Archive for the ‘MONEY – VANGILE’ Category

When started my writing company, I had a poetry contest and offered a $100 price for 2 winners. When the contest the winners were announced I had to pay them and I couldn’t because I had no money and had spent most of my money on food and rent. There was very little money left over for the business.

I spent a whole day calling myself stupid and all sorts of other names. I remember going to a friend and telling her I felt so stupid for not having this money and started crying. She looked at me and told me to start having compassion for myself. A little later that day, my sister told me the same thing.

Up until that point no one had ever told me that it was possible to have compassion for myself. That advice changed my life because it opened me up to such concepts as forgiving myself.

I started to see this as what it was – me not having enough money to pay for my rent and my company, nothing more. I also realized that this was a common problem that all entrepreneurs face and it didn’t make me stupid. It just made me an entrepreneur facing a common entrepreneur problem.

This realization allowed me to step out of the story I had created and to look at the facts and look for a solution – get a part time job or find a way to increase revenue so I can pay my expenses and pay myself.

I admit that I don’t always practice self-compassion but when I do, life moves a lot smoother and becomes more enjoyable.

How Self Compassion Affects Behavior:

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In December, I spent a month at a meditation retreat learning how to be calm even in the face of a storm or rather to smile through it. I left the retreat in shambles and I have spent the last 6 weeks crying during meditation and feeling even worse in waking life.

It was like my retreat brought up all these negative emotions and I was being forced to practice what I preach. Somehow I managed to sit and observe these emotions and complete an 80 page workbook to go with my new heart, mind and money workshops. Download the free eBook at: www.wealthy-money.com.

It was like a cloud lifted and I let go of all the baggage I was carrying and surrendered to the process. I shocked myself by remaining calm, focused, smiling and being genuinely happy. And I once more saw that what the wise men were right – happiness is not dependent on your external circumstances.

Why strive to be happy?

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Congratulations goes to Vangile who signed her publishing contract with Jacana Media! This means the book you’ve been hearing about will now be available at Exclusive Books and CNA

Well done V!

Baydu

How to Stop Being a Pessimist & Start Achieving Your Financial Goals

Freud made the argument that our lives are filled with undercurrents of negativity.

Hey may have been right. Positive thinking doesn’t come easy to us.

Studies have shown that one negative event in our lives requires multiple good events to make us feel better and get us back to normal.

For example, a study by Kahneman & Tversky in 1984 found that people feel more pain about losing $100, than joy from receiving $100.

According to evolutionary psychologists pessimism kept us alive

Pessimism is an adaptive response to unfavorable circumstances

Optimists anticipate a favorable outcome to any situation but pessimists expect the worst from situations, which is actually good if you’re living in the Stone Age and facing a wild animal like a lion.

An optimist would probably think they had a chance at killing the lion or taming it, but a pessimist would assume the worst and run. Or kill the lion, if victory was guaranteed.

Chances are, the optimist would die and the pessimist would live to fight another day.

How Your Pessimism Affects Your Financial Behavior…

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My best friend openly admits she’s a miser. She tells me that spending money makes her physically ill. So she saves everything, including ketchup packets, plastic cutlery and napkins from fast food places (she has a drawer full of these things).

She has a daughter and still manages to save 60% of her income and no matter how hard things get, she never dips into her savings. Oh in case you were wondering, she’s 29 years old.

When she quit her job this year (the scariest thing she says, she ever did), she went from eating 3 meals a day to eating 1 meal a day so she could save money as she looked for a new job.

That’s not frugality. That’s being cheap.

In her world I’m a financial nightmare

I refuse to live on $50 a week. Hell I refuse to live on $50 a day.

I think it’s okay to spend $80/hour on a weekly massage, $40/hour on weekly acupuncture sessions and $125/month on yoga if I can afford to and still save.

I earn money to do the things that make me grow as a person and add value to society. Like going off to Haiti and starting a business school (I’m doing that in June 2013).

I have $33,000 in student debt; have no credit cards and pay cash for everything (including my car). I’m now on a mission to pay cash for my house so I never have to deal with a mortgage.

I call this frugal, she (and my mom who is exactly like her) calls it insane and risky.

There’s a difference between being frugal and cheap

The Merriam Webster Dictionary defines frugal as characterized by or reflecting economy in the use of resources.

A miser is defined as someone who’s stingy with money. This is someone who refuses to spend money.

Financial Behaviors of a Frugal Person

Using the definition of frugality, we can assume that a frugal person would use their resources wisely and exhibit the following behaviors:

1. Good money management

I’ve always thought being frugal means wise and balanced and to manage your finances wisely.

A frugal person would save, invest and spend wisely. Frugality means looking at the best use of your money in this moment whilst still getting a balanced amount of joy from spending, investing and saving your money.

Instead of earning money to pay off debt, you earn money to live and do the things you want.

2. Matching your finances to your overall goals…                                                                                                                                            [CONTINUES...]

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How to Master Your Impatience & Your Finances

Why do some people have tons of debt and others very little? Why can some people pay off all their debts whilst others fail?

And why are there so many differences in personal financial outcomes?

A study by Meier & Sprenger in 2008 found the answer: impatience.

According to the study people that are impatient have higher debt levels on revolving accounts such as credit cards. The study concludes that impatient people are also most likely to default (fail to pay) on their debt.

Impatience Affects Your Financial Decisions

It should come as no surprise that impatience has such an adverse effect on financial decisions.

One of the first things I learned as a Finance Major was that a dollar today is worth more than a dollar tomorrow. There’s even a theory for it – Irving Fisher’s Theory of Interest.

According to this theory investors need to be compensated for the risk of waiting of an uncertain tomorrow and have to be paid a premium for their patience.

Talk to any stock broker and they will tell you that impatience (as well as greed) has ruined many great men. It is also the emotion that most pyramid schemes rely on.

The impatience to get rich quick leads many investors to financial ruin – foregoing research and long term investment strategies, choosing instead, to buy and sell assets based on hot tips from friends and family.

How Impatience Negatively Affects Your Finances

A study by DellaVigna & Paserman (2005) found that workers that are impatient search less intensively for work and accept lower wages. But what other impact does impatience have on financial behavior?

1. 1.      Decreased savings: when you’re impatient it’s difficult for you to save and wait for the things you want so you spend what you have to get satisfaction in the here and now

1. 2.      Risky investments: impatience by its very nature makes you take on more risk for higher rewards. This emotion doesn’t lend itself to slow and steady work, instead it forces us to rush things

1. 3.      Get rich quick schemes and gambling: this is very similar to a risky investment because in your quest to make money fast

1. 4.      Stealing and other unethical deeds: you cut corners and try to get money in any way because the legal way takes too long and you just don’t thing you have time to invest

1. 5.      Underprice your services: as the research shows, impatient people are quick to settle for lower wages. Impatient entrepreneurs will undercharge their services and products in order to get money and also because they compromise on quality in their haste to make money

1. 6.      Increased credit card debt: you take on more credit card debt, instead of saving, to acquire the things that you want. Your concept of time as a limited resources pressures you to spend NOW

How to Deal With Impatience About Money

We get impatient about money when we buy into the belief that we need to have something now or that we need to make money now. We have high expectations and expect them to be fulfilled right now.

1. 1.      Practice delayed gratification: Distract yourself.

Walter Mischel (1960) conducted a study with 4 to 6 year olds where he left them in a room with their favorite sweets. He gave them 2 options: they could eat the sweet now or they could eat the sweet after a few minutes when he got back into the room, in which case they would get an extra sweet. The kids that were able to wait before they ate the sweet were the ones that were able to distract themselves by singing, playing with their hair and closing their eyes.

Interesting when Mischel followed up with these kids in 1980 he found that the ones that had been able to delay gratification had higher SAT scores.

2. Focus on your breath: the best way to distract yourself is to focus on your breathing. Find a place where you can sit, clear your head and focus all your attention on your breath.

3. Understand what triggers your impatience and avoid it: emotions are often triggered by something. Pay attention to your spending triggers and make an effort to avoid them.

Impatience stems from the underlying belief that things need to happen in this instant for us to be happy or for life to be fine. It’s this underlying belief that gets many people into debt. Mastering your impatience can help you master your finances.

When you have no belief in yourself, no one believes in you.

Last week I did what I usually do: I packed my bags and moved to a new city without any definite plans except to finish the Landmark Forum seminars. And since I am practicing this thing called “keeping my word“, I kept my word and moved to Cape Town for these seminars.

But that’s actually not the big deal here. The big deal is that I moved, as usual, with no place to live but with a vague idea that this is where I want my base to be located. Fast forward 7 days later: I’m extremely exhausted from house hunting and have actually done very little work.

Why?

Because I’ve been too busy doubting myself and the work I do. In fact I’ve spent hours listening to people tell me I’ve made a bad mistake – I should’ve stayed in Joburg, I’ll never find a place in Cape Town during high tourist season and I’m just plain crazy because no one will hire me as a coach in Cape Town. And because I’m already in self doubt mode, I’m attracting these conversations and totally believing everything, which leads to fear, which then leads to action paralysis and a host of self esteem issues.

Honestly, were it not for a friend in India who coached me over Skype I think I may have had a melt down (everyone needs a friend or coach that can coach them through panic attacks).

How does lack of self esteem affect your finances?

I once paid off $5,000 (US) in debt in Boston, MA in a space of 3 months just by raising my self esteem. Sounds insane but it’s true. I did it doubling my coaching fees and going after a whole new clientele. Until the day I doubled my fees I’d never believed that I was worth that price or that those clients would take me seriously. I always believed that people would laugh at me behind my back for even marketing to them (this is a major fear for me in business).

So I’ve seen first hand how self esteem or believing in yourself can affect your finances. In fact, a study by Timothy Judge and Charlice Hurst in 2008 found that people with higher self esteem earn more money, have greater job satisfaction and occupational status than people with lower self esteem. They even argue that people with high self esteem attain success at an early age.

Lack of self esteem has a negative impact on our finances

This blog post is actually about self esteem and how it affects your finances, not the nay sayers in my life. The nay sayers are just a deeper reflection of the self doubt that I’m currently dealing with.

No matter how many countries or continents I’ve moved to without a plan, this time is different. This time I have a voice in my head telling me that next year I’m going to be 30 and I really should be more stable and more settled.

Every time this voice starts talking I listen and I think, “Damn I can’t believe I just agreed to perform in Toronto, Canada in February and to move to Haiti in April. And I still haven’t paid off my credit card from like years back, and I just moved to Cape Town. This is not mature adult behavior. What the hell am I doing with my life? I should be stable. I should consider marriage and start thinking babies because maybe one day I’ll want a bundle of joy and will regret that I took so long to decide.”

The mind is a trickster: it can scare you into making decisions that aren’t in line with your values

Every time I listen to my negative internal chatter I get scared and I doubt my abilities as a human being, forget coaching, I’m talking existential crisis.

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A few months ago I was introduced to a lady from up North in SA by her sister who’s a friend of mine. She told me of Vangile and how well she is doing and if I would be interested in having her blog on this site. We chatted via emails and things and next thing  ’Money Matters with Vangile‘ right here was born! She is a money coach and offers advice and suggestions and we can all learn a thing or two in order to stretch our cash just a little further. A few weeks ago Vangile moved to Cape Town and we met for coffee for the first time and it ended up being like a 4 hour chat! Vangile has been interviewed on tv and radio and in publications because of her first book she’slaunching. Some lucky readers here were able to see the rough and raw e-book copy of the book and we asked them to review it. This is what they had to say:

I have an unrelenting need to look good, which inevitably affects my finances because I lie about money in little ways.

Apparently I am not alone in this; Susan Shapiro Barash in her book, “Little White Lies, Deep Dark Secrets”, argues that 75% of women lie to the people they love about money in order to manipulate the way that others see them.

I’m disappointed that I’m in that 75% because I lie by pretending that I have more money than I actually do. This is easy for me to do because everyone always assumes I have my finances in order since I’m a financial coach and most of my clients actually have dramatic financial breakthroughs.

This is far from true – I am able to coach others because I have emotional issues with money (that I work on constantly) and can easily spot these issues and thought patterns in others. I talk about these openly in my book: Heart, Mind & Money: Using Emotional Intelligence with Your Finances

I say yes to visiting friends in foreign countries and traveling even when I know that that money will be better used for my business. I say yes, because I’ve cultivated this image of me as a carefree nomad and to say no, would break that image and make me look bad.

How does the need to look good affect your financial behavior?

According to Susan Shapiro Barash people lie for self-preservation but in the long run lies box us in, which makes it difficult for us to have close relationships in case people find out the truth about us. I can honestly say all my relationships got a lot deeper when I started sharing my financial figures with my friends and family. Now I am challenging myself to open up about my relationship with money on blog posts and my writing.

Of course the need to look affects our financial behavior:

1. 1.      Fear of failure and criticism: Fear of failure and criticism stems from the need to look good, which affects our ability to innovate, take risks or go against the crowd when making investment decisions.

As an entrepreneur I procrastinate on marketing my products and services because then people will know that I need money to continue running my business. This means that they now know that I don’t have it together and they can reject me by saying no, which often feels like death to me.

It’s easy to see how this messed up story affects my business – I refuse to market myself and in turn lose clients and money.

1. 2.      Increased debt and spending: The need to look good is almost always the reason behind most people’s spending.

Most of us are walking around with the belief that we have to be a certain way in order to be accepted. We spend money we don’t have in order to impress people we barely know, who are also only trying to impress us.

It’s a vicious circle that only leaves you, the person who’s spending money as the biggest loser in the game.

1. 3.      Making financial decisions that aren’t in line with your life’s purpose: When you start playing the “I have to look good”, you will make financial decisions that aren’t in line with your values like taking on clients that you wouldn’t normally take on in order to support your lifestyle and keep up pretenses.

How to stop lying about money’

1. 1.      Start caring more about your finances than what others think about you: this is easier said than done. It’s human to fear rejection and to want to belong. Honestly, 10,000 years ago rejection meant fighting the elements alone, which often meant death by starvation, cold or animals. So it makes sense that we want to look good and be accepted because that’s just how our subconscious mind is conditioned. Unfortunately, to achieve financial freedom, you’re going to have to care more about your finances than what others think about you i.e. develop unlimited self esteem.

1. 2.      Accept that everything is perception: you can be perfect and there’ll still be people that hate you and criticize you for being perfect. Accept it and deal with it.

Most of the time, we as people, never see the facts, instead we choose to create stories about others and others will create stories about us. It’s called being human.

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How would your finances look if you did what you said you were going to do, when you said you would do it?

A few months ago I started a microfinance company, loaning money to men and women in Witbank.

The business didn’t work out as the research showed, which is to say women weren’t my best customers. Except for one guy who outright told me that he had no intention of paying me back at all, the men turned out to be better at paying back their debts than the women were.

One of my male clients taught me a lot about financial accountability. He’s almost manic about the way he makes his payments: he tells me the date and the time I can expect payment and is almost always on time.

This is what financial accountability looks like – it’s deeply tied to integrity.

What are the costs of not being financially accountable?

1. Increased debt.

How often do you justify unnecessary spending?

No matter how you look at it, every time you spend money and justify yourself, the fact still remains that you spent the money. And the equation still works out the same way:

Spending Money + Justification = Money Spent

2. Taking on unnecessary investment risk.

If the promises you make yourself mean nothing to you, then you’ll never do what you said you’d do as an investor. Good investors always stick to their investment criteria.

3. Bad credit due to late payment.

Paying your debts when you said you were going to pay them is not just good financial management – it’s practicing integrity.

How to be financially accountable

1. Keep financial promises you make to yourself and others.

Set the intention to be the kind of person that lives by their word and you will see that you won’t say yes to things unless you know you can keep your word.

If you tell yourself you’re going to save $100 a month, hold yourself accountable to do just that.

The minute you start justifying why you can’t do this, see that you’re making excuses and start afresh. If you let yourself slip once, you’ll find yourself slipping the next month and then the next and before you know it, nothing gets done.

2. Get an accountability partner.

An accountability partner helps you keep a commitment and can give you the support you need to remain on track with your financial goals. It’s easy to lie to ourselves about our finances but it’s not as easy to lie to someone else.

3. Keep a budget and stick to it.

Once you know where your money is going, make a decision about what you need to change. Look at different parts of your life like recreation, health and daily operations and decide how much of your money you’re going to spend in each area.

Resolving to be the kind of person that lives by their word, can change your life and also directly impact your finances because you by teaching you to only commit to the things you know you can afford.

How do you hold yourself financially accountable?Vangile Makwakwa is a money coach, speaker and author of Heart, Mind & Money: Using Emotional Intelligence with Your Money. She is passionate about wealth building and changing the way people feel about money.

When I was 10 I asked my uncle, who was an electrical engineer, what the highest paying career was. He told me that talking about money was wrong and that I should never consider money when choosing a career.

I believed him and even though money was the cause of many family arguments and I was a Finance graduate with an MBA to boot, I never talked openly about money.

I never talked about money until I found myself broke, unable to pay my rent or feed myself.

And then I had to talk about money because not talking about it was causing me too much pain and suffering.

Knowing who you can talk to about money can change your life and increase your chances of financial freedom. When you’re sick you go to the doctor.

So who can you talk to about money?

1) Financial Planner

Financial planners are jack of all trades. They prepare your financial plans, help you look at all aspects of your life; help you draft a savings plan, investment plan and retirement plan. Some financial planners can even help you build your stock portfolio.

The advantages of working with a financial planner is that they work with your lawyers, accountants and brokers to make sure that your financial objectives are being met.

Financial planners offer a variety of services so it’s important to ask your financial planner what services they offer.

It’s also important to ask them about their qualifications – it’s prudent to work with a financial planner who is registered with the CFP (Chartered Financial Planning) Board.

 2) Investment Banker/ Stock Broker

They invest your money in the stock exchange. Stock brokers trade stocks in the stock exchange in return for commission.

They can help you build a stock portfolio by investing in stocks and mutual funds based on their knowledge.

The one thing you want to first find out from a stock broker is what their 5 year track record is.

Past doesn’t always foretell the future but knowing your broker’s track record can help you see if they made other people money or not.

3) Money Coach/ Life Coach

Life coaches help you change your relationship with money and the way you think about money so you can craft the financial future you want.

It’s best to talk to them if you experience negative emotions like guilt, anxiety and fear about money.

Money coaches aren’t financial planners but they work like money psychologists and work with you to change the way you think and feel about money.

4) Estate Lawyer

They help you write your will and plan your estate in the event of your death but you have to talk to them whilst you’re still alive.

I know it sounds morbid because death is the last thing any of us want to think about, but it’s important to talk to an estate lawyer because they focus on estate duty taxes and examine the tax implications of your will.

Talking to them will ensure that your benefactors benefit more than the tax man when you die.

If there’s one thing that’s made a difference in my finances – it has been talking about money. Not only has that led to new career opportunities for me, but it has also allowed me to shed a lot of family beliefs that I carried about success and financial freedom.