A strong mind is everything. You need a strong mind to get rich. You also need a strong mind to win at sports and get ahead in many aspects of life.
One of the goals of achieving financial independence is financial security. We want to feel secure financially so we ironically don’t have to think about money so much. As a personal finance writer, however, this is both my blessing and my curse. No matter how wealthy I get, I can’t escape the topic of money.
When you’re spending time with friends or taking care of your kids, the last thing you want to feel is financial dread. Did I make the right investment? Am I going to get laid off during the next round? Will I be able to make my next house, car, credit card, and student loan payment on time? Dread.
The desire for financial security is why I’ve in the past suggested creating financial buffers for your financial buffers. By doing so, if one money soldier goes down, you still have an army to prop you up.
Get Your Mind Right And The Rest Will Follow
As an aging tennis player who still regularly competes, I believe getting your mind right is at least 60% of the reason why you will end up winning your match. If you are not mentally sharp, it doesn’t matter how talented you are, you will not win. The same goes for most competitive events.
Therefore, if you want to get your mind right about finances, you need to spend as much time as possible learning about finances. You can get your MBA, read personal finance sites, listen to personal finance podcasts, watch finance videos, and get firsthand experience working in finance. You can also invest your hard-earned capital and learn from your mistakes.
The more you listen and do, generally, the more financially secure you will feel. Experience goes a long way because there are fewer surprises. You’ve seen the movies before and have action plans.
However, even if you do all these things, you still might not feel as secure as you’d like. It’s not good enough to be rich. You must feel rich as well. And a large part about feeling rich is about feeling secure.
After more than 22 years of saving and investing, I think I am financially secure. But am I really? Some readers have given me some doubt.
I revealed in my post on perpetual failure, that I continue to save more than 50% of my investment income and online income. Having a family creates multiple unknown variables. Saving money feels good. However, if I was really financially secure, I would be spending a much greater percentage of my income.
Getting That Tough Love
To improve, sometimes it’s not enough to recognize your faults and share them with the world. Sometimes it’s necessary to receive some tough love by others.
Here’s a comment from a reader named Cody,
“Squirrels save nuts for winter. They just don’t save 1,000 tons of nuts. Enough is enough. If it isn’t, move to a nice cheap place with territorial taxation where the sun still shines, it still rains, and they actually have food to eat. You’re getting neurotic.”
Cody’s comment is a great reminder that maybe I should just suck it up. To “be a man” and not worry about the things I worry about. It is probably also better to reveal setbacks in private.
The thing is, I’m not sure how I can improve if I don’t share my failures and ask for help. And as someone who wants to help others feel more financially secure, I feel bad about ignoring readers or telling them to “suck it up” if they’ve experienced a financial setback. As a parent, my nature is to try and empathize and explain why things are the way they are.
But Cody’s comment is a good reminder to me that nobody really cares about your problems because everybody has their own problems to deal with. I’ve asked Cody to share some tips on how he was able to feel so financially secure, but he has not responded.
Therefore, instead of consistently saving and investing, Cody has encouraged me to live a more YOLO lifestyle. Cody has also helped me realize that we have one last financial buffer: a strong financial mind.
Your Mind Is Your Last Source Of Financial Security
Let’s say someone robs you of 90% of your net worth. You also lose your job thanks to a recession. For good measure, you also break your leg, which you need to do your job. Essentially, you are screwed.
But are you?
When I used to play a ton of no-limit Texas Hold’em, there would be a time where I’d get some bad beats (losing even though the odds were in my favor). But instead of thinking I was doomed, I would always tell myself, “A chip and a chair is all I need to come back.” And with this attitude, I sometimes did.
If all goes to hell, we still have our minds. Our mind is our last source of financial security because we can always find ways to make money. Here’s an example.
On October 20, 2021, I wrote a post entitled, Health And Fitness Stocks: The Last Reopening Trade. The post explained why I was getting bullish on gym stocks. Life Time Group ended up reporting solid 3Q results. Then Peloton reported abysmal results, partially caused by more of its customers heading into gyms.
In other words, the thesis was correct, and old-school fitness stocks rallied by 15%+. Although I only invested about $50,000 in names like LTH and MED, I made enough to pay for food and housing for one month. Of course, if I don’t cash in, the paper gains could go away the next day.
Originally, I was thinking that I had wasted my time spending three hours writing the post, researching the space, and recording a podcast (iTunes) about using data to make winning investments. If I was going to spend all this time analyzing a stock, I should just get a job as a portfolio manager and really get paid.
But what I realized was that MAYBE I have enough financial acumen to save our family from financial calamity, if it were to ever occur. And if this is true, then worrying so much about the future is unnecessary. There’s always another money-making investment out there.
Do You Believe In Your Financial Acumen?
One of the most important things investors must do is stay humble. Never confuse brains with a bull market. As soon as you start thinking you’re hot stuff, you tend to lose because your risk parameters get out of whack.
I have lost money plenty of times before. I will continue to lose money in the future because I plan to keep putting my capital at risk for potentially greater returns. That’s the nature of investing.
I like to think that if all went to hell, I could still connect the dots and come up with a a new investment idea that would re-inflate our lifeboat. I’ll just tell my children that daddy can’t take them to the zoo one morning because he needs to find the next great investment.
But this is unlikely. To believe any of us can consistently come up with investment ideas that will outperform the market is delusional. Even most investment pros, who spend Monday – Sunday thinking about great investment ideas can’t regularly outperform passive index funds.
Being a good investor may not be good enough.
Financial Security With The Entrepreneurial Mind
Therefore, in addition to developing investing acumen, perhaps it’s even more important to develop entrepreneurial acumen. In other words, when you’ve lost your job and your net worth is down in the dumps, will you have the entrepreneurial mind to make money on your own?
With entrepreneurship, there is a much stronger correlation with effort and reward (money). For example, there are plenty of people making money online in the personal finance world who have no financial background. However, because they have a strong entrepreneurial mind, they know how to market, grow a brand, and convince the search engines they’ve got a great product.
With good investing acumen, the correlation with investing success is not as strong. You might know all there is to know about analyzing a cash flow statement. However, if you can’t properly predict what others are thinking, you could still lose.
Be careful about getting lulled into only making money from a day job. Your day job could one day go away. Work on building a strong entrepreneurial mind and a strong investing mind.
A Strong Mind Will Make You Feel Rich
The older I get, the more I realize a strong mind is vital for financial security. Our minds tend to stay in peak performance longer than our bodies. As a result, it makes sense to nourish our minds as much as possible. This means getting good sleep, setting aside time everyday to think, and to seek therapy when we feel mentally ill.
Be risk-averse with your health! Protect it at all costs.
You can tell who has a weak mind if you spend any time on social media. If you have a weak mind, you tend to get agitated more easily. You start getting into useless online arguments because someone doesn’t believe what you believe.
If you have a strong mind, you’re more open to seeing the other side. There is no way of knowing everything. Therefore, the logical thing to do is learn from others who’ve experienced what you might one day experience. In other words, a strong mind is also an open mind.
Let’s keep on learning and sharing our experiences. The stronger we can grow our minds, the more financially secure we will feel. Even if you receive tough love, embrace it so you can try and get stronger. It’s nice to know that if all else fails, we can always fight our way back.
Readers, do you think a strong mind is our ultimate source for financial security? If we have both investing and entrepreneurial acumen, what is there to worry about financially?
Reader Questions And Suggestions
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