples I have in the book of being able to invest in areas that you understand. The book you can get for free on the website in PDF format. Go to Resources and the book link should be there. The next thing to do is sharing is caring. Share this information and teach somebody else what you guys learned. It’s one of the best ways to lock in the understanding so that the next time you are faced with financial decisions, specifically in the arena of making an investment, you will remember this experience. Chances are, if you don’t teach somebody in 2 or 3 weeks, the information will be gone.
Let’s summarize this episode. First, all investment is a hypothesis by people. Therefore, it inherently is susceptible to flaw and fallibility that requires due diligence. Learn to judge your judgments when investing because you instinctually will make a judgment unconsciously and look straight to the rate of return and the opportunity to build wealth. You also associate decisions with the character and charisma of the person in charge. Make a judgment about their level of competency without going beneath the surface, which is that big lesson that I learned. It was a hard and painful lesson and one that I hope you don’t have to experience.
Finally, another thing you guys can do is there’s a live demo that I’m doing with the Financial Independence Calculator as well as The Hierarchy of Wealth. This is going to happen in 2021 on September 10th. If you already have the Financial Independence Calculator and the Hierarchy of Wealth Calculator, then you will receive an email. If you don’t have it, you can go to TheWealthStandard.com/calculator. There you will be given the opportunity to register for this live demo that I’m going to do. I’m not sure of the time yet, but it will most likely be in the afternoon. Thank you for reading. I appreciate the support. I hope you learned something and stick with me for the coming episodes. You’re not going to want to miss them. Until then, take care.
According to science, our brain does not have the capacity to process the information that bombards us daily. That is why it creates these shortcuts or cognitive biases. Our cognitive biases rule our behavior, especially towards our finances. On today’s show, Patrick Donohoe speaks about these biases from a financial perspective, foremost of which is the notion of retirement and why it is so appealing to so many. Get out of what you have been conditioned on so you can gain that financial independence as soon as possible and not have to wait 20, 30, or 40 years. Tune in to this episode to learn how.
Watch the episode here:
Listen to the podcast here:
The Framework For Financial Independence
I’m grateful for this episode. We had to be reminded about the principles of freedom and independence. I thought I’d use this show to speak to that from a financial perspective. I’m going to be talking about a mental model or framework for financial independence. It’s changed my life and I believe it could change yours. At the end of the episode, I’m going to give you a tool. It’s a calculator that will help you quantify these ideas. I’m going to explain the different pieces of it.
First, I want to create some context. It’s fascinating to think about how science has made us all aware that our brain simply does not have the capacity to process the information that bombards us on a daily basis. It’s not able to keep up with how innovative society has become. As a response, the brain creates these shortcuts or cognitive biases. There are over 100 proven cognitive biases. The Visual Capitalist has an amazing infographic. It gives you an idea of how all of these cognitive biases are connected. What this tells me is that even if we want to be objective and assess a situation, scenario, opportunity or inner working with absolute objectivity, it’s not possible. Our mind has prevented that. Being aware of these cognitive biases is vital. The primary ones are, first, cognitive dissonance. It is what happens when we hear our exposed information is contrary to what we believe. We go to this carnal state. We come up with why our opinions are right and why theirs is wrong. At first, it feels unnatural.
The second is confirmation bias. It is looking for groups or friends that all essentially believe what we believe, think how we think, have the same opinions. The other is the halo effect. It is when a political figure, a sports figure, celebrity, gives an opinion about something that is not within their expertise, yet we still take it as if it were. Our cognitive biases, if you think about it, we all have them. It’s part of our survival mechanism. We don’t choose. It’s unintentionally created because we’re wired to survive. We are looking for things constantly that could prevent our survival. Look at 2020, we all went primal to some degree, at least I did a few times where things were chaotic, unknown, and whether it’s toilet paper, water or whatever, you still want a primal.
Financial Independence: Even if we want to be objective and assess a situation with absolute objectivity, it’s not possible because our mind is preventing that.
Our mind creates these unintentional frameworks, biases, perspectives. It results in what we think about the most. There’s a very strong set of perspectives and biases around the personal finance world. I’ve been in this world for decades. I’ve written a book. I’ve done hundreds of podcasts and concluded something. First off, there’s a biased toward this notion of retirement that’s what you should be doing. It’s where all financial behavior originates to some extent. Pursuing something for 40, 50 years as a career and not having to do that anymore. There’s a whole industry, trillions of dollars around reinforcing this idea. Whether it’s asset management, insurance, brokerages and you can point to all different advertisements that continually speak to this idea of retirement. For years, I criticized the qualified plans, mutual funds, perspective until I realized something. I finally considered why retirement was appealing. It’s appealing not because people want to retire. The definition of retirement is to be taken out of service, essentially become useless. Nobody wants to become useless.
The motivation and what creates the framework is people have this urge, natural desire to be free to not have to do things any longer. That driving force compels people to act. That is the path at least they believe is going to help them achieve that. I believe there’s a much simpler way. I know you were thinking, “I’ve saved for twenty years. I have all this money in the market. I’ve been successful. I’ve been successful in my career. I’m going to work another ten years and I’m done.” Some of you may be saying that and I get it. First off, I’m genuinely inspired by the dedication, energy, commitment and fortitude to achieve these ends because many people just don’t ever retire. It’s incredibly a frustrating series of events for people. There are those that do that ended up realizing it’s not what they thought it would be and ended up going back to work.
My discovery in this profession and ultimately become my mission is to inspire and motivate people to gain financial independence as soon as possible. Not wait 20, 30 or 40 years because we’re not promised that we’re going to survive or it’s going to be the same circumstances we believe we’re going to be in at that point in the future. There are lots of different perspectives and biases around this idea of retirement. I want you to step back and start to realize that we have these cognitive biases. They’re reinforced and unintentionally created. We operate our vibes based on those belief systems. This is why this tool that I was referring to before is important because it quantifies it. It puts something into math or something that’s more objective than an opinion.
You can access the calculator at TheWealthStandard.com/Calculator. You can complete it in less than one minute. What the calculator does is it gives you an outcome. That outcome is a date that you could be potentially financially independent. I’ve come to realize that financial independence is not a dollar amount, it’s more of a mindset. The mindset is most often created based on a couple of factors. Number one, you have investment cashflow. You have passive income coming in every single month. That pays either half or the majority of your living expenses. When you establish that, there’s still a gap. I believe that gap as far as from the outcome of independence and freedom, it’s filled by a profession, a career or meaning full work.
Work that aligns with who you are. It’s something that you love doing and you connect what you do with how you benefit others that are very high level. You come to this conclusion that you are meant to do this. It’s that type of meaningful work. I believe we’re all unique. We may not be operating or doing what that type of work is right now. That is where you start to pursue that type of work and find opportunities to do it, where you don’t necessarily have to work full-time but you work because you love it. You recognize it because you have cashflow and passive income coming in. You are not living to work. You are working and doing meaningful work in order to live. This engages these feelings of independence and freedom what I believe everyone’s after.
You don’t have to wait 20, 30 or 40 years. Many of the people I work with are able to do it right now. The fact that they know they can do it right now gives them this sense of freedom and independence that they don’t necessarily have to be doing what they’re doing. It is now a choice. What I encourage is to be open to these ideas. I know what you’re saying, it’s contrary to many of your belief systems as they stand right now. If you connect with the outcome of retirement, it’s freedom and independence. Consider the possibility that it is possible. That feeling can be achieved sooner than 20, 30 or 40 years into the future.
Financial Independence: The notion of retirement is so appealing not because people want to retire but because of this natural desire to be free and not have to do things any longer.
The parts of this calculator that are most important are you enter in your income or what you make on an annual basis, the investible assets that you currently have and then you use a couple of factors. The rate of return you’re getting from your assets. Also, it’s the establishing of a reasonable rate of return to gain passive income. When you have that number, usually we look at 50% of your current income as this freedom income which is doing meaningful work on your terms at 50% of what your current income is. When you look at the growth of your assets and the cashflow that would come from that plus 50% of your current income, that is going to equate to whatever dollar amount you have to earn on your investments and gives you a specific date at which you could potentially be financially independent. This calculator opens eyes.
By no means does it get down to every single detail of how things work but it gives you an idea of what is possible. When you realize that, you start to look at investments and work differently, what you’re doing for a career. That is the point of the calculator. It gets you out of what has been conditioned, what cognitive biases rule your behavior especially your financial behavior. It puts you into this position of, “There could be another way. Here is potentially a path that gets me what I want sooner.” I believe we live in an amazing era. There’s a lot of chaos. There is a lot that is going wrong and news, websites, social media point all of these negative factors out. That comes from this natural carnal state of wanting to survive. We’re always looking for what can hurt, harm and kill us because our brains are wired to survive thousands of years ago, not in our era. I believe, there are miracles are happening all around us if we’re aware whether it’s the innovation with healthcare, food, energy. There are some amazing things happening.
I believe that meaningful work, being able to connect who we are, we’re naturally gifted with the value creation for others in receipt of an exchange with monetary exchange. This is a level of living that is possible for more people now than ever before. At the same time, it is first the recognition that you have to make certain changes and do things that snap you out of what and why you’re doing it in to look at another way. TheWealthStandard.com/Calculator is a link to download this specific tool so you can see where you stand and how far off you are from financial independence. There are some other resources there as well. I hope you can take advantage of that offer. It’s free. No cost. Hopefully, you’ll gain a better understanding of what’s possible for you. I wish you a great week of celebrating and being aware of the principles of independence and freedom. I hope you get to spend it with people that you love. Have a blast. Until the next episode.
We will not succeed if we simply stay where we are and refuse change or improvement. But trudging the path to the next level of your life means facing your anxieties, financial challenges, and personal issues. To address this,Patrick Donohoe presents his course, The Wealth Standard, which focuses on helping people embrace a better version of themselves. He concentrates on getting rid of the thoughts that limit our beliefs, finding your true value as a worker, and looking at leadership from a brand new perspective. Self-fulfillment can only be achieved if you know where you are leading your life, and it starts by transforming yourself.
Watch the episode here:
Listen to the podcast here:
How To Bring Your Life To The Next Level
I’m grateful to share some thoughts with you. It’s been a while since I made an episode, especially a solo one, but I’m back. I’ve spent time developing and creating content for the new digital course that has officially launched. You guys can get more information about that course by going to Go.TheWealthStandard.com/freedom. What I like to do is talk a bit about the course, how I came up with the content, but then also unpack and dive into some of the primary themes in the responses you gave me through your candid feedback, as well as thoughtful responses to questions. That’s where I’ll start because the course is something I could have assumed I knew what you needed, what you would have valued, what was holding you back in your particular situation.
I’ve done that in the past. Sometimes it works, sometimes it doesn’t. This go-around, I decided to get responses from you to understand your world, what holds you back, and what are some of the obstacles that you’re facing. I’m humbled by the hundreds of responses I received. It made me dig down deep to understand the true root cause of those challenges, obstacles and limitations that are holding you back. What I discovered is that these are some things that have held me back in the past. These are parts of the human experience. We’re faced with similar obstacles, at the same time, the situations are all different.
I’m grateful to you. I’m grateful to have been able to think through the way in which the curriculum is created and the exercises were formulated. If you want to take your life to the next level, then this is a course that is for you. It has a 30-day money back guarantee. If you buy it and you hate it, don’t like it, too intense, too much information, I didn’t even give you all the information at one side to stagger it out week upon week because of how much is in there, but I’ll give you your money back, no questions asked. What I’d like to do is get into a couple of the primary themes that I saw in the responses that you gave me. I believe that this will give you insight into how I developed some of the information as well as exercises.
The Next Level: Today’s society wants things quick and fast, and with the snap of a finger or a click of a button.
A Year of Disruption
Thank you for investing your time and your energy. It says a lot about you and it means a lot to me because I’m inspired by those who are driven, those that are seeking information to improve their lives. I’m grateful to you. 2020 was a year of disruption. This season has been disrupted, especially here in Utah, and we weren’t able to gather as we have in the past. It makes you think about how grateful you are for the things that you have, because when they’re taken away, that provides that polarity. 2020 has been full of those opportunities. I hope you have passed your weekend grateful and had a wonderful experience. I haven’t done an episode in a while. Many of you know that I have been working on a digital course since I’ve been neck deep in recording, re-recording, and it’s been a great experience. This go-around has been different because of your involvement. I had reached out to a number of segments of the audience and pulled them, and requested feedback and answers to questions. This go-around, I wanted to create content, create a course that served you at a higher level by addressing your primary concerns, your anxieties, the things that are holding you back the most from achieving that next level of life, that financial freedom or financial independence that you and everybody else is ultimately seeking.
Your responses were heartfelt and your candor was incredible. I’m appreciative and grateful for that. What I’d like to do is give you a snippet of what the course is going to entail by addressing one of the patterns that I’ve seen throughout the responses. These are patterns are everywhere and they’re in greater magnitude these days. I believe we live in a society that wants things quick and fast with the snap of a finger or a click of a button, and looking at freedom and achieving that level of life, and then continuing to achieve it because it is not a one-time event. It’s challenging for most because they see it as a possibility, whether it’s what they see on social media, whether it’s what they read in books.
That pursuit and desire is amplified. I have had the fortunate opportunity of working with a lot of people with their personal finances. I’ve come to these conclusions or these realizations that ultimately, money is a part of the equation, but it is not the primary variable to freedom and independence. Hopefully, that comes out in what I’ll talk about. There are practical strategies, things to do, things to do differently, things to stop doing, things to start doing, but there is a mindset shift that is necessary. The variables or the components of that mindset shift will be evident because not only do I want to go through a specific response to a question. The question being, what are the primary obstacles that are holding you back from living a life at the next level? It pertains to a person, but you can substitute any obstacle that you have, where you stand in a specific place in life.
The Next Level: If a business wants to grow, it has to innovate and find better ways to meet the needs of their customers.
There is a future that you desire and you yearn for. There’s a gap or an in-between. There is what needs to take place in order for you to be at that level. Our psyche often times puts these barriers in place and prevents us from taking risks because naturally we want to avoid fear, and that fear is embedded in our DNA. Mostly it’s irrational at the same time because it’s built into us. It’s challenging for us to rationalize being able to confront it and overcome it. Let’s get into this example. I hope you find some meaning and some value in it. The course is life. Version one is up. I plan on doing lots of iteration and that’s why I kept the price point on the course low so that I can get a bunch of users experiencing it, giving feedback with both the exercises that are there, as well as the content and continue to iterate and make it even more valuable.
You can go check out version one. If you buy this first version, even though the price is going to go up in the future, you can get all those different versions, those upgrades for free, but you can go to Go.TheWealthStandard.com/freedom. This is the obstacle that I’m going to be addressing. The question, what are the primary obstacles that are standing in the way between where you are now and where you want to be in the future, that life at the next level? This specific response was short but I saw this pattern in dozens, if not more of the responses, and there were hundreds of responses. This one was, “I don’t have a business. I am an employee.” These are obstacles you can replace whatever obstacle you have as you ask yourself that question, what is the primary thing that is in the way of me achieving that life at the next level? “I don’t have a business, I’m an employee.”
There could be a multitude of meaning within what they have responded. I’m going to get into a few of them, but it’s an obstacle. The first thing is having a business. If that is the barrier that’s in the way to achieving an amazing life, business is a masochistic and risky way of doing it because the majority of businesses do not succeed. The majority of business owners who get divorced lose their relationships with their kids. They put huge investments and lose those investments, and put people’s lives on the line.
It’s stressful. I’ve been in business for several years and almost going out of business a number of times. There’s a deep desire inside of me that pushed me through and had me persevere through some challenging times where I wanted to be done, but going to life at the next level as business owner, there are even more opportunities and possibilities to achieve financial independence and meaningful life by being an employee. That’s what I’m going to focus my attention because in the end, I believe that successful business and being a successful employee have same dynamic. The only difference is scale, because a business provides a service. An employee provides a service. If a business wants to grow, they have to innovate and find better ways to meet the needs of their customers.
If it’s an employee, it’s a great way to innovate where you can look at the service and the value you’re being paid for, and find ways to improve the value to reach and meet the needs of the person that’s paying you. It’s a different perspective. Sometimes employees look at this entitlement where they should receive a raise for doing nothing. You can flip that and ultimately get even more money through bonuses, raises and position increases. They allow you to make more money and with that additional money, it’s making investment. It’s saving and establishing what I define as financial independence. For those of you who have read the book, you are familiar with this. It’s when 50% of your income comes from the cashflow of investments. The other 50% comes from doing meaningful work on your terms.
Fifty percent can be established by making a lot of money as an employee, but along the way, the resume you build, the human life value balance sheet that you create by your experiences, by the relationships and the network you’ve built can position you to spend twenty hours a week doing meaningful work, and being paid a multiple of what you are paid now. That’s what I’m going to get into because the dynamic, the components, the variables of success of both a business and an employee are the exact same thing. The only difference is scale but I’m going to give you some ideas as far as scale is concerned and how to scale yourself as an employee. The first thing I’m going to do, and this is where I took a direction with a course based on the responses you gave me, because there are many different tactics, strategies, ideas, advice and insight I could give you, but unless there is a breakthrough with your psychology, then all you’re going to be doing is looking for what’s wrong.
The Next Level: 50% of income comes from the cashflow of investments. The other 50% comes from doing meaningful work on your terms.
You’re going to be trying to find this confirmation bias, it’s finding the evidence of why your obstacle and what you’ve stayed as your limiting belief is true. Until you can start to question the validity of your limiting belief, no solutions are going to resonate. That’s where I’m going to start. There are some exercises in the course that facilitate the breakthroughs that you can have in order to look at yourself, your beliefs, and your limiting beliefs differently, creating empowering beliefs, and positioning your psychology so that you can be open to the slew and myriad of opportunities that are all around you. I’m going to use a simple example, but there are much more deep and profound experiences within the course that you are going to find fascinating. These are the experiences that I’ve had over the last few years that have given me tremendous breakthrough in my own personal life and my own happiness in my business.
I replicated those for your benefit, but I’m going to go through one. If I was talking to a client, an employee, a friend, my wife or my kids, and we were having a conversation about something that is holding you back, what I would first do is to address the feelings and emotions associated with that limiting beliefs. In this case, the limiting belief is, “I have to have a business. I’m an employee. I have to have business in order for me to be free.” When you think about that, financial independence and life of the next level isn’t possible because in order to do that, you have to have a business. You have to do your own thing.
How does that make you feel? The response is, “I feel held back. I feel frustrated. I’m not motivated. I’m challenged.” I would follow up with, “When you feel this way, do you even want to pursue anything that could potentially get you there? The answer is, “No way, I don’t even want to take that first step.” When you tell yourself this story that you have to own a business in order to be financially independent, in order to achieve the next level of life, you have all the information and you’ve pulled everybody. Do you know beyond a shadow of a doubt that that statement is true? That in order for you to be financially independent and live a life of the next level, you have to own a business.
This is where the eyes roll sometimes, but that’s intentional because what it does is it gets a person to say that “No, I don’t have all of the information. It could be possible that life of the next level is there, and I don’t have to own a business in order to achieve it.” First, it interrupts the belief or that confirmation bias. We’re looking for information to validate what we already believe. What this does is it opens our mind to this new opportunity that it is possible. Simply saying the words that, “I don’t have all the information. It could be possible.” It’s associating the emotions with it. The emotions are those agents of confirmation.
The emotion is if it were true that you didn’t have to be a business owner. You could be an employee to achieve that level of financial independence. How does that make you feel? That’s when they say, “I’m optimistic. I feel that it’s possible. I believe that there may be somebody out there that can help me or give me some insight or give me some information for me to believe that even more.” That’s where it starts. That’s the first domino that needs to be knocked down in order to start positioning strategy. That’s where limitations are concerned and why I positioned the first part of this digital course as breaking through the limiting beliefs.
Following that up with the actual strategies, a person can pursue to make changes, to make adjustments, to get more information, and to execute on that information. I know that if I started with that like I have in the past, most individuals are not in the mindset. They don’t have the psychology of making changes. In one episode that I did, the biggest fears that people have are being wrong and having to change. This is one of the exercises that could potentially work. In this digital course, there are a few other exercises that help you navigate through some of those limiting beliefs and start to replace them with empowering beliefs. Let’s get into solutions because psychology is one thing, but if you’re open to new possibilities and to having additional information, change is likely not to occur.
Value As An Employee
The Wealth of Nations
A business and employee are similar. They both provide a service of value in which they’re paid for. The only difference is scale. In a business, multiple people are involved. A famous definition of scalability is by Adam Smith when he talks about the pen factory in his book, The Wealth of Nations, where he identified that one person making all the different parts of a pen and putting it together has a certain amount of output at the end of the day. If you divide that labor, the division of labor, where multiple people are involved, each of them is responsible for one piece of the assembly, then you’re able to have scalability. The output is a multiple. That’s the idea of scale. There’s scalability possible for an employee, but you first have to identify the value that you provide as an employee. We’re all wired to look at ourselves and to come to a determination of why we’re valuable, rarely do people step outside of them and define, “Why does an employer think I’m valuable? What do I do? What is it about what I do that I’m paid for?”
This comes down to doing an audit of the different tasks and responsibilities and where you spend your time during the day. There are tasks that are meaningless or tasks that have low value. There are the tasks and the value that you’re paid for. In the process of doing this, you’re starting to look at yourself as the customer or the client. The patron looks at you, in this case, it’s your employer. This is a key to business. Peter Drucker says that to grow a business, you have to have focus on two things, innovation and marketing. Innovation is constantly finding even better ways to serve and meet the needs of your customer or client. Marketing is getting people to do more business with you. Looking at employee and employer relationship, this is where you start to understand the needs of the employer. What are they trying to do? What’s their revision? Were they trying to achieve? What are they trying to accomplish? How can I do something potentially different to bring even more value to them? If you go through this process as an employee and bring that success to a business, you’re going to have a much higher likelihood of being a success in business.
You might as well figure out how to do it as an employee first. I look at being an employee as one of the most incredible ways to experiment and to do things that potentially could be incredibly risky as a business, but doing it as an employee, there’s more agility and resilience because you can try things. If it doesn’t work, try something else. The worst thing is you can get a slap on the hand or get fired, but then you can go find another position where as a business, there are people’s jobs that are on the line. There are expenses, leases and other commitments that you’ve made that are on the line. Whereas an employee, there’s more resilience associated with experimenting on the ways in which you can create even more value. Coming from an employee, it’s finding leverage in the tasks that you’re already doing and defining all the different things you do throughout the day and what you’re paid for. As you look for more ways to scale, that’s an easier way to scale.
Looking at it from a position standpoint, are there other positions that you would be better at, that you could be paid for? This is going to, what’s your skillset? What’s your experience? What do you love doing? That’s going to give you those nuggets where you can start to look for other positions, whether it’s inside the company that you’re with or within the employee base of another company. Nonetheless, it’s starting to identify yourself as the asset and find out why you’re paid and figuring out how to make that asset even more valuable. There’s an eBook that I wrote a number of years ago before my official book came out and it’s essentially how to invest in a $50 million asset, which is you.
A Look At Leadership
What it does is it shows the math behind instead of getting a 3% raise per year, which is customary, you get a 10% raise per year. That 10% doesn’t come about by entitlement. That 10% is going to come about by you being more valuable and demonstrate that in the digital course as well. Let’s segue into an essential variable or dynamic of a successful business. It’s also an essential component of a successful employee. This is leadership. We are conditioned in our society to look at leadership from a hierarchical perspective. There is tenure within the public-school systems. There is the vice principal, the principal, the superintendent, the same structure exists in government. In corporations, the same structure exists.
We get this idea that leadership is management, but I believe that management in and of itself is a horrible way to get leverage. Leadership-focused management is an empowering way. Management is getting people to do things whether it’s usually by a stick. Rarely it’s a carrot, but I believe that even stick and carrot are limiting. There is a way in which you can empower people to do good work. Leadership is a huge opportunity because the majority of employees are conditioned to look at leadership as a hierarchical management structure. I think that’s limiting. It’s figuring out how to hone in on your leadership abilities, your ability to involve others in projects and get scale. Use that division of labor dynamic. This could come from reading books and taking courses. It’s the experimentation side of things. It’s learning how to be a good leader, finding mentors whether it’s direct or indirect, and incorporating their style of handling meetings, their style of executing projects or being part of a project.
The Next Level: Focus on the areas that you’re best at and allow others to fill roles that they’re best at.
The leadership dynamic is huge because it’s empowering people, especially in our day and age, when you have a fleeting employee base, where employees are jumping from company to company for a 2%, 3%, 4% raise. Maybe a little bit more benefit here. What’s going to keep them is good leadership, which is caring, empathy, but also instilling in them a desire to do good work and even more good work after they’ve done the initial good work. Leadership is huge because that’s when you can work in teams and get way more done. You can focus on the areas that you’re best at, and allow others to fill roles that they’re best at.
A Meaningful Life
That right there brings about a greater output. That is essential for scaling as an employee. I know a lot of people that make high six figures and even seven figures in the employee world. This is where sometimes research into, what is the maximum income that you can earn in your position or a position that you desire? What does that look like? Start to define what is inside of the gap between where you’re at right now, what you’re paid for and what a person at that caliber is paid for. All along the way, you’re making more money. The point is it’s not to solely reliant on your profession to achieve that end result, that financial independence or a meaningful life.
It equips you to, number one, establish an asset base that is providing cashflow that covers your lifestyle. Second, it’s to be able to evaluate what you’re doing inside of your work as an employee and always, either find ways to have more enjoyment, success, achievement and fulfillment. If you don’t, you have a lot more latitude because of how you’ve established your assets to either move to a consultant position or to a part-time position. Move from company to company, if that environment is not suitable to the terms and conditions you set up for yourself as far as defining a meaningful life and a meaningful career.
In the end, retirement is a flawed idea, which is 100% living off your assets. We’re wired to create value. We’re wired to contribute and improve the lives of others and in the process, improve our own lives. That’s a natural occurring energy that keeps us alive, happy and fulfilled. Without it, it doesn’t matter how much money you have, fulfillment is unlikely. Looking at the continual pursuit of improving yourself as an asset, whether you own a business or not is going to be vital to achieving this financial independence, whatever that next level looks like for you. This is where it all end. Even if you get to that 6, 7 figures and you’re a highly valued or highly paid employee, it doesn’t mean that you have to stay in those positions. You can look at consultant positions and being on boards.
You could be part-time. You could be a contractor or a free freelancer, and do work from anywhere in the world on your terms. That’s where a big piece of the course comes is to help you define what are the terms. What is the criteria? What is life of the next level look like? You can define that first and have that end result always in your mind. More often than not, people don’t necessarily come up with a clear definition of what they’re after or the results that they want. They go through the motions on a daily basis without the milestones that are necessary to get to that end result. The clarity that one can get from establishing that ideal life and a life on their terms is powerful.
Unequivocally, I see individuals coming to the conclusion and realization that to live life at that level, it doesn’t require what they thought it was going to require. It’s a lot easier. At the same time, this is a process. There are many people that are struggling because of our environment. I empathize with that. I understand that there is disruption. At the same time, there are incredible opportunities for those that exercise the fortitude of a healthy and abundant mindset because opportunities are everywhere. Thanks again for reading. Thanks for investing your time into educating yourself. Hopefully, this message has resonated with you. Go check out this new course called A Path to Financial Independence. It’s at Go.TheWealthStandard.com/freedom. Next, I’m going to be tackling another insightful obstacle that many of you had expressed in relation to achieving that life at the next level, and that is taking time and money away from family. In this case, wife and children. It’s the confidence to commit more time and money into a business, but also keeping spouse and children in mind. That’s what I’m going to tackle next. We’ll see you next time. Bye.
Once they’ve reached their goals or a certain level of financial independence, most people will always ask, “What’s next?” And reaching that sense of achievement, the bar essentially gets raised as they realize that the horizon extends beyond where they thought it would be. On today’s podcast, Patrick Donohoe takes a look at one of the fundamental variables that he believes is necessary to not only achieving what you are after, but for what’s after that and then what’s after that.
Watch the episode here:
Listen to the podcast here:
Achieving Your Goals And Beyond
Thank you for tuning in. I am grateful for this episode. There is, of course, a lot going on in the world now. The things that I believe are happening are for a reason like COVID. In some of the political situations that we’re in, there are reasons there. Disruption oftentimes helps us to understand ourselves, our lives, and what we want at a higher level better. I see so much of that. The reason why I’m starting off this way is because between the last episode and this one, I had the chance to review a lot of the responses that came in from my request for some of you to do a survey. In response, I would send a signed book out. I didn’t realize I’d have to be sending books outside of the United States, but there were several of you that filled out surveys that were in other parts of the world, Australia, New Zealand, Middle East, and the UK.
First off, I thank you for taking the time to fill out that survey, and your insight was invaluable. Additionally, because the sample size wasn’t as high as I would have liked, I wanted a couple of hundred in there, I sent another email and I had an overwhelming response, hundreds of responses come in regarding some of the information I wanted to know in order to take the right direction with a digital course that I was preparing. Your response and your candor was amazing. I couldn’t help but be drawn toward the responses, the obstacles that you’re facing in life, your dreams, and what you want out of your life. It’s inspiring to me. I wanted to start by saying thank you. Also, what I would say humbling in a sense for me is that I have already started to put the course together. I’ve recorded the first module. I did so with the intent of doing some iteration once I got your feedback.
As I read the feedback, as I looked at responses and I tried to put myself in your shoes and understand your world, it made me excited because the first module that I recorded for this digital course, I plan on releasing toward the end of 2020, the first part of 2021. It is right in line with what I believe is going to be hugely valuable to you. I’m going to give you some insight into this first module and make this a little bit shorter of an episode. In doing that, I would like to make some observations in regard to what I see as some universal challenges people are facing, which I believe there are some universal solutions to that. I’m going to first start off by saying, there was a couple of responses that came from a question about what type of content would you like inside of the course?
They said, “We don’t want any personal development or mindset information.” I chuckled because that’s exactly where I started. I realized what they were saying and why they were saying it. There’s a lot of heavy mindsets out there with a few practical applications to back that up, but believe me, there’s going to be a lot of that. I probably wouldn’t do the course if I couldn’t start with mindset first. That’s what I’m going to focus on the topic of the show. There’s something I believe, and I see it not just with my own experiences, but the experiences of thousands of clients I’ve gotten to do business and my firm’s been doing business with. I’ve also networked with a lot of successful people. In the end, there’s something interesting.
Number one, there’s some conflict as far as what we’re motivated by. That conflict is the fact that we want finality to what we’re working on, what we’re doing, and what we’re putting our attention to our resources behind. We want this finality or this certainty of the conclusion. The idea behind that is a degree of fulfillment, achievement to that feeling, and we believe that feeling, once it’s achieved, will last for the rest of our lives. That’s the conflict is that life is an infinite game. There are things that draw us into wanting to always be achieving more and going beyond what we’ve already accomplished. Most people don’t realize that until they’ve gained wealth, they’ve achieved their goals and they’re at that point and they realize, “What do I do now?” It’s unequivocal that happens. There’s no doubt in my mind that it does not happen. People reach that point and it’s, “What’s next?”
That’s where I look at several of you who have responded having achieved a lot and in most circumstances would be considered wealthy and financially independent. At the same time when a person gets to those levels, that sense of achievement, the bar essentially gets raised, or the horizon extends beyond where they thought it would be. That’s what I’m going to speak to you. As I look at one of the fundamental variables that I believe is necessary to not only achieving what you are after whatever that goal is, it’s essential for achieving what’s after that and then what’s after that. I’m going to start with an example. One is Elon Musk. The other is Jon Huntsman, who I’ve talked about before. He’s a billionaire. He passed away, but his family is in Utah and I’m somewhat familiar with them. I’m going to start with Elon Musk.
For those of you who know Elon’s background and have read his biography and seen interviews with him here and there, realize that he has some pretty significant reasons for what he does. He has these dreams. He has this purpose behind what he’s doing that goes way beyond Elon. With the companies he owns, I’m going to speak specifically to SpaceX, it has this grandiose dream of what it wants to accomplish. The reason behind Elon’s drive is to essentially extend our experience of life out into space in the solar system. There are also many resources associated with what would be valuable on earth, but wouldn’t have to pollute, wouldn’t have to take our natural resources here. I’m not going to get into the complexities of the details of that, but he has these huge grandiose dreams and reasons to benefit humanity.
The interview that I saw alluded to the fact that Elon’s heroes that drove him to want to pursue commercial and private space exploration or travel demonized him. They scrutinize and ridicule him for what he was doing. In one of the interviews, I saw Elon was emotional. His heroes that he looked up to his entire life even up to that point were the ones ridiculing him. How many of us whose heroes would crush our dreams would give up at that moment? Because Elon Musk’s reasons were significant and far beyond appeasing heroes, mentors, people he looked up to, it’s what pushed him through the ridicule, the feedback, and the achievements that SpaceX has made despite numerous failures is significant. Now I’m going to go to Jon Huntsman.
Jon Huntsman, a billionaire. He’s created multiple companies. I’m not going to get into the details of that either. In one of his books, I remember distinctly that the drive that helped him pursue the various ventures and opportunities that he had was his drive to cure cancer because his mother had cancer, died of cancer, and he was driven to cure it and found that through business. It was why he pursued certain business ventures and so forth, because of those grandiose reasons for achieving something that was beyond him, his lifestyle, and his purpose. That’s what I’m going to keep talking about. I look at the levels that we’re at in our life and I believe what got us here are the results of certain reasons. What’s going to get us beyond where we’re at now are going to be different reasons.
As I got into the formation of this digital course that I’ve been working on, that’s what I concluded is getting yourself in the right mindset, having the wealth perspective or mindset as you approach life, business, profession, job and relationships. As you approach it that way, number one, it’s understanding the reasons why you’re doing what you’re doing. The second is to be crystal clear about the results that you want. I believe reasons continue to evolve over the course of time but as you find yourself with obstacles, which the majority of you have, many of you don’t have obstacles. It sounds like life is going amazing, but there was one comment in the feedback that said, “Everything’s going pretty good right now. I’m waiting for that curveball or that black swan of that event that’s going to knock me off-kilter.” That person understands how the cycle of life works.
Achieving Your Goals: What got us here are the results of certain reasons. What’s going to get us beyond where we’re at now are going to be different reasons.
The idea is that I don’t think we have to react and wait for those events to happen, which throws us off-kilter and forces us to change, innovate, and grow. I believe we can do it strategically. That’s where understanding what motivates you and understanding and getting clarity, gaining clarity in yourself, crystal clarity about your reasons for what you’re doing must exist first. Those reasons have to be way beyond what you achieve. That’s where there are these corresponding reasons to achievement ratio that I’ve seen in my own life and in thousands of other people as well. I’m not saying that those that achieve wealth, prestige, and accomplish their goals didn’t start with reasons strategically. However, those reasons exist if you dig into what compelled them to do what they did.
The second is clarity of results and outcomes, what it is you want in the end. What is the definition of your ideal life? What is financial freedom? What does life look like and being crystal clear about that? There are a fear and reluctance people have in defining that from my experience, which is they don’t want to fail. They don’t want to state something and then ultimately not live to those expectations. I get that. That’s a natural fear that we have. That’s why it’s important to number one, understand reasons, have clearly defined outcomes and results. What happens next is a quote that I’ve gleaned and am inspired by, which is by Tony Robbins, “It’s when your shoulds become musts, then your entire life changes.” We know what we should do. We know who we should talk to. We know what we should change in our business or change in our job. At the same time, they’re not musts because our reasons are not strong enough.
I’ll end with this. I’ll claim that I made getting into this wealth mindset aspect of this digital course that I’m working on was that, over the last several years, I claim that you and me have been presented with all of the opportunities to make $1 billion. Whether it’s relationships, information, books, people that cross your path that you may or may not form a relationship with, all of that existed, yet we didn’t have the $1 billion reasons or even the $1 million reasons for some of you. That’s where we start in the course. It’s not the end of the course. It is simply the beginning. What happens as you start to define your reasons and get clarity beyond what you have now, as well as start to define the actual results you want from your efforts, tactics, and strategies? That’s when your shoulds become musts and it opens up the space for some amazing things to happen.
I’m going to end with that. I first want to say thank you to those who took the time, candid, and clear. I hope the exercise helped you understand what you want and what’s holding you back. That’s a big step in being able to overcome a challenge, to get or achieve what you’re after. Hopefully, it benefited you. The course is going to be awesome. I’m excited to give you some additional updates on that, but I’ll conclude for now. Thank you for reading. Thank you for your support. It means the world to me. Go out and produce, go out and touch somebody’s life, and live an amazing life yourself. Take care.
Love the show? Subscribe, rate, review, and share!
The starting point of wealth is in your mindset, not in your assets. Having grown accustomed to certain beliefs about money and wealth, we have in us a self-imposed threshold of what we allow ourselves to wish for as our ideal lifestyle. Have you ever asked yourself what kind of life you really want? What does financial independence mean to you? How much money it will take to get you there? How far beyond that point are you willing to go? In this episode, Patrick Donohoe invites you to participate in this mental exercise that pushes your imagination to its limits and takes you to a world of possibilities. Do you want to know what wealth really means to you? Join in on this exercise now!
Watch the episode here:
Listen to the podcast here:
Wealth Mindset Exercise: Visualizing The Ideal Life
Thank you for tuning in for this episode. I’m glad you’re here. I have some things to talk about that hopefully will be a good segue from the last two episodes before this. I hope you took advantage of purchasing that book series called The Tuttle Twins. If you don’t know what I’m talking about, head over to TheWealthStandard.com. You will learn about the two episodes specifically with my good friend, Connor Boyack of the Libertas Institute as well as the author of those fine books. For this episode, I’m going to pick up on that theme. The reason why I wanted to have Connor on is because there is a lot of angst based on some cultural divide or maybe a socioeconomic divide that calls for justice and more equality.
I wanted to have him on because sometimes given the fact that we are not taught to critically think and debate ideas and ultimately encouraged influence to choose a side. We don’t get to think through concepts and issues. I put myself in that category forming opinions based on certain things and not being open to other perspectives. I’m not going to get into that now but I look at wealth inequality. This is something I do for a living. It’s talk about money, investing and strategy. I feel that it’s my stewardship to keep talking about this because it’s prevalent in the news. That’s why I wanted to talk to Connor and get his perspective on things from a libertarian standpoint, but also talk about where we are with understanding ourselves, our beliefs about money, and then figuring out what to do about that.
That’s where I went to children because oftentimes, we’re masochistic in a sense. We have pain and anxiety tolerance, and it’s high. When it comes to our kids though, that’s where we start to draw lines. What we realized is that both our conscious and unconscious behavior about money is teaching and influencing them. Let’s get into it. Going off of Aristotle’s quote about excellence, “It’s not a onetime act, it’s a habit.” It’s having a certain mindset which I believe is necessary. A dollar amount in the bank will not create this amount of cashflow, and the number of doors or property and the amount of business interests will not replace this. I believe that this mindset and this perspective is irrespective of the amount of money and wealth that you have. That’s the starting place. From there, you have a strategy. There’s a formula that I use which state story and strategy. The most important thing is the state, which I believe comes from the belief system that you have about money and wealth, and what’s possible for you. That’s going to be the biggest barrier to you achieving what you want.
Wealth Mindset: We have an idea of what an ideal life would look like, but we never really explore it.
I’m going to take you through some exercises. I hope that this expands your view and your belief in what’s possible for you. I’m going to do some follow-up episodes getting into a specific calculator and formula that you can use to start having some breakthroughs, some realizations, and setting some goals potentially. You’re going to get a kick out of it.
The Ideal Life
First, wherever you are, I want you to think about on a scale of 1 to 10, how are things going financially? How’s your financial life? You can put one being that you’re on the verge of bankruptcy and all you do is worry about money and it’s affecting your relationships with yourself. It’s affecting your health and your work, then ten being financially free where you can do what you want, when you want, with whom you want. You feel completely free. I want you to rank yourself and understand that that ranking is a gut feeling.
We understand where we’re at, whether or not we’re able to look at our financial statement or our bank account. We have an idea of where we’re at naturally. I want you to first be aware of that. This next part is going to be interesting. Sometimes we have this what I call the infinite horizon which is this light at the end of the tunnel or this pot of gold at the end of the rainbow. It’s this thing in the distance that never seems to get any closer. Sometimes we have an idea of what an ideal life would look like but we’d never explore it. There’s a psychological way in which you can be open to what you want. That’s what I want you to start thinking about. What does life look like at a ten? What does life look like on your terms. If you were to be financially free, what would have to happen?
This is where I’m going to stretch the perspective. I did an event with good friends of mine who are also in the financial services space. I love doing events with them. We meet every week, we brainstorm, and we come up with cool ideas. We do an event for financial advisors. We had a guest speaker who I consider a good friend. He’s also a colleague. He’s been a mentor of mine. He has inspired me in many different ways. His name is Garrett. He did an exercise on this event that I was impressed by. I also have thought about a bit, but never connected its relevance to the topic we’re on until my preparation for this. I feel that the purpose of this exercise is to connect with who you are, what you want, and then what growth means. I want you to take another moment. You’ve ranked yourself on a scale of 1 to 10 and get a gauge of where you’re at and now understanding what a ten looks like. What I’m about to do expands beyond a ten, which allows you even more room to understand what you want.
First, I want you to imagine that starting next month, whatever month it is next, you receive an additional $1,000 of income on top of everything that you’re making. What would you do with that? Would you save it, pay down debt, go out to dinner at your favorite restaurant a couple of times or take out? What about an additional $5,000 a month? If $5,000 additional money came in every single month on top of what you’re already making, what would you do? Would you maybe look at moving where you live? Would you look at putting money away for college education, savings or build up a reserve? Now, $10,000 a month. If every single month on top of what you’re currently making, what would you do with an additional $10,000 a month? Would you get a new car, upgrade your wardrobe, pay off debt, give money to your kids, go on vacation? What would you do with an additional $10,000 extra per month?
What about $30,000 extra on top of what you are already making? What would you do with that money? Would you get your dream home, quit your job, start your own business or go to an event? Would you move your parents to a nicer place? Would you put money away or save it? If you had an extra $50,000 a month coming in every single month on top of what you’re already making, what would you do? Go to $100,000 a month more than what you’re making. Now $250,000. Every single month, money came in. What would you do? Every single month, $500,000 showed up in your bank account more than what you’re making. What would change? How would you feel? What would you do? What would you not do? $750,000 every single month on top of what you’re making right now, and then finally $1 million extra every single month.
I want you to think about those dollar amounts, the exercise, and I want you to connect with something. Number one, at what dollar amount did you not know what you were going to do? I also want you to connect to at what dollar amount did you start thinking about giving money to others where your lifestyle was complete? You are living in the home of your dreams. You had no debt. You were making investments. The worry factor of money was no longer there. Maybe a new worry set in which is, “With all this money, what am I going to do?”
Breaking The Threshold
The reason why I wanted to do that exercise is because I do believe that there is a threshold to what our ideal lifestyle looks like, what the ideal life is, and what it takes financially to achieve that. I don’t think we ever had this conversation with ourselves or anybody else, whether you feel guilty or you feel that you shouldn’t have that type of lifestyle and that others are more deserving of that. I don’t know. These are all belief systems. I want you to start connecting to that and opening up your mind as far as where you’re at, the money that you’re making, the thresholds, the glass ceilings that do exist. They exist for all of us. I want you to start positioning yourself now on what I consider a hierarchy. I talk about Maslow’s hierarchy of needs every single episode. It’s something that’s important to me because it helps me categorize, formulate, and structure ideas and lots of different information in a simple way.
Wealth Mindset: There is a threshold to what our ideal lifestyle looks like and what it takes financially to achieve that.
When I look at that exercise, it’s to merely open you up to possibilities. Opening your mind to what would you do and what do you want. Subsequently, it breaks beyond the threshold of you and it gets to others. What would you contribute? Who would you help? What experiences would you create for those that may not have the blessings, the opportunities, and the drive that you have? This is where the hierarchy of needs, that physiological, that carnal need like your food, shelter, clothing and those survival instincts from a financial standpoint. This is the category where people are in debt like credit card debt and high-interest debt. They’re living paycheck to paycheck. It’s a survival mentality. They don’t have any savings. They’re struggling to get by. They spend every single dollar that’s in their bank account and go into overdraft every month. This is like that physiological section where you’re surviving.
Graduating from that as you start to resolve those things, you start to pay off debt and eventually get out of debt. This is the safety tier-two of the hierarchy of needs. Maybe you have a good credit score now and you’re responsible. You purchase a home instead of renting. You start saving a double-digit percentage of your income starting at 10%. You have liquid reserves, 6 months, 12 months. You’re essentially creating that safety net for yourself. I look at the next stage, that tier-three as a relationship. It’s where you’re incorporating the building blocks of good, financial wherewithal starting with having a budget, saving money, establishing a will and trust, potentially a college fund for your kids or an education fund. You maybe start investing. You started looking into ways in which you can make more money.
The next rung is self-esteem. Self-esteem is where I would put maximizing your income. Realizing that one of the best investments is in yourself and taking some money in getting a course or getting a certification or learning something new. It allows you to be more valuable to others and subsequently earn more money. This is a stage where you have a spending plan as opposed to a budget. The spending plan is different. Spending plan is, “What lifestyle do I want and how can I create a spending plan where I can have that lifestyle and enjoy life at a different level?” Spending plans and budgets are different. This I believe is when you start to identify with that ideal lifestyle. Maybe some of those thoughts came to mind when you were doing this exercise a moment ago. At what dollar amount would you be able to do what you want to do, live where you want to live, and have fun with the people that you love?
My parents live on Cape Cod in Massachusetts and usually every year we go and visit them. A few years ago, I got to take my dad on this little plane and do a tour over Cape Cod. He had never seen Cape Cod that way, but it was awesome to have that experience with him. I prepaid for a great white shark excursion on Cape Cod to have one of those other experiences with my brother, my nephews, my dad, my uncle and my son. Unfortunately, there’s a wind storm and it knocked out power to the little airport. We did usually was the spotter plane for this boat that went around. Someone was probably looking out for us and that wind soar came in that we did not do the shark tour. That’s on the bucket list. I have some big bucket list items to contribute to the experiences of others.
Those are examples of what I’m talking about. This is where you start to put together what you dream about and what you want to provide as experiences for yourself, your family, and then subsequently people that you love, that may not be able to have the same experiences as you. Finally, you get to self-actualization. It’s this final rung, which you’re growing for different reasons. You’re maximizing your income for different reasons. You’re investing for different reasons. It’s now outside of yourself. You’re growing to contribute to others. It’s not just live a lifestyle that you love, but you do the things that you’re passionate about. You support causes, you create memories and you establish your legacy. Also, self-actualization like career on your terms. You’re working to live. You’re investing, you’re managing to live because you have connected to that lifestyle and not the other way around.
I hope that you guys are connecting with this. The reason why I want to do it is to start getting you to understand that there is a position you’re at financially. That position that hopefully expanded you into $1 million a month. What would I do with $1 million a month? Also, it connected you to where you’re at in the pecking order of things or the hierarchy of things. Are you in desperation? Probably not because you’re reading this blog. Are you in safety, in a relationship, or in self-esteem? Are you in self-actualization? That would be amazing. I want you to connect to where you are and then over the course of the next few episodes, we’re going to speak about what life looks like at those stages above and beyond where you’re at now, and then subsequently, ways in which you can quantify that. You can establish some potential milestones on the way to whatever that ideal lifestyle is for you.
Make sure you stick with me because I’m doing this for a number of reasons. Number one, I’m trying to connect a lot of the previous episodes to actionable things that you can do. Also, I’m hoping you realize by now that the majority of this is psychological. What you believe about money is what you believe about yourself. It’s what you believe you’re worthy to achieve. I look at many different influences that have caused us to think about money and most of them I would say are limiting. Connecting with those and realizing those are simply beliefs. You didn’t necessarily consciously create those barriers for yourself. That will open you up to the importance of strategy and how do you implement strategy, because changes need to be made in order to get to the next level. If the cause is not worthy of the efforts to establish goals, change habits, then you’re not going to do it. It may be an act here and there but as Aristotle said, “It’s not going to be a habit.”
Wealth Mindset: It’s all about what you believe about money, what you believe about yourself, what you believe you’re worthy to achieve.
We’re going to connect potentially some spreadsheets. You know that I posted the Hierarchy of Wealth spreadsheet calculator on the website, TheWealthStandard.com as well as the Financial Independence calculator and other spreadsheets using some of the things I’m talking about. I’m hopefully formulating a way in which there’s a program created so that you can go through some goals, go through ways in which you quantify those goals, and subsequently start charting a path to achieving those goals. That’s where we’re going. Thanks for reading. It’s a shorter episode but I appreciate your attention. I appreciate your participation. Hopefully, you gained from these exercises and there will be more to come in the subsequent episodes. Head over to the website. We have some cool resources there. If you like what you read, give us a great ranking on iTunes because that always helps. Share this with your friends and family. That would be amazing. You are awesome. Thanks again. I’ll talk to you next episode.
Patrick is the President and CEO and started Paradigm Life in 2007 after learning from his mentor Kim Butler about financial strategies outside of Wall Street.
With a background in economics and marketing, Patrick immediately realized the opportunity to teach investors, business owners, professionals and families on a large scale using modern digital media and communication technology. Since 2007 Paradigm Life has worked with thousands of individuals in all 50 states.
Run-of-the-mill advice is everywhere. But in order to achieve different results, your strategy has to be different.
In this book, you're going to learn about a hundred year old strategy that's tried and proven to give results. Are you ready to
shift the way you think about investing?
WHAT THE PROS ARE SAYING...
Once in a great while, a person comes along who can explain financial concepts so clearlu that all of a sudden,
what had been a mystery becomes obvious. For many people, Robert Kiyosaki was that person when he wrote Rich Dad Poor Dad. For me,
that person was Patrick Donohoe when he first explained what you're about to learn in this book.
Tom Wheelright, CPA
Author of Tax-Free Wealth, of the Rich Dad Advisor Series
"Patrick's book explains why every American is experiencing worry, fear, and uncertainty with thier finances.
'Heads I Win, Tails You Lose' outlines a better way to take back control and live a life you love."
"Storyteller, man of honor, humble seeker of truth - these are the words I think about when Patrick comes to mind.
I've been looking forward to this book for quite a while and am pleased to tell you, the reader, it is worth the wait."
CEO, Partners for Prosperity
"Patrick is someone that I call upon to learn the strategies of the world's richest people. 'Heads I Win, Tails You Lose' provides
a creative approach for managing wealth outside of the old and tired methods used by everyone else."
Founder of Capitalism.com
Book Nailed it
A should-read for anyone looking to be smart with thier money, and smart enough not to just follow the herd.
Robert K. Cunningham
Very enlightening and actionable!!
If you want a real path to Economic Independance and not a theory this book is for you.
Wise if I read this years ago.
Great book, made me change my thinking on my investment situation.
Take back control of your money
The truth about money. You will be surprised with the information. WOW!
A must read
Outstanding book. Details information most people are not aware of in creating a sound financial programs.
...a critical financial strategy
I simply couldn't put this book down, I read it cover to cover in 1.5 days! #VeryEngagingRead
ABOUT THE AUTHOR
Patrick Donohoe is the Founder and CEO of Paradigm Life and PL Wealth Advisors. Patrick and his team teach thousands how
to build wealth, create lifetime cash flow, and leave a meaningful legacy.
Patrick was recently honored by Investopedia as one of the Nation's Top 100 Most Financial Advisors. He is a highly sought
after presenter and speaker at financial-based events around the country and is the host of The Wealth Standard podcast.
Patrick grew up in West Hartford, Connecticut, and attended the University of Utah, where he received his bachelor's degree in economics.
He lives in Salt Lake city with his wife and three children.
WHAT'S INSIDE THE BOOK?
THE CHAPTER LIST:
1. ORIGINS OF THE AMERICAN DREAM
2. THE PERPETUAL WEALTH STRATEGY™
3. QUESTION EVERYTHING
4. BREAK AWAY FROM WALL STREET
5. AVOIDING THE INVESTING AND LENDING TRAP
6. THINK FOR YOURSELF
7. A SOLID FOUNDATION
8. B ELIKE THE WEALTHY
9. MYTHS AND TRUTHS OF INSURANCE
10. SAVE, BORROW, INVEST, AND BUILD WEALTH
11. START, BUILD, AND PROSPER YOUR BUSINESS
12. YOUR FINANCIAL FUTURE
13. MAKE THE SHIFT
14. TAKE BACK CONTROL