Author: Money Maroon

Financial literacy

Financial Literacy Is Important

Money Maroon

Without a basic understanding of simple financial concepts, good luck. It will be almost impossible to achieve your financial objectives. Everyday we make decisions about banking, budgeting, saving, credit, debt, and investing. Financial literacy enables you to make informed financial decisions that will propel you toward financial stability and achieving your financial goals.

Financial Literacy

There is currently no one definition for financial literacy. However, generally, financial literacy is the ability to understand and use personal financial management, budgeting, and investing to your financial advantage.  Simply put, financial literacy is having the knowledge to know what to do in a financial sense. This does not necessarily mean that every financial decision will result in success. But over time, it is likely that you will improve your financial situation.

Why Is Financial Literacy Important

Financial literacy is important because it results in budgeting, being prepared for emergencies, and limiting debt. These are the financial forces that we deal with on a daily basis. But more importunely, the financial decisions we make today compounds. The decisions we make today are more important than ever because of the limited safety net available for retirement. 

Most pension plans have been replaced by 401Ks. Unlike pension plans, 401K plans leave the bulk of the decision making and planning to the employee. Without proper financial knowledge, many will be saddled with debt and be ill-prepared for retirement. 

Lack Of Financial Literacy Is Expensive

Not being financially literate is expensive. Some consequences of lacking financial literacy appears in everyday life. These consequences show themselves in increase costs that can be locked in for decades. For example, higher transaction fees, banking charges, higher interest rates on debt, and loses in the stock market. Financial ignorance also compounds as you will not understanding the concept of  compounding. Compounding in view of debt and also in view of income/interest. In a recent survey, it is estimated that financial illiteracy costed Americans about $353 Billion in 2021 alone. That is a crazy amount of money. That is a nontrivial amount of funds.

The Solution

The solution to lack of financial literacy is simple, educate yourself. It is to you and your family’s benefit to be financially literate. Financial decisions not only affect you, but also those around you. 

Financial education resources are available. Best of all, a lot of the information is free. You have this blog as an example and hundreds of others that you can subscribe to or follow. If you want to learn the thoughts of the biggest financial titans in the world today, just search for it. Financial literacy comes down to how important it is to you. Believe me, it should be at the top of your to do list.

For the same reasons why a coach is likely not the best player on a team, financial literacy alone will not be enough to win the financial game of life. Knowledge alone is not enough.

Financial Literacy Alone Is Not Enough

While financial literacy is important, it is not enough. To achieve your financial goals, you need a climate that facilitates wealth generation. This means that the country/jurisdiction that you are in has to facilitate wealth generation. You have to have access to tools and resources to build wealth.  For example, in starting a business,  you need to have/have access to capital, general money management, supply chain and transportation infrastructure. Financial literacy alone will not overcome infrastructure deficiencies.

Financial education is important, but you must also tackle your beliefs and attitude toward money. Having the financial knowledge alone will not change your attitude.

Additionally, having knowledge does not mean taking action. You, yes you have to take action. You have to put your plans in motion. Start today. Take action. Use money  as a tool and other resources around you to move toward your financial goals.

Conclusion

Everyday we make decisions about banking, budgeting, saving, credit, debt, and investing. Financial literacy enables you to make informed financial decisions that will propel you toward financial stability and achieving your financial goals.

Below, is the reproduced S&P Global FinLit Survey. Take the test. Answers are given below. Are you financially literate?

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Financial Literacy Test (S&P Global FinLit Survey)

RISK DIVERSIFICATION

  • 1. Suppose you have some money. Is it safer to put your money into one business or investment, or to put your money into multiple businesses or investments? 
    1. one business or investment; 
    2. multiple businesses or investments; 
    3. don’t know

INFLATION

  • 2. Suppose over the next 10 years the prices of the things you buy double. If your income also doubles, will you be able to buy less than you can buy today, the same as you can buy today, or more than you can buy today? 
    1. less; 
    2. the same; 
    3. more; 
    4. don’t know

NUMERACY (INTEREST)

  • 3. Suppose you need to borrow 100 US dollars. Which is the lower amount to pay back: 105 US dollars or 100 US dollars plus three percent? 
    1. 105 US dollars; 
    2. 100 US dollars plus three percent; 
    3. don’t know

COMPOUND INTEREST

  • 4. Suppose you put money in the bank for two years and the bank agrees to add 15 percent per year to your account. Will the bank add more money to your account the second year than it did the first year, or will it add the same amount of money both years? 
    1. more; 
    2. the same; 
    3. don’t know
  • 5. Suppose you had 100 US dollars in a savings account and the bank adds 10 percent per year to the account. How much money would you have in the account after five years if you did not remove any money from the account? 
    1. more than 150 dollars; 
    2. exactly 150 dollars; 
    3. less than 150 dollars; 
    4. don’t know.

A person is typically defined as financially literate when he or she correctly answers at least three out of the four financial concepts described above. What was your result?

Answers: 1(2), 2(2), 3(2), 4(1), 5(1).

Video Summary

Tithe Yourself

Tithe Yourself Now

Money Maroon

Let us start by saying that this posting has nothing to do with religion. This posting focuses on tithing yourself. More specifically, from every paycheck, pay yourself first. Tithe yourself. Ensure that you are taking at least 10% from your paycheck and directing that portion to a personal account. If you do not tithe yourself, someone else will have a claim to your money. You work hard for your paycheck, why have others take a share before you do?

Tithe Yourself

The word tithe in Hebrew literally means tenth. By tithing yourself, we mean automatically taking at least 10% of your paycheck off the top and directing this amount to a personal account. Some folks religiously tithe to a church but often forget about tithing to themselves. It is important for your financial future that you tithe yourself.

When beginning on a journey to save or to establish an emergency fund, you may not be able to tithe 10% to yourself. Start small and build from there. The first step is to start. Once you start and begin to build a habit of tithing yourself, move on from just tithing yourself to tithing as much as you can to yourself. Aim to increase your tithing percentage up to 10% and once you hit the 10% mark, aim for 15% and beyond.

Tithe Yourself – Pay Yourself First

Tithe yourself is to encourage you to pay yourself first. You should pay yourself first because if you do not, you run the risk of not paying yourself at all. For example, after paying your bills and spending discretionarily, how much of your paycheck do you have remaining? If you have money left over, it does not take much for all that money to disappear due to frivolous spending? 

Many times, living above your means and going into debt can result when you do not pay yourself first. If you do not pay yourself first, it is likely that you will not budget and over spend, or you will simply spend what you have because you have not assigned a task to that money.

By paying yourself first, you will force yourself to live below your means and budget accordingly. By paying yourself first, you are assigning a task to every dollar that you make. Imagine upfront knowing that 10% of your paycheck is off limits. By reframing your paycheck this way, you know that you are limited to 90% of your paycheck. This means that all of your bills must be paid by this amount. Can you pay rent/mortgage, phone, cable, internet, subscriptions, power, and whatever other bills you may have from this amount? If the answer is yes, increase the amount of your paycheck that you are paying yourself. If the answer is no, you will be forced to cut back. You will be forced to make hard decisions. But trust me, it is worth it. Saving for your financial future is worth it. Tithing yourself is worth it.

Money in hand. Tithe yourself. Pay yourself first

You Are Not Being Selfish

It may sound selfish when it is said to pay yourself first or to tithe yourself. However, if you do not pay yourself first, you are always putting yourself behind someone else. You are putting your bills ahead of your financial future. You are also putting the temptation of instant gratification ahead of the delay gratification that will benefit your future. Instead of having others having a claim to your money, claim it as your own. You worked hard for it, so keep it and grow it to the betterment of you and your family.

If you still think that tithing yourself is selfish, then sometimes in life, you need to look out for yourself and your financial future. Because the simple fact is, if you fall on hard times, it is unlikely that there will be many people lining up to pay your bills or to house your family.

Conclusion

This posting focuses on tithing yourself. More specifically, from every paycheck, pay yourself first. Tithe yourself. Ensure that you are taking at least 10% from your paycheck and directing that portion to a personal account. For example, a personal investment account or a personal savings account. If you do not tithe yourself, someone else will have a claim to your money. You work hard for your paycheck, why have others take a share before you do? Reward yourself for your hard work by saving for your financial future.

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Why Lottery Winners Go Broke

Why Lottery Winners Go Broke

Money Maroon

Ever since I understood the concept that buying a lottery ticket gives you the chance of winning millions, I wanted to win the lottery. As I got older, I realized that the probability of winning was extremely low, as such, I rarely ever play. When I do play, I see it as a donation to the State’s education system as a percentage of the lottery usually funds education. For the lucky few who plays and wins, congratulations. However, for winners there is happiness, that is typically followed by sorrow and many times tragedy. It makes you wonder, why does such tragedy follow many lottery winners? Looking at the financial side, why do lottery winners go broke?

Lottery Winners Go Broke Because Of Inexperience Money

A lot of lottery winners are not math or financial whiz. The fact is, the more educated you are, the less likely you are to play the lottery. It is simple, you understand that the odds of winning is extremely low and as such you do not play.

Those who win the lottery, tends to be those playing the lottery which is in effect proportionally not the most educated with regard to finances. Most lottery winners have the issue of having a large sum of money and not knowing how to maintain it. 

Many lottery winners fall prey to their wildest financial dreams. The dream of having one or more mac mansions, new expensive cars and other toys that are wanted but not needed. With a scarcity mentality, many lottery winners are frivolous with lottery winnings. Some winners see their winnings as “free money” to be spent. While individual purchases may not put a dent in the overall winnings, they can quickly add up if winners don’t keep a close eye on what they are spending. A bigger home comes with a bigger bill to upkeep. Luxury cars come with larger insurance and repair bills.

lottery check - why lottery winners go broke

The Payout Is Not As Much As You Think

When taking the payout from the lottery, winners usually have a choice. The choice is typically between taking a lump-sum or a fixed payment overtime. If you take the lump-sum, sometimes it is only around 60-75% of the advertised prize. This can leave winners with a lot less money than they expected. Then do not forget about the taxes. In most jurisdictions, lottery winnings are taxed. As such, in the end, while you will have a huge sum of money, the sum may not be as large as others think it is. Therefore, it may be bit more difficult to rebuff family and friends when they falsely believe that you have a lot more than you actually do.

Lottery Winners Go Broke Because Everyone Knows That You Won

In many places, a condition of winning the lottery is that your name is made public. Many lotteries do require that basic information about winners are made public. For example, name, city and the amount won.

When every one knows that you won millions of dollars, you will have long lost friends and family coming out of the woodwork. They will all come calling.  Many new lottery winners will not be well equipped to say no to friends and family. Once family and friends learn of the windfall, they will have expectations of what they should be entitled to.

But also, there are complete strangers who targets lottery winners. Some with sad stories, others with investment ideas and still others who aims to rob, maim or kill lottery winners.

Typically, lottery winners go broke as a result of a million cuts. One bad investment idea or falling for one sad story will likely not completely deplete the millions won. However, not paying attention and learning to manage your money will eventually lead to bankruptcy or worst.

Addiction

There is the saying that money does not buy happiness, it only amplifies who you are. A jerk before having a lot of money, will likely be a jerk with lots of money after winning the lottery. If you were previously prone to addiction prior to winning the lottery, now you are a wealthy individual who is prone to addition with the financial means to support that addiction. If you were an alcoholic before winning the lottery, you are now a very rich alcoholic. For those with addition issues or tendencies, winning the lottery and having the financial resources to support an addition habit is dangerous and can be deadly.

For those who cannot handle stress, winning the lottery will add a lot of stress. There is some stress that comes with having the money. You will like be stressed about how to maintain it, how to manage it, how to handle the constant requests for handouts, and how to face resentment (because it will come from family and friends). For many, alcohol and drugs are the remedies often sought with stress. It is not uncommon for many lottery winners to blow huge sums of their winnings on drugs and alcohol. At times, this is in an attempt to cope with their new lives as lottery winners.

Not Asking For Help

As mentioned above, many lottery winners were not finance majors in college. As such it is probably in their best interest to seek advice from qualified financial professionals. However, despite the fact that sudden wealth can cause lots of financial complications, very few lottery winners seek professional help. Very few lottery winners seek out professional advice on how to grow and or maintain their wealth. Without the requisite knowledge of how to manage such an instant inflow of funds, many lottery winners mismanage their money and go broke.

Conclusion

With winning the lottery or with any other instant financial windfall, be careful what you wish for. Many lottery winners go broke. By not being able to handle the stresses of winning the lottery, you could end up being a lottery winner that goes broke or worst.

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Not getting The promotion

You Did Not Get The Promotion, Now What

Money Maroon

At some point in our lives, if you are an employee, a worker for pay, you will miss out on a promotion in view of someone else. This other person may be a current coworker or someone from outside the company. In either case, it will leave you wondering, why. Especially if you believe that the person receiving the promotion is less experienced and/or less qualified.

Be Graceful

Once a promotion has been given to another, congratulate that person. Rise above your feelings of disappointment and be professional. No matter how you may be feeling, your reputation matters. Do not come off as unprofessional or as someone who do not know how to deal with disappointment. By not being graceful or lashing out because you were passed over for a promotion, you may be confirming that you are not mature enough for the role. Be graceful, even if it is difficult.

Evaluate Why You Did Not Get The Promotion

If you missed out on a promotion, you will be hurt. This feeling is normal. It does not matter whether or not you really wanted the position or not. Just being rejected will have an effect. While you may be hurt, you must try to be objective. Was the chosen person better for the role? Where you misled about what is required for the role? Do you think that you were treated unfairly in any way?

If in the end you were objectively not the best person for the position, if you really want this position, it is time for you to add to your skillset. Work toward a direction that will get you where you need to be.

On the other hand, if you were truly the better person, find out why you did not get the role. Is there a bit of favoritism or some other isms at play? Did you have the credentials, but others did not believe that you were qualified or ready? If this is the situation, it may be time to begin advocating for yourself. Begin to show who you really are and what you know. At times, the most qualified person may not get the position. The role typically goes to those who promote themselves. Lots of idiots have been promoted because they know how to play the game.

Ask For Feedback

Ask for feedback. If you did not get a role that you believe that you are qualified for, ask for feedback. Note that most managers are terrible at giving feedback, so try to read between the lines. At times, when you ask for feedback, your manager may justify the case for the other person being promoted, without actually giving you the feedback you asked for. So read between the lines. 

Some managers will provide adequate feedback and provide a roadmap to being promoted.  This rarely occurs, but it does. When you have such a manager, you are very lucky. You are more so lucky if the roadmap provided actually leads to a promotion.

Some managers will flat out tell you that you did not get the promotion because you are needed in your current role. If this happens to you, it may be time to leave. It essentially means that you are too good at your job. The company is not incline to promote you and train two people to do your work, when they can simply keep you at that position.

Some managers may even say that you will be up next or there was a business need for a specific skillset or there will be more opportunities in the near future. It will really be up to you to believe if this is truly the case or not. Many employees have been strung along in the past with the promise of a position opening up or an opportunity that is just on the horizon. Be careful in how you approach these promises. Many times, these promises are only lip service for you to calm down and to move beyond your disappointment.

Review The Landscape

In your evaluation of why you did not receive the promotion, review the landscape. Were you best placed for the role? For example, were you told not to apply, encourage not to apply or told that there are certain requirements but then the chosen individual did not fit the announced requirements? There could be more at play here.

Take a step back and look at the individuals in the role that you did not receive. The requirements posted about the role may just be a preference but not really a requirement. The most important characteristics may not actually be posted. By looking at who previously occupied the role, or who currently occupies that role, you can gain a lot of information. 

Some corporations have a certain type that is elevated to certain positions. That may be education level, select schooling, sex, race or demeanor. When you look at the role you missed out on, do you fit? This is a real question and you must be honest with yourself? If you do not fit the role, it may be time to leave as it is unlikely that you will ever be elevated to that position.

Improve Yourself

If you received a road map that will lead to a promotion, if you believe that the recommended action would lead to a promotion, follow that path. Also, seek to improve yourself for the job you want with your current company but also for another company. Work to improve yourself not only for a promotion but also to better yourself. Take additional classes in an area. Volunteer for new assignments. Work across departments. Make your resume the best it can be for your future role or new job that you may be interviewing for in the near future.

Didn’t Get The Promotion, Leave!

If you believe that you were wronged, or you see your non promotion as a pattern of activities, begin your task of leaving. Many times when we work for a company, we may hear stories and rumblings of who is being promoted. It may not bother you at first because it was not affecting you, but once it affects you directly, you may see things a bit differently. If you are in this situation, know that this is how your company works, and they will likely not change. As such, it may be time for you to leave.

This does not mean announcing that you will leave or making an ultimatum. Simply prepare your resume and improve yourself. Over the next few months, keep an eye on job openings and apply. When the time is appropriate give your two weeks notice and move on. There is no reason for you to stay in a toxic environment. Especially if your non promotion begins to impact your mental health.

At times, once you give your two weeks notice, you may be offered a higher salary, you may even be offered a new role. Whether or not you stay at your current company or leave is up to you. But note and keep in mind what it took for the company to come up on your salary or offer you the new role. You had to threaten to leave. Will this be required going forward? This also does not bode well for you when times are hard and the company performs a reorganization to cut headcount, it is highly likely that you will be cut.

Conclusion

At some point in our lives, if you are an employee, a worker for pay, you will miss out on a promotion in view of someone else. This other person may be a current coworker or someone from outside the company. In either case, it will leave you wondering, why. Especially if you believe that the person receiving the promotion is less experienced and/or less qualified. In these situations, be graceful, evaluate why you did not receive the promotion, ask for feedback, improve yourself and if necessary, leave.

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Video Summary

The racial wealth gap

Closing The Racial Wealth Gap

Money Maroon

You would have to be living under a rock to have not noticed or heard of the racial wealth gap in the United States. This article will not address biases or racism, implicit or explicit. The focus of this article will be on high level ways to address the racial wealth gap. More specifically, what can minority groups do to increase their wealth.

Racial Wealth Gap Explained

The Federal Reserve reports that “In the United States, the average Black and Hispanic or Latino households earn about half as much as the average White household and own only about 15 to 20 percent as much net wealth.” White households hold 87% of the wealth and account for only 68% of the population. Blacks account for 16% of the population, but owns only 2.9% of the wealth. Hispanics hold about 2.8% of the wealth and accounts for about 11% of the population. These numbers are very telling. 

A striking stat is that the 400 richest American billionaires have more total wealth than all 10 million Black American households combined.

On average, the net worth of a typical White family is about 10 times greater than the average net worth of a typical Black family. Based on some calculations, Black families are expected to have $0 net worth by 2053. The same is expected for Hispanic families just 20 years later.

All things being equal, we would expect the proportion of the population to equal the proportion of the wealth. This is however not the case. 

Wealth Building

To really look at the wealth gap, let us take a look at the wealth drivers in the United States. Huge wealth generation traditionally comes from entrepreneurship, ownership of real estate and stock market returns. 

To address the racial wealth gap, these three areas are prime targets.

Entrepreneurship

When we look at businesses, and entrepreneurship generally in the United States, Whites owns about 70% of businesses, Hispanics 14% and Blacks 6%. In view of the wealth statistics, this is not surprising. Additionally, for all the amazing work being done in the start-up space, less than 3% of total venture capital funding went to Black and Hispanic founders.

The industries that minorities operate in further exacerbates the racial wealth gap. Minorities generally own firms in the service and retail industry, many serving low-income and minority communities. Therefore, many minority enterprises have missed out and are missing out on the boom happening in the high skill sectors and the tech industry.

To combat the racial wealth gap, increase minority representation in entrepreneurship, the high skill workforce and the tech industry.

Stocks

On average, about half of Americans are investing in the stock market. For the most part, stock ownership is highly concentrated in the upper class and the highly educated. Greater than 90% of those in the top 10% based on income owns stocks. Looking at the top 10% in wealth, 94% of those individuals own stocks. Minorities are not well represented in the top 10% in wealth and income.

Looking at the racial breakdown, about 64% of Whites own stocks. Only 35% of Blacks and 24% of Hispanics owns stocks. Looking specifically at wealth, for Whites, 24% of assets are in the stock market. On the other-hand, only 13% of Blacks and 10% of Hispanics’ assets are in stocks. This have huge implications. 

What this states is that over the past decades of growth in the stock market, minorities participated less and have less of their funds in the stock market. The end result is that minorities have reaped and continues to reap significantly less benefits from the stock market boom. The losses are significant. 

Therefore, to close the wealth gap, increase minority participation in the stock market.

Real Estate

You cannot approach the effects of real estate on the wealth gap and not appreciate the effects of governmental policies such as redlining. The past policies of redlining have detrimentally affected the wealth of many in the United States to the benefit of others.

Today, Americans have a home ownership rate of about 65%. However, 73% of Whites own the home they live in. Only 48% of Hispanics and 42% of Blacks own their homes. But owning a home is not enough. Where you live matters. The value of the home you own matters. For minorities, it is a double whammy. Not only do minorities own less homes, minorities homes are less valuable.

It is no secret that home prices have been on an astronomical rise since the housing crash of 2008. Based on the above, this raise in prices and in turn equity benefits those who own, more specifically those who own high priced properties. 

To close the wealth gap, increase real estate ownership in minority communities.

Conclusion

To close the racial wealth gap will take a multi-pronged approach and it is a more complex issue than we have addressed. We have not addressed the effects of slavery, and Jim Crow segregation. We however, identify three areas that are the foundation for wealth generation in the United States. These areas are entrepreneurship, ownership of real estate and participation in the stock market.  By increasing minority participation in these areas, we can begin to address the racial wealth gap.

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Video Summary

Athlete

This Is Why Athletes Go Broke

Money Maroon

Over the years, for professional athletes, we have seen astronomical contracts that have repeatedly broken records. We have also seen the sobering news that many athletes go broke. At times, we may fall into the trap and think, how can you go broke after earning hundreds of millions of dollars? But do not forget, a lot of our sports stars are young and have never had the life experiences that would have taught them how to manage money and plan for the future. 

Athletes Go Broke Due To Short Careers

For most athletes, once they sign the big contact, the financial mistakes are immediate. Some begin spending in anticipation of the contract or is out spending once signed. This happens in some cases because like us, many athletes are aware of the superstars who have decades long careers. Many rookies believe that they will continue to play their respective sports for years to come, earning an ever increasing salary. But this is not the case.

For the National Basketball Association (NBA), the average player lasts around 4.5 years. Like many other sports, making it to the NBA is hard, staying there is even harder. For the National Football League (NFL), the average career length is about 3.3 years. Let’s take a deeper look at the NFL. On average kickers and punters last 4.9 years, quarterbacks last about 4.4 years, cornerbacks last about 2.9 years, wide receivers last about 2.8 years and running backs last a dismal 2.5 years. Those in the National Hockey League (NHL) fare a bit better and last around 5 years. The average career of a Major League Baseball (MLB) player is about 5.6 years, and soccer players have careers of about 8 years.

It is therefore unsurprising that the average retirement age for MLB players is about 29.5, 28.2 for NHL players, 28 for NBA players, and 27.6 for NFL players.

If you have no transferable skills, lack financial discipline and your career lasts only a few years, you will have financial problems. No wonder athletes go broke.

Athletes Go Broke Due To Their Contracts:

Not all sports contracts are created equal. In some leagues, it is normal for the contracts to be guaranteed, but this is not the case for others. So when a player signs a contract for hundreds of millions of dollars, depending on the league, they may never receive the full amount.

Players’ contracts are guaranteed in Major League Soccer (MLS). For the most part, NBA, MLB and NHL contracts are also fully guaranteed. However, this is not the case for the NFL. For many NFL players, only a portion of their contract is guaranteed. This is very troubling as the NFL has one of the shortest career spans of the major sports. NFL players are faced with only a few years on average of playing in the league and also not having guaranteed contracts. Don’t forget, as a contact sport, NFL players also have a very high risk of injury.

Young And Dumb

If you received 100 million dollars upon your 18th birthday, in ten years, would you have more or less. The fact is, for many of us, at the age of 18-25, our sense of money is to get it and spend it. For many, this is the period of time where we spend a lot of time trying to impress the opposite sex. 

With money, comes the expensive cars, clothing and homes. At this age, as hormones rage, it may be a matter of time before kids. For many professional athletes, kids occur outside of wedlock which leads to child support and crazy exes. Think of your twenties but to the extreme. The fact is, not many of us could manage money in our twenties.

For athletes, it is a bit worst. Everyone you know, knows that you have money. Everyone around you potentially will have their hands out or will be reaching into your pockets. For so many athletes, it was family, agents, accountants or friends that stole from them. It is no wonder about 78% of professional athletes go broke after 3 years of retirement. Some professional athletes stand very little chance of building wealth in view of the people that are around them.

Most professional athletes just do not realize until it is too late – your career will be short, and your savings must last for the rest of your life.

What Can We Learn

What we can learn from athletes is that it is not about how much money you have, it is about how much you keep and grow. If you have no financial background or do not know how to mange your money, it is likely that you will lose it. No matter if it is 10 dollars or 10 million dollars.

As you move through your career, or your many careers, learn to manage and grow your money. You should learn who to trust and set boundaries with friends and family to ensure that your financial future is secure. Be the CEO of your life and your financial position. It is your money so take responsibility for what happens to it.

Conclusion

Over the years, for professional athletes, we have seen astronomical contracts that have repeatedly broken records. We have also seen the sobering news that many athletes go broke. At times, we may fall in the trap and think, how can you go broke after earning hundreds of millions of dollars? But do not forget, a lot of our sports stars are young and have never had the life experiences that would have taught them how to manage money and plan for the future. 

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Video Summary

Wedding rings

Your Wedding Cost & Crushing Debt

Money Maroon

It is wedding season again. It is time to overpay to join union with another. Don’t get me wrong. A wedding is a beautiful thing. However, so many overpay to show love. If you are currently planning your wedding or have planned your wedding, focus on your wedding cost and do not go into debt for your wedding. Please do not do it.

The Wedding Cost

It is no doubt an exciting time in life. Your partner asked and you said yes or vice versa. You are about to make it official, you have a wedding in your future. If you are not simply going to a court house to sign the papers, watch your wedding cost closely.

You will need to plan out how you will pay for things like your wedding venue, flowers, chairs, photographer, food, alcohol and anything else that may pop up. I do not know why, but when “wedding” is attached to any of the above, the prices explodes. You will be charged a premium.

Expectations

To ensure that your wedding cost does not explode, do not make wedding decisions or purchases because it is what is expected or traditionally done. If you do what is expected, you may run yourself into financial trouble.

It is important to understand, for a wedding, everything have a cost. Further, as the guest list grows, so does the cost. As such, it is important to do what is important to you and your partner. Do what you want and what you can afford. Because in the end, you may fulfill everyone’s expectations, but you and your partner will be left with the bill. At times, this could be a very big bill.

One Day

Do not fall into the trap of believing  that your wedding day is the most important day of your life. It is a special day, but it is only one day. One day that will cost you thousands or hundreds of thousands of dollars if you do not pay attention. This day may also set you on the trajectory of a divorce as well.

Remember, close to 50% of all marriages end in divorce and the number one cause of divorces tend to grow from financial issues. Starting out your marriage in substantial debt is not a good start. Further, so many couples divorce while haven’t paid off their wedding day debt. This is a cruel situation to be in, divorce and still paying off your wedding.

If your next step after marriage is kids and/or a new home, note that these are also very expensive. The better financial situation you begin your marriage in, the better. Do not ruin your financial life for a wedding.

Control Wedding Cost

To control wedding cost, consider what you could potentially change. Also consider what is right for you and your partner.

  1. Change the venue. The venue comes with a lot of costs. For example, the venue typically sets the price for a number of different aspects of the wedding. By changing your venue, you can significantly impact the cost associated with your wedding. A golf course on the ocean will have a very different cost profile as compared to a church in a small town. 
  2. Communicate. Communicate not only with your partner but also with your friends and family what your financial boundaries are. This may lower expectations and reality check your friends and family. Be upfront about your expectations of them and what it is that you want for your wedding.
  3. DIY. There are some things that you can do yourself or have a friend do. For example, taking your engagement photos. This is one task that anyone with a good camera can do. You may also choose to make your own table numbers, for example. There are a myriad of ways for you to get involve and lower the cost of your wedding.
  4. Change when you will have your wedding. There is a wedding off-season where you may be able to get a discount. Also consider having your wedding on an off-day. You could have your wedding on a Friday or another day during the week because the weekend tends to be significantly more expensive.
Wedding ceremony sign

Conclusion

In the end, whatever you choose to do on your big day is between you and your partner. Make decisions for your longterm future and if possible, do not go into debt for your wedding. Your financially independent future self will thank you.

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Jealous friends and your wealth

Jealous Friends And Your Wealth

Money Maroon

While you are focus on your financial objectives, you may lose sight of one very important aspect, your friends. Based on the people around you, can you or will you be able to truly enjoy your wealth? Would your friends be happy and congratulatory of you achieving your financial objectives? Put simply, do you have jealous friends. 

Here, the assumption is that you are not purposely flaunting your wealth to belittle your friends. If you are doing this, then you are the bad friend, and your friends should be distancing themselves from you.

Money Changes Friendships

It is understandable that as time progresses the dynamics of our relationships change. Some friends will grow with you while others will grow away from you. But for those that you aspire to be apart of your life for the near and foreseeable future, how will they react to your wealth or you achieving financial independence? 

You will likely believe or have heard the refrain that true friends will not care. But the fact is, this is wishful thinking. Money changes the dynamics of all relationships. Just do a general search on the internet and you will see what I am talking about. As you transition in life, few of your old life will be with you in your new life.

While I know this, I do hope for you and me, that we are able to navigate achieving our goals and continue to have current friends around us that cheers us on. 

Cheap

If your aim is to achieve financial independence and you have tried to balance your expenses by trying to limit your spending, you will be called cheap. You will hear it multiple times from certain friends who may not completely understand what you are doing. You will be mocked for wearing the same pants or shirts that you have had for years. You will have to endure others around you having newer things, but if you are really about attaining your goal, you will not care. 

But a funny thing happens as you get closer to your goals. All the mocking and jeering will fade away to real questions. How close are you to retiring? What do you think about this financial move, what do you think about that? Your friends will have real interest in what you are doing. They will want to get to where you are, but there is an issue. You have been sacrificing and working on this path for years while they are seeing the end results and wanting that result.

This is where issues may develop.

Real Friends

As your dreams begin to come true, your real friends will continue to cheer you on. 

What I am saying here is that if you are low key, you will continue to be low key. If you believe in stealth wealth, you will likely continue to do the same things with slight changes. If you have achieved financial independence, well, you may change jobs or begin to pursue other things. It is unlikely that you will tell your friends your net worth. However, your real friends will know that you have enough based on your actions.

But your other friends may not see it that way. They will say that you have changed. If you decide to upgrade after being frugal comments will be made. You may also be accused of thinking that you are better than others. Overtime, some friendships will become strained.

Resentment may come from comparison, sometimes it may be linked to your friends own self-esteem and the way they view themselves. Especially if you and that friend started at the same financial point or you were from a lower economic position but have now surpassed them.

Real friends or jealous friends - friends jumping in the sun
Really friends or jealous friends

Why You May Have Jealous Friends

Some friends will be jealous friends because they do not want to see others, not even a friend, do better than they are doing. Some jealous friends are jealous because they love to cause chaos. Misery loves company. But if you have friends who have been with you for a long time and they become that jealous friend, it could be a matter of envy because you had the confidence to take the risks and make the sacrifices to achieve your goals.

How To Solve Or Preempt Jealous Friends

To prevent jealous friends, be aware and have the tough conversations. As you embark on your journey to financial independence and early retirement, note that not everyone is on the same journey. Be conscious of this. While you may be ostracized at first, note that the lifestyle that you will build for your family will likely be the envy of others. 

Once you have achieved your goals, you will likely have amply free time and the financial resources to do as you choose. You will be able to travel, do a job that you want, and spend time with family. You will be able to more so do the things that will make you and your family happy. Who doesn’t want that? This is all while your friends are toiling at a job that they hate and potentially have a life that they do not want. Be conscientious of this. Be understanding.

When friends ask about what you are doing, try to be patient and explain, do not judge their lifestyles. Do not fall into the “I told you so” mantra. 

Above all, live your life as they live there’s and if a friendship needs to end, it needs to end. Do not put yourself or your family in a terrible situation to maintain a hostile friendship.

Conclusion

While you are focus on your financial objectives, you may lose sight of one very important aspect, your friends. Based on the people around you, can you or will you be able to truly enjoy your wealth? Would your friends be happy and congratulatory of you achieving your financial objectives? Put simply, do you have jealous friends. 

Whatever the situation, do what is best for you and your family.

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Nerds run the world

Why Nerds Run The World

Money Maroon

Look around, think about who is making all the calls, then look behind that person. Typically, it is a nerd. For starters, look at the richest persons in the world. Look at the most powerful countries in the world, advances are made by nerds. Politically, whether you agree with one party or another, they are funded by nerds on both sides. The fact is, while there may be debates on the value of going to college, there is no doubt that nerds are running the world. Further, as we are in the computer age, nerds will continue to do so. Crypto and the metaverse are only recent examples of the power of being a nerd.

The Cool Kids

There is a saying, “he who laughs last laughs best.” For those who are intellectually gifted, this is certainly true. Cool kids have fun early in life, but it is the nerds who excel as adults. Whether your are the sports star or the cool kid that connects well with others, your early social years will be great, primarily in high school. However, for many cool kids, this will be the height of their influence. For nerds, high school is typically the last years of hell. Once high school is over, the world opens up, because intellect is valued.

Nerds

Let us look at the richest people in the world. Warren Buffet, Bill Gates, Jeff Bezos, Elon musk, they are all nerds. The fact is, they are at the cutting edge. They are coming up with new ideas and inventions that revolutionize the world and have in turn made them very wealthy. As is often true, money is power. With their monetary power and position, nerds are able to influence every part of life.

It is this wealth that is being used to run the world. When you have billions of dollars at your disposal, your pet projects are very impactful. Whether this is to go to space or to create a foundation to pursue a specific purpose. With funding, what is important to you become important to others. Your dreams shape the world that not only you live in, but that we all live in.

Crypto is one of the newest examples. Let us think of bitcoin that only a few years ago was worthless. Today, there are many different crypto currencies and this invention has made many millionaires. For the most part, crypto was invented by nerds and has become mainstream, making many ridiculously wealthy. We also now have NFTs, which are being sold for millions and let us not forget about the newly created metaverse. As the computer information age pushes on, nerds will continue to dominate.

Political Reach

Nerds are not only successful in the business world, but also the political world. A lot of those in political power today were not well adjusted in their earlier life. Yes, they were and still are nerds. But even if some of today’s political figures were well adjusted, look at who these politicians take their direction from. They take their direction not from the masses, but from the wealthy who are likely to be nerds. To run political campaigns, you need money. As noted above, who have the money? Nerds through their business successes have plenty of discretionary income to donate and shape the agenda of every political campaign. Even when you look to todays sport stars, look at who are employing them. Nerds are the owner of sport teams, sport arenas and are the bosses of the jocks you watch in amazement.

Why are they so successful?

Nerds flex their brains

Reasons

Not being in the in crowd have a lot of advantages. You read that correctly. Not being popular can be an advantage in life. It teaches you important lessons in survival and how to be self reliant.

The fact that many nerds are not in the in crowd allow them to spend more time working on their dreams. Nerds have more time to be themselves and know themselves because they do not have to succumb to social norms. They are essentially able to figure out who they are and what they are good at and just do it. Nerds have the freedom to become experts in the difficult, the new and the cutting edge.

Further, most nerds find comfort in knowledge. So not being invited to all the parties or social activities give nerds more time to hone their skills, in this case knowledge of a subject. They become masters of a subject area. Once they are masters of a subject area and confident in their skills they are motivated to show the world.

Because many nerds have been ostracized or physically intimidated, they operate with a chip on their shoulder and have a competitive drive to prove and show how good they are. All this leads to people who are very confident at what they do once they find that thing. Often times, these nerds are some of the most ruthless individuals that you will come across. They strive to be the best and often times, do not accept failure. Think of Elon Musk, Steve Jobs and Bill Gates.

These are some of the reasons why so many nerds have achieved the highest of business success, amass billions and strongly influence our every day life. 

Conclusion

Look around, think about who is making all the calls, then look behind that person. Typically, it is a nerd. For starters, look at the richest persons in the world. Look at the most powerful countries in the world, advances are made by nerds. Politically, whether you agree with one party or another, they are funded by nerds on both sides. The fact is, while there may be debates on the value of going to college, there is no doubt that nerds are running the world. Further, as we are in the computer age, nerds will continue to do so. Crypto and the metaverse are only recent examples of the power of being a nerd.

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Video Summary

Inflation

What Is Inflation And Should You Care

Money Maroon

Inflation is the overall general upward price movement of goods and services in an economy. Put it simply, when asked what is inflation, it is a general increase in prices. Why is this important, this is important because as prices rise, your purchasing power decreases. Unless you have obtained a pay increase that matches or exceeds inflation, your purchasing power is being eroded.

What Is Inflation

A simple example of inflation is the price of an item at your birth versus current prices. I can remember when a can of soda from a soda dispensing machine was only 25 cents. Today, the same soda would cost at least about $1.50. My friends, that is inflation. This also shows how much your purchasing power have decreased. 25 cents cannot purchase what it use to. As prices rise, you are able to purchase fewer goods and services with the same amount of money.

Inflation increases in prices

Why Is Inflation Important

As inflation rises, purchasing power decreases, costs of living increases, and economic growth may decrease. If prices increase and consumers cannot purchase goods and services, guess what happens next? Without a pay increase, consumers will not be able to purchase goods and services at the same rate that they did in the past. If consumers do not purchase goods and services, companies providing these goods and services will not be profitable and may begin to go into debt. Companies that do not make profits, will over time reduce staff and may eventually go out of business. As such, unemployment rises and further exacerbates economic hardships because without a job, consumers will purchase less and the cycle continues. 

What Is Inflation And Why Does It Occur

Many believe that inflation results when the money supply growth outpaces economic growth. What this means essentially is as money becomes more available prices increase. It becomes a matter of products are sold at the prices that the market is willing to pay. With increase money supply, some in the marketplace will be able to pay the increased prices, but not all. 

With income inequality, there will be a class of folks that will be able to absorb increases in prices. But when inflation rises dramatically, the effects of inflation will be more apparent. Most in the middle and the lower class will not obtain pay raises that will allow them to continue living the lives that they once did. If anything, once this cycle begins, the middle and lower class will likely be most affected. Meaning, when businesses begin to layoff workers or go out of business, the middle and the lower class will be most affected.

Winners And Losers

As asset prices increase during an inflationary period, those who own assets will likely benefit. For example, those who own precious metals, real estate, and stocks. In fact, some borrowers benefit as well if they have locked in a low interest rate. For borrowers, their asset price increases but their rates are locked in. The losers are often those on a fixed income, as they will unable to afford increase prices. But in an inflationary environment, things can change very fast as uncertainty increases.

What Is The Fix

To slow down inflation, governments typically try to reduce the money supply. This can be done in a number of ways, but one method is typically used. Increasing interest rates. As interest rates increase, it costs more to borrow money, it costs more to do business and as such, less money is in the marketplace. Of course, these policies must be balanced. 

As money in the marketplace is reduced, credit may tighten, businesses may not be able to borrow money and in fact may not be able to make pay roll or invest in growth. This may lead to a recession leading to layoffs and business closures. To put it simply, monetary policy is complex. Knowledge is power.

Conclusion

Inflation is the overall general upward price movement of goods and services in an economy. Put it simply, when asked what is inflation, it is a general increase in prices. Why is this important, this is important because as prices rise, your purchasing power decreases. Unless you have obtained a pay increase that matches or exceeds inflation, your purchasing power is being eroded.

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Video Summary