LEARN FROM MISTAKES Most of us grew up thinking that mistakes are bad and should be avoided at all cost. We tend to correlate mistakes with low intelligence: The more mistakes you make, the dumber you are. However, mistakes are opportunities to learn something new. “There’s a bit of magic hidden in every mistake,” “That magic is called learning.” Instead of telling you how to avoid mistakes, we encourage the art of turning a mistake into an opportunity to gain wisdom. It’s not easy to learn from our mistakes and setbacks. How we react to them tells us who we are. After recognizing that you’ve made a mistake, it’s difficult not to let one of these characters take over. So go ahead, bang your head against the wall. Lie. Whine. Complain. If you’re ever going to get your financial house in order, however, eventually you need to let another character, the Responsible You, take control of your thinking. The Responsible You asks, “What priceless lesson can I learn from this mistake?”Below are certain characters to mistakes: which one are you? The Liar -“I don’t know how that happened.” The Blamer - “The customers are too stupid to buy my product.” The Justifier - “I didn’t really want to be rich anyway.” The Quitter - “I told you it would never work. This is too complicated, I give up.” The Denier - “No, there’s nothing wrong. What mistake? Things will work out.” CHARACTER THE CHARACTER’S LINES Think back on three financial mistakes you’ve made. What lessons can you learn from those mistakes? Take a few moments to record your thoughts. MANAGING RISK One of the valuable lessons I learned from my own mistakes was how to manage risk. Like it or not, risk is a part of investing, whether you invest in paper securities, the real estate market, or a business of your own. Everyone who has built a fortune from scratch has felt on the edge of a cliff at one time or another. If you’re going to get rich, at some time you’ll have get close to the edge of the cliff, too. But that doesn’t mean you have to jump. It’s quite possible to make investments that receive high returns with low risk, and you can learn how. As I’ve said, too many people rely on big government or a big company to eliminate the financial risk in their lives. They play it safe in their jobs, buy houses and cars and, if they don’t have pensions, put a little money aside monthly for retirement plans. This was the path of the Industrial Age. What’s wrong with this scenario? Plenty. Today, more and more people are graduating with good grades and advanced degrees, but there are fewer and fewer secure jobs with benefits. Robert Kiyosaki taught me differently. He said that working for someone else just created the illusion of security—that it was much riskier than investing or starting your own business. As you move forward in this work/study program, you’re going to learn that true investing is not a gambling game of hunches, but rather a plan. Once you become financially literate and begin enacting your own plan, whether through investing, building businesses, or both, it’s likely that your ideas about what is risky and what is not will have changed. A RISK SELF-ASSESSMENT Before you reach that point, it’s helpful to get a sense of your overall risk tolerance. No matter what you do in your financial life, there is always the possibility of losing some money. How comfortable are you with this possibility? The following questions are meant to get you thinking about your general attitude toward risk: • Do you get bored easily? Are you usually looking for a new challenge, or do you like to stick with what you know? • Do you feel confident that you can handle whatever comes your way, or do you tend to worry? • When you lose something valuable, do you get anxious and obsess about it, or are you able to accept the loss and move on? • How easily can you turn important matters over to others? Do you trust experts to act on your behalf, or do you prefer to handle everything yourself? Later you’ll learn more about financial risk and how to handle it. The more financially educated you are, the less risk you’ll face. On the road to riches some risk is inevitable, but if you keep a cool head and improve your financial literacy, you can manage it. _ “The primary difference between rich people and poor people is how they handle fear.” Knowing how to manage risk is one of the prerequisites of financial literacy. Once you’ve fulfilled all the prerequisites and become fully literate, does financial freedom follow? Not necessarily. Certain personal obstacles can prevent even the most financially literate from developing abundant wealth. Despite all their knowledge, they’ll continue working full time just to pay the bills instead of living the life they dream. By learning to recognize these personal obstacles, you can overcome them. What are they? 1 Fear 2 Cynicism 3 Laziness 4 Bad habits 5 Arrogance 6 Disappointment .
Posted on: Mon, 26 Aug 2013 07:36:59 +0000
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