When it comes to wealth building, emotion is not your friend! A perfect example of this is the roller coaster ride the stock market has been on the last few weeks. One day the news is good so people buy, the next day the news is bad so people sell. Did the companies being bought and sold really gain or lose value in those few hours? Of course not but people are reacting to emotions rather than logic.
What about your everyday spending habits? Do you spend money when you feel like you want something even if the item is not in your budget? Do you have a budget? Do you save when you are fearful about the recession economy and then start spending freely again when the economic news improves?
How about your work habits? Do you stay focused on your business even when your friends are headed to the lake? Do you set goals and plan out the action steps needed to reach them?
Before I was introduced to the Kiyosaki financial education principles I made all of my wealth building decisions based on emotion. Actually, it has only been in the last few years that I have developed the discipline to manage my emotion when it comes to wealth building. I am a very impulsive person and I love excitement. Believe me when I say I have had to sit on my hands during the recent stock market churning. I have a plan for my investments but it has been so tempting to bail on some holdings, to add to others, only to watch the fortunes reverse for each in a matter of hours or days.
Same with my everyday spending. At our new home we have so many projects we want to do but I have to stay focused on priorities. In the past we would have simply done the projects and put the cost on credit cards. Now, thanks to my Kiyosaki, Rich Dad education, we avoid credit card debt like the plague.
Same with business. It is Friday afternoon and I am so tempted to call it a week and quit early but writing this blog is the action step that is needed to achieve my long term business goals. Now that I am writing this blog my emotion has shifted from bored to excited.
Emotions are like that. They are fickle and can shift on a dime. That is why wealth building is about managing emotion.
Here are a few tips that help manage emotion:
- Keep a journal so you can see where your emotions go from day to day
- Keep a balance sheet for your business so you can see where your money goes
- Track business and personal assets and expenses
- Understand what your net worth is
- Watch your cash flow monthly
- Read and study all you can about wealth building. Hint – all the experts say make a plan and stick to it. Boring but true.
- Schedule time for fun and keep a little cash on hand for impulse spending
- Celebrate and reward yourself for managing your emotion