We are starting a new blog series. As a partner to our Horseman’s Health we are now going to add Horseman’s Wealth. In this blog, we are going to look at financial education. This first blog is long and I apologize for that. I wanted to tell enough of my story to help you get an idea of what the journey of financial education can look like. Some of the things I say won’t make much sense at first and I may even ruffle some feathers. I welcome feedback and comments. Network Marketing has been a huge part of my path to residual income but it is not right for everyone. Hopefully, this information will get you thinking and seeking your own path.
Most of the time, I get to stay home as much of my work is done over the internet, from my home office, in my comfortable clothes. I have time to spend with my family and enjoy some traveling. I have been able to take my veterinary practice completely holistic and educate others about holistic care and horse temperament typing. My bank account balance may not have lots of zeros but on a quality of life scale from 1 to 10 for me it’s a solid 9.
Life is sweet right now but it sure has not always been like this. I have lived hand to mouth most of my life, often in very uncomfortable surroundings. I have worked when I was so sick I could barely hold my head up because I could not afford to pay my bills if I took time off. I have sweated in front of my mailbox praying one of my clients had sent a check so I could have dinner. I have sold my favorite saddle and a good truck for extra cash.
It was during my living in the back room of the clinic days that my life finally started to shift. Two things happened. I joined a network marketing company and I started getting a financial education!
I would give anything to have known when I graduated what I know now about how money works.
As I look back at my life; I grew up in a two parent home; my Dad’s income allowed my mom the luxury to stay at home to attend to me and my siblings. What a blessing to have our Mom available when we needed her most.
Yet, I know my mom and dad struggled with money. It was a stress on their relationship and they wanted better for us kids. I can remember many nights sitting around the dinner table being told how important it was to get a good education, land a high paying job or become a professional. With good intentions my parents drilled into me to work hard, pay your bills and enjoy any money you had left over.
This was not what I wanted. I wanted to be a horse trainer. After a brief stint training horses while trying to go to school I put my dream on hold and went to school full time to become a veterinarian. My parents were ecstatic when I shared with them my plan. At the time we all felt as a professional my financial future was bright.
In 1980 I became a veterinarian and in 1990 I was still BROKE! I certainly don’t blame my parents for encouraging me to become a professional; they wanted only the best for me. I love and respect my Mom and Dad; unfortunately they were not money smart. They taught me what they knew; the plan that is taught in our public education system.
After 10 years of working my butt off with little to show for it I went looking for another way to deal with my money issues. Standard programs for reducing debt and living within my means did not resonate with my inner knowing that there had to be something more than this. After all, I was working 70 to 80 hours a week, being extremely frugal and I saw no path to get back to my dream of riding and training my own horses.
I knew I lacked the knowledge on solving my money challenges. I had to begin a whole new process of learning about money and getting myself a financial education. I came to understand that how much you make is not as important as how you make it and how you spend it!
Fifty years ago those without financial education could live a comfortable life by getting a good job or working for themselves in a profession. Many people today that have continued to follow this path are wondering why their life is so screwed up. Here are some questions that often come up and the answers that money smart people understand.
1. Where did my money go? In 1971 President Nixon took the world off the gold standard. This meant the value of our paper money was no longer backed up by physical gold or anything of real value. Now the government was allowed to print as much money as they wanted. What this means to you and me is each time money is printed and put into circulation it lowers the value of the existing money already in circulation, our money. Additional printed money is the cause of inflation, which makes a dollar buy less and less.
You don’t have to go through life trying to figure out where your money is going.
Do you listen to all the “money experts” telling you that it is your fault you are not living within your means? It may be your fault. You have to honestly ask yourself if you are paying attention to how you spend your money?
In my case it was not so much lack of responsibility but lack of money smart skills. I did not even know what I did not know.
In 1998 I read two books that totally changed my life. One was Rich Dad, Poor Dad and other was Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom, both by Robert Kiyosaki. In Rich Dad, Poor Dad, Kiyosaki looks at belief systems about money, and in Cashflow Quadrant he goes into detail about the different kinds of income.
I was working for earned income, which was heavily taxed and subject to the negative effects of inflation. I wanted to shift my focus to cash flow monthly which is taxed differently and would not be dependent on how many hours I could work. It was so important for me to grasp this concept because I was working 70 to 80 hours a week and I knew I could not keep up that pace much longer.
Becoming money smart about the value of money and what causes inflation leads to an understanding of why working hard and saving money is so frustrating an undertaking. Don’t get me wrong, I believe in hard work but working for cash flow monthly that adjusts for inflation is a path to build wealth and maintain a desired lifestyle.
Here is how it works. Your paycheck most likely does not adjust upward to match the official inflation rate much less the hidden inflation from the dilution of the money supply. As a professional you can control the rates you charge if you pay close attention to the bottom line but if you don’t pay attention you can quickly get behind the curve.
On the other hand, a home based business, such as network marketing, is an option to start a business that comes with a built in management team, requires no inventory or employees. A well-managed network marketing company will be on top of every expense and build rising inflation costs into their product prices. Since you get paid commissions of product sales your monthly cash flow goes up to match inflation.
2. What happened to the jobs? The world moves from the industrial era to the information and technology era.
Now here is something to get excited about!
In our current tech savvy world there is little reason to be tied down to an 8 to 5 job that you have to commute to. With a little money smart thinking you can text and tweet yourself right into your dream.
Changing times force people to learn new skills and new ways of doing business. Life is all about adapting, and those that do succeed and those who resist the change suffer. Fewer of my parents’ generation ever thought of owning their own business. Why would they? Being a well paid employee or being self employed as a service professional offered a secure, respectable future. That was true in the industrial era where manufacturing was at an all-time high.
To match our current economic climate, Robert Kiyosaki feels the public school system should be training more people to work for cash flow monthly rather than or in addition to earned income. For this to happen, people will need to learn about different types of income. Robert divides income sources into 4 quadrants.
This information can change your life. It did mine!
His quadrants are E for employee, S for self-employed, B for business, and I for investment. While one quadrant is not better than another, it is important to match your income quadrant with your life goals to avoid frustration.
In the E quadrant it is possible to earn a very high income, but you give up your choice of when to have free time. Most of the time, your work hours and vacation time are determined by your boss. Taxes are on gross income with few exemptions.
In the S quadrant, you have more freedom to set your hours because you are your own boss, but any time you take off means that no income is generated, so you are still trading your time for money. To have more time you have to have less money, and vice versa. While some expenses can be deducted, earned income in the E and S quadrant is the most heavily taxed form of income and it rarely keeps up with the rise in inflation.
In the E and S quadrant you can have money but rarely freedom.
On the other hand, in the B quadrant, you buy or create a business that brings in income without you having to be constantly present. Generally you are
leveraging your time by creating something once that can be sold repeatedly or you leverage the time of others by having employees. Network marketing fits both of these criteria but instead of employees you have a network of associates or affiliates on your team.
Owning a business allows for expenses to be deducted so taxes are paid on net, not gross income. Tax allowances, even for small home based businesses can be very attractive.
Author Paul Zane Pilzer believes that the wellness industry and the home based business system of network marketing will drive the emerging economy. More people will want to control their own health and lifestyles. People have the ability to work on their own and in supportive teams. By developing their own skills and leveraging their time, people will be able to control their income and balance their personal lives.
Translation: Be able to afford your dream and still have time to enjoy it.
In the I quadrant, you leverage your money to bring you income. Examples of investments include real estate and the stock market. In the B and I quadrants you can have income and time freedom, but you often have to work hard with no immediate return to launch a business, and the investment of money generally involves some risk of losing it. Stock market income and passive income from investments such as real estate are taxed at a lower level than earned income.
Translation: Instead of working for your money, your money works for you.
After reading the Kiyosaki books, I realized I had to stop focusing entirely on earned income and look for ways to increase my cash flow monthly. With increased cash flow monthly that was not dependent on my trading time for money I could get out of the rat race.
I was looking for a way into the B quadrant. I was desperate for anything and had started looking at ways to work with the internet when a friend introduced me to network marketing. At first these ventures just took more money and time, with little return, but I resisted the temptation to give up and return to working more hours.
My persistence paid off and over a period of a few years I was gradually able to create residual, consistent cash flow monthly from my network marketing business. This allows me to cut back on my working hours and still have the income to meet expenses. So now I ride and train my own horses. Yea! No more 80 hour weeks. Thank you, Lord!
Are you ready to do what you have to do to adapt to this changing world?
So, depending entirely on income from the E or S quadrant can lead to continued frustration if you want to have any free time for relaxation and recreation. Between taxes and inflation, earned income is stolen right out of the hard workers wallet before it can even be enjoyed. Financial education on how to build cash flow monthly from the B or I quadrant will keep money flowing in and working for you, but you will have to become money smart!
3. Why are taxes so high? Bailouts and entitlements – The rules of capitalism have changed.
This is perhaps the most important reason why the old financial education system does not work. Your money can be taken from you and “redistributed” to someone else at the whim of the government.
In my parents’ generation, people who worked hard for their money got to keep more of it. What a novel concept. The more risk someone took the more money they could potentially make. On the other hand, if a business or investment failed the owner had to dust himself off and start over. Bummer, but this is how capitalism is supposed to work.
In my parents’ generation, most people did not live outside their means because they did not have to and taking a government handout was seen as a huge failure. Charities and church groups, supported by private donations, tried to meet the needs of those truly down on their luck or unable to care for themselves. Government stepped in during emergencies only. The concept of multiple generations living solely on government handouts was simply unheard of.
Rather than redistribution of wealth I, like Robert Kiyosaki, would rather be teaching money smart skills so others can create their own wealth and be able to retain it. Those who have been able to accumulate dollars can immediately start putting some of these wealth building techniques into action.
Others, who are still trying to get ahead in the E or S quadrant can look at a home based business such as network marketing to generate the cash flow to channel into the I quadrant.
I have been on this journey for just over 30 years and it has been quite a ride. I have made many mistakes and learned from them. My goal has not been to become rich, but to become free. Becoming money smart has helped me do just that. My motto, work because I want to, not because I have to.
Your mission, should you choose to accept it, is to get money smart skills and put them to work in your life. This will take courage and persistence. Your friends and family may not support you. I will! Read the information on this blog and share your comments and experiences so that we can make this journey together.
Network marketing is a real and viable option to move you from the E or S quadrant to the B quadrant. You can join my company or any other you choose and you have little to lose if you do your homework, are willing to work and have a good mentor.
If Network Marketing sounds like something you would like to know more about then contact me.