Retirement

Be Work optional

Be Work Optional And Have The Best Job

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The best job to have is one that you do not need. The reasons are easily apparent if you think about it.  The less reliant you are on your job, the more comfortable you can be in the workplace. When your job is optional, your boss and those above you cannot take advantage of you. If they try, you can simply quit. Essentially, with work optional, you can make ongoing decisions that are in your best interest. If you are an employee, it is important to remember, no matter how much they love you, you are replaceable.

If you do not believe me, consider the rapid layoffs that have occurred in 2022. Think of those twitter employees in 2022. From top to bottom, you are replaceable. Your employment is at the whim of someone else. If your livelihood does not depend on your job, you are free.  Aim to be work optional.

Being An Employee

In the United States, for many, employment is at will. Which means for any reason, the company can fire you. It is that easy. If someone does not like you, you can be replaced. Many companies, to avoid a law suit for discrimination or retaliation, will build a case for removing employees before actually firing them.

When building a case, companies and their agents, yes your manager, will become more vocal against you. All your missteps will be documented. If you are late for a meeting, no matter the reason, it will be noted. Someone does not like your tone, it will be documented. If you disagree with others, the company will view you as not being a team player. You will begin to hear criticisms. The aim here is to let you know that you are not doing a good job such that when you are let go you do not think to sue.

But some companies build cases in a more blatant way. You may have received great reviews previously, and all of a sudden a bad review. That should be a warning signal to prepare yourself. Sometimes, you may have absolutely no contact with your manger or supervisor and they drop a bad review on you. In some of these cases, the managers will actually blame employees for the lack of contact. 

The Elon Musk Situation

You may encounter an Elon Musk situation. You may be in the unfortunate situation where another company buys your employer. Your role may be redundant. In these cases, all your good will and hard work goes out the door. The new owner will view you as a cost center. The point is, if your company wants to get rid of you, they will. 

Protecting Yourself

As life is unpredictable, plan ahead and protect yourself. At least from the financial stand point, the best way to do this is by becoming  work optional. This way, no matter what your boss or your bosses boss decides, you will be ok. 

If you lose your job today, how would your life change? If you have a family, this is a question that you should be thinking about often. Do you have enough in an emergency fund? How far are you away from financial independence? Instead of rushing back into a job that you may not like, can you take your time and find something that you like to do? Another question is, was your job optional.

Work Optional

Work optional is another way of noting that you are financially independent. By being financially independent, you can work if you choose to, or not. You are work optional. If you have a job, the job is optional. If you happen to be fired, you can pick up your things and graciously exit your job and sit at home if you need to. Strive to be work optional.

Conclusion

The best job to have is one that you do not need. The reasons are easily apparent if you think about it.  The less reliant you are on your job, the more comfortable you can be in the workplace. When your job is optional, your boss and those above you cannot take advantage of you. If they try, you can simply quit. Essentially, with work optional, you can make ongoing decisions that are in your best interest. If you are an employee, it is important to remember, no matter how much they love you, you are replaceable.

If you do not believe me, consider the rapid layoffs that have occurred in 2022. Think of those twitter employees in 2022. From top to bottom, you are replaceable. Your employment is at the whim of someone else. If your livelihood does not depend on your job, you are free.  Aim to be work optional.

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FI driver salary

Wow!! 2022 F1 Driver Salary

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Like many in the United States, I have become a major fan of Formula One (F1) over the last few years. I am not new to F1 racing. I am new as a major fan of F1 racing. Sometimes I paid attention to F1 in the Michael Schumacher glory days, but it was very much predictable. Michael was going to win. The early years of Lewis Hamilton’s domination was also predictable. But over the years, while the action on the track remains predictable, the story lines in view of access to drivers have made the sport that much more interesting. But as this is a financial article, let us take a look at F1 Driver Salary in 2022.

The Drama

Depending on the side that you are on, there is a protagonist and an antagonist in F1. When I say sides, I mean team. Is it Ferrari, Mercedes, Red Bull, Haas, Aston Martin, Alfa Romeo, McLaren or Alpha Tauri? Is it turmoil within the team regarding strategy, looking at you Ferrari. Did you totally miss the new regulations, looking at you Mercedes. Did you have internal team conflict regarding team orders, looking at you Red Bull. There is also the matter of the back markers and who will have a seat next year. It is interesting how so much of the drama of F1 is off the track. But let us refocus on F1 Driver Salary in 2022.

2022 F1 Driver Salary

As the top motor sport in the world, you can expect the top drivers to earn a lot. Way more than us mere mortals who are concerned about saving and investing to financial independence. If manage appropriately, these drivers will no doubt have a financially secure future. Below is the list of the salaries for the 20 F1 drivers in 2022.

  • Lewis Hamilton (Mercedes, #44) – $40 million
  • Max Verstappen (Red Bull Racing, #1) – $25 million
  • Fernando Alonso (Alpine, #14) – $20 million
  • Lando Norris (McLaren, #4) – $20 million
  • Sebastian Vettel (Aston Martin, #5) – $15 million
  • Daniel Ricciardo (McLaren, #3) – $15 million
  • Charles Leclerc (Ferrari, #16) – $12 million
  • Valtteri Bottas (Alfa Romeo, #77) – $10 million
  • Lance Stroll (Aston Martin, #18) – $10 million
  • Carlos Sainz Jr. (Ferrari, #55) – $10 million
  • Sergio Pérez, (Red Bull Racing, #11) – $8 million
  • Kevin Magnussen, (Haas, #20) – $6 million
  • Pierre Gasly, (AlphaTauri, #10) – $5 million
  • Esteban Ocon, (Alpine, #31) – $5 million
  • George Russell, Mercedes, #63) – $5 million
  • Alexander Albon, (Williams, #23) – $2 million
  • Nicholas Latifi, (Williams, #6) – $1 million
  • Zhou Guanyu, (Alfa Romeo, #24) – $1 million
  • Mick Schumacher, (Haas, #47) – $1 million
  • Yuki Tsunoda, (AlphaTauri, #22) – $750,000

As expected, the elite drivers are paid a tremendous amount of money. However, even the back markers are making a very good living. All drivers having the opportunity to make more from sponsorships and other business ventures.

Conclusion

While you may not be making as much as a F1 driver, you can still achieve financial independence. Whatever you are doing, earn, live below your means, save, and invest. You do not need anything close to a F1 driver salary. Continue your journey to financial independence by taking your next best financial step forward. 

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IRA contribution limit 2023

IRA Contribution Limit In 2023 Has Increased

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In 2023, the IRA contribution limit will increase to $6,500. This limit is up from $6,000 in 2022. On the other hand, there will be no change to the catch-up contribution limit. The IRA catch‑up contribution limit for individuals aged 50 and over will remain $1,000. If you are in the position to contribute to your IRA, take advantage and boost your retirement savings.

IRA Contribution Limits For deductions

The IRS has announced that the IRA contribution limit will increase to $6,500 in 2023. The income ranges for determining eligibility to make deductible contributions to traditional and roth IRAs will also increase in 2023. Generally, taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. 

If covered by a retirement plan at work, the deduction may be reduced or phased out depending on filing status and income. If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs do not apply.

Phase‑out Ranges For 2023

Single taxpayers covered by a workplace retirement plan will have the phase out increase in 2023. The phase-out range in 2023 will be between $73,000 and $83,000, up from between $68,000 and $78,000.

Married couples filing jointly will also have an increase. If the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $116,000 and $136,000, up from between $109,000 and $129,000.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.

For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000.

For married couples filing jointly, the income phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.

The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $73,000 for married couples filing jointly, up from $68,000; $54,750 for heads of household, up from $51,000; and $36,500 for singles and married individuals filing separately, up from $34,000.

The amount individuals can contribute to their SIMPLE retirement accounts is increased to $15,500, up from $14,000.

Take Advantage

If you are able to increase your IRA contributions, do so. IRAs are one of the most effective ways to save and invest for the future. IRAs allows your money to grow on a tax-deferred (Traditional) or tax-free basis (Roth), depending on the type of account. If it is a Roth IRA or a Traditional IRA, move forward toward your financial goals.

Conclusion

Tax advantage accounts are one of the feet making up your three legged retirement stool. These three legs include your savings and retirement account, employer relate account such as a pension, and social security. In 2023, the limit on annual contributions to an IRA will be increased to $6,500. This total is up from $6,000 in 2022. On the other hand, there will be no change to the catch-up contribution limit. The IRA catch‑up contribution limit for individuals aged 50 and over will remain $1,000. If you are able to contribute to an IRA, take advantage and boost your retirement savings. Continue your journey to financial independence.

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401k contribution limit in 2023

401k Contribution Limit In 2023 Has Increased

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401K contribution limit in 2023 is now $22,500. In 2023, the 401k contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will be increased to $22,500. This total is up from $20,500 in 2022. If you have access to any of these plans, take advantage and boost your retirement savings.

Catch Up 401k Contribution Limit

The Internal Revenue Service (IRS) has also announced that the catch-up 401k contribution limit from employees will also be increased in 2023. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will be increased to $7,500. This total is up from $6,500 in 2022. 

Taken together, starting in 2023, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $30,000. The IRS has also noted that the catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans will also be increased in 2023. For these individuals, the contribution amount will be increased to $3,500 in 2023. This total is up from $3,000.

401k Match

This change does not appear to affect the match for employers. As you may already know, an employer 401K match means that your employer contributes a certain amount. Typically, the 401k match is a percentage of your annual salary to your retirement plan. This is in effect, free money. For most employees, if you contribute to your 401K, your employer does also. Take advantage of the added limits to further boost your retirement savings on your journey to financial independence.

Conclusion

Tax advantage accounts are one of the feet making up your three legged retirement stool. These three legs include your savings, employer relate accounts such as a pension, and a retirement account. In 2023, the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will be increased to $22,500. This total is up from $20,500 in 2022. If you have access to any of these plans, take advantage and boost your retirement savings.

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Buying Time

Start Buying Time Now

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Quickly calculate your net worth. After calculating your net worth, divide your net worth by your average spend per year. The resulting number of years is what you have bought back. If you decide to quit your job today, this is how long you could potentially go without working if all else stays constant. Now knowing this, how many years have you bought back? Buying time is akin to financial independence. At a certain point, you will have bought back so much time that you will no longer need to work. This is the aim.

Know Your Net Worth

On a basic level, your net worth is equal to your assets minus your liabilities. Unsurprisingly, the younger you are, the more likely that your net worth will be zero or below. But this does not mean that you should keep the full picture of your financial situation in the background. Knowledge is power! 

By knowing your net worth, you are able to gauge where you are as an individual. By knowing your net worth, you can individually gauge your progress towards your financial goals. Having a home or a specific car may be a goal, but your ultimate financial goals are inextricably link to your net worth, not a salary, home or a car. It is important to know your net worth because with this information, you can knowledgeably plot your financial path forward. If you do not know what your current financial situation is, how can you plan your financial future? How can you determine how and where to allocate funds? The fact is, you cannot plan your financial future without knowing your net worth. Know your net worth, use money as the tool it is  and buy time.

Money Is A Tool

Money is truly nothing but a tool. As such, you should aim to use your money to accomplish tasks. This should be done the same way that you use other tools. For example, if you have a hammer, it does not just sit around and do nothing. The hammer is always kept in working condition ready to bang in nails. In the same manner, money does no good just sitting around. Money should be in working condition and ready to be applied to accomplish tasks. For you who are financial minded, the game of money is about buying time. Each dollar you spending is time you are losing and each dollar you earn is time you are gaining. The time you gain is related to time that you need not work.

View Your Money As Buying Time

Each dollar you spend, consider how long you will need to work to get that money back. I guarantee that you will not buy certain items if this analysis is done before each purchase you make. If you are making $10 an hour, that $200 shoe is equal to 20 hours of your time. With taxes and other deductions from your paycheck, it is actually a bit more of your time. Now, when looked at in these terms, is that $200 shoe really worth it? Is it really worth more than 20 hours of your time? This same calculation work if you are making $50 an hour or $100 an hour. Is that item worth your time? Buy an item or buy time? The answer is simple, buy time.

Buying Time Gives You Freedom

Knowing that you have bought back 2, 3, 4 years gives you confidence. If there is a recession, you have time to do what is necessary with no need to panic. Because you have bought time, you will not lose your home or other possessions. Buying time provides a security blanket, you are able to pay your bills and if needed, you have enough for any emergency that arises. You have the money, you have the time. This is the difference between those who live pay check to pay check and those with money in the bank. One group is critically worried about keeping their jobs, while the other group have their head up and looking for better opportunities. It is much more difficult to seek opportunities and take advantage of them when they arise if you are in a place of financial survival. 

The more time you have bought back, the easier it is to pursue your dreams and take advantage of opportunities as they arise.

Conclusion

Calculate your net worth. After calculating your net worth, divide your net worth by your average spend per year. The resulting number of years is what you have bought back. If you decide to quit your job today, this is how long you could potentially go without working if all else stays constant. Now knowing this, how many years have you bought back? Buying time is akin to financial independence. At a certain point, you will have bought back so much time that you will no longer need to work. This is the aim. Journey to financial independence.

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Financial Experts

Be Wary Of So-Called Financial Experts

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There is a reason why Warren Buffet said to be “fearful when others are greedy, and greedy when others are fearful.” The reason is simple, so-called financial experts do not necessarily know what they are talking about most of the time. In effect, it has been shown that a monkey can pick stocks better than a financial expert. Yes, a monkey is a better stock picker than an institution paid a percentage of your portfolio. If financial experts were foolproof, they would beat the market every year, but this is simply not the case. This is also the reason why index funds are the safest bet to have consistent growth over time. So-called financial experts of the stock market are typically no better than you and I at gaging what will happen next.

Stop & Think

In life, whenever a large group is running to the left, stop and ask why. Do your due diligence and investigate whether or not these individuals are going that way in view of reason or an irrational drive to follow the heard. In most circumstances, the answer is herd mentality. Someone with name recognition will make a statement, others will be too lazy to do their due diligence and instead parrot the earlier person’s statement. This then occurs over and over again and soon you have a group of individuals moving in the same direction without a concrete reason to do so. This is particularly problematic when the individuals that are irrationally moving are also in positions of power. You end up with irrational acts leading to longterm detrimental effects.

Economic Movements

Just think back. How many financial experts called the great recession? How many financial experts predicted the sustained bull market following covid lock downs? The answer is not too many individuals. If you go back and take a look, most so-called experts where shouting from the roof tops about a sustained bull market back in 2007. When covid-19 hit, many financial experts were calling for a massive recession as a result of the lock downs. In both cases, the opposite actually occurred. 

If experts are calling for a specific economic activity to occur, the more fervor they have, the more likely it seems that the event will not occur. When the majority is looking for a recession, there may be a dip, but just wait for the bull market. When the majority is calling for a bull market, it is only a matter of time before the market falls. The point is, it is your money that you are playing with, do your own due diligence. Make informed money decisions by doing your own investigation into the matters at hand. 

Do not be a lemming. Do not turn over your life savings to an expert and sit back in the hopes that they will do what is right for you. It is your money. No matter who you choose to manage your money, you should also play an active roll in the actions taken with your money and how it is allocated. If you do not take an active roll in your financial security, do no be surprise to find that your money is not being managed in the way that you would want or like.

Financial Experts

This is not to say that experts should be ignored. If qualified, they are experts for a reason. They have the requisite knowledge and qualifications. This is to say that while experts may know more than you do about a subject, you should still take an active role in your money management. Trust but verify. In the end, it is your money.

Conclusion

Warren Buffet said to be “fearful when others are greedy, and greedy when others are fearful.” The reason for this statement is simple, do not follow the herd. A blindfolded monkey beats humans with stock picks. As such, keep in mind that some financial experts do not necessarily know what they are talking about most of the time. Be an active participant in the management of your money. Trust but verify. Educate yourself and do your due diligence. Do not be a lemming when it comes to how your money is managed. Actively participate in the management of your money and your journey to financial independence.

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Video Summary

Financial literacy

Financial Literacy Is Important

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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

Athlete

This Is Why Athletes Go Broke

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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

Retirement plan

Do not Become Someone Else’s Retirement Plan

Money Maroon

No matter how hard you work or how much money you earn, you are only a few bad choices from finding yourself in the poor house. Sometimes, the decisions that we make are in view of perceived obligations. For example, many financial decisions are made in view of obligations to family and friends. On your path to financial independence and early retirement, do not become someone’s retirement plan.

Focus On Your Retirement Plan

As the statement goes, put on our oxygen masks first before the person next to  you, including family. This also applies to your plans for retirement. You may be able to make head way in saving toward your retirement by living below your means, saving, and investing. However, it is also easy for a family member or two to constantly ask, manipulate or steal what you have saved. The stories are easily available if you perform a simply search, and should serve as a warning.

What Is Yours Is Theirs

There are so many stories of an individual or a nuclear family making progress by living below their means, saving and investing over time. As this family rises and increases their wealth, it is only natural for families and friends to notice, and notice they will. We can try all we want to hide success, but others will notice how you live your life. While you may try to be the millionaire next door, your close family knows better. While you may drive the standard car and live in a standard house, your family will be well aware of your job and will likely have researched your salary. It is only a matter of time before assumptions are made with regard to your wealth. With assumptions, it is common for others to begin to think that what is yours is also theirs.

As knowledge of your life is shared by family and close friends, you will be seen in a different light. When financial hiccups occurs, you become their bank. If they are having issues with housing, they will show up at your door. If you do not take steps to stop the initial requests or actions, you will pay for it later.

Of course, the proximity to family and friends will matter. The closer you are to those with a specific personality type, the faster the devolution into others thinking that what is yours is theirs. The further away you are, the less interaction and the less issues you may have.

Blocking retirement plan
Do not allow others to block your financial flow

Reason Does Not Matter

It really does not matter if you and others all had the same opportunities. It does not really matter if you choose to live below your means while others live it up. You may sacrifice all you want to maintain your life and that of your family, but it is simply human nature for those around you to think and believe that what is yours is also theirs. Especially when others believe that you have more than you need or that you do not deserve what you have.

What To Do

The fact is, you must learn to say no. You cannot become someone else’s retirement plan. You must stand up for yourself and your family. Others may claim that you are mean, but you must put your oxygen mask on before others. You cannot find yourself bank rolling other peoples lives, especially if these individuals do not understand how hard you have worked for what you have. 

It is all around us. Others have nice cars, vacations and homes that dwarfs the size and costs of yours. However, these are the first to reach out for aid and have a deep seated belief that what is yours is theirs. When times are hard, why do you have so much and they have so little, even though when times were good they had more than you and in effect wasted it.

We are not saying that you should be selfish and not help others. Help others and give. Success is not achieved alone and in isolation. What we are saying is, know what you are doing. Know the consequences of your actions. Know what saying yes today will mean for tomorrow. Do not become another person’s retirement plan. Know when to say no.

Conclusion

No matter how hard you work or how much money you earn, you are only a few bad choices from finding yourself in the poor house. Sometimes, the decisions that we make are in view of perceived obligations. For example, many financial decisions are made in view of obligations to family and friends. On your path to financial independence and early retirement, do not become someone’s retirement plan.

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Empty piggy bank

If You Are Feeling Broke, It’s Ok

Money Maroon

If you are feeling broke, know that it is ok. The feeling of not doing enough or that you are behind as compared to others is a normal. As human beings, we are hard wired to compare ourselves to others. It is natural. It is also natural to feel like you are not where others are when you look at their material possessions. But keep in mind, you are typically only seeing what others are willing to show you. You are not seeing what is going on behind the scenes. Many engage in fake it till you make it and  project a wealthy facade, but are in tough financial straits. Focus on you and do not concern yourself with what others are doing.

Empty wallet
It’s ok to feel broke…. but are you?

The Story

You have likely heard a similar story, but here we go. Around the corner is a neighbor who has one of the most beautiful homes, with an up-kept yard and with hedges always cut. This neighbor has two kids, a dog and two luxury cars which are replaced every few years. The neighbors are very social in the neighborhood, for gatherings, they are the life of the party. These folks take vacations each year to exotic locations, essentially these neighbors are the envy of the neighborhood. They are the picture of the American dream. They exude confidence, money, success and privilege.

Eventually, you may begin to notice some cracks in the happiness of your neighbor and this goes one of two ways. (1) They may stop attending certain events and may downsize the cars and eventually note that they are moving because of work. (2) If they chose to keep up appearances, eventually you or another neighbor may begin to get inquiries about who lives at their home. Typically, these are the early signs of someone hunting for your neighbors assets. It may be their cars or a boat in the back yard. Eventually, one or both cars will be towed away and repossessed. Sooner or later, a sign will be placed on the home that it is in foreclosure. 

It is amazing how often this story plays out.  Keep this story in mind when you begin to think or feel broke or inadequate as compared to others.

You May Not Be As Broke As You Think

The events above is typically shocking to all and will be the subject of much gossip. Some may enjoy seeing this fall from grace but many will be left reflecting on their previously perceived short comings. The fact is simple, you only see what others want you to see. If your neighbor has luxury cars you have no idea if they are leased or owned. You have no idea if they had previously won the lottery, you also have no idea if they have inherently wealth or are up to their eye balls in debt. The moral of the story, do not compare yourself to others.

Live your own life and stay in your lane. Be happy for those who are doing well or appear that they are doing well. Know what you are doing and focus on your financial goals and not what others are doing. It is ok to feel broke, it is normal to compare yourself to others. But do not act in a manner to compete with others. Live your life. Stay in your lane.

Do You

If you are pursing early retirement, do so. While it is difficult not to compare yourself to others, keep focus on your goals. If your aim is to save 50% or more of your income, understand that you may then not have the nicest cars, fashion or take the same vacations as someone who do not save as much as you do. Just remember that we are all on different paths. You may feel broke or inadequate, but your bank account may say otherwise.

Whenever you feel financially inadequate, take a look at your assets. Look at your bank account and know that you are one day closer to your financial goals.

Conclusion

If you are feeling broke, know that it is ok. The feeling of not doing enough or that you are behind as compared to others is a normal. As human beings, we are hard wired to compare ourselves to others. It is natural. It is also natural to feel like you are not where others are when you look at their material possessions. But keep in mind, you are typically only seeing what others are willing to show you. You are not seeing what is going on behind the scenes. Many engage in fake it till you make it and  project a wealthy facade, but are in tough financial straits. Focus on you and do not concern yourself with what others are doing.

Follow me on Twitter @JoToFI_com

Follow me on Instagram @JoToFI_com