3095: The Millionaire Mindset To Achieve Financial Independence by Brian Tracy on Retiring Early

[00:00:00] Have you ever noticed how a calm mind can really set the stage for a good night's sleep? That's the idea behind our new podcast, Good Sleep. Greg, our host from Optimal Relationships Daily, is here to help ease you into a peaceful night's rest with some positive affirmations. And these affirmations aren't just comforting. They can help ease anxiety and nurture positive thoughts, setting you up for true good sleep.

[00:00:25] So press play on Good Sleep Tonight, because a good tomorrow starts with a good night's sleep. Just search for Good Sleep in your podcast app and be sure to pick the one from Optimal Living Daily. This is Optimal Finance Daily, The Millionaire Mindset To Achieve Financial Independence by Brian Tracy of briantracy.com.

[00:00:51] To obtain the type of financial independence you've been dreaming about all your life, you must learn to develop a millionaire mindset. Thomas Stanley and William Danko in The Millionaire Next Door explain that most wealthy people and self-made millionaires drive used cars, live in average neighborhoods, wear average price clothes and watches, and are very careful with their money. In addition, very few of them buy books.

[00:01:20] You must learn to buy books.

[00:01:50] wealthy people develop the habit of getting rich slow rather than getting rich quick. To assure this, they have two rules with regard to money. Rule number one, don't lose money. Rule number two, if ever you feel tempted, refer back to rule number one, don't lose money. Wealthy people spend much more time thinking about their finances than people who remain poor.

[00:02:15] The average adult spends two to three hours each month studying and thinking about their money, usually at bill paying time. The average self-made millionaire, by contrast, spends 20 to 30 hours per month thinking, studying, and planning his finances. This millionaire mindset, the very act of focusing on your money, will dramatically improve the decisions you make with regard to it.

[00:02:42] Wealthy people who invest more time planning their finances invariably make better decisions, get better results, and achieve financial independence. Develop the habits of wealthy people. With regard to your growing bank account and goal of achieving financial independence, millionaires develop a series of other financial habits to assure that they don't lose money and that their money grows steadily over time.

[00:03:12] During the cultivation of a millionaire mindset, one of the best financial habits you can develop is the habit of getting good financial advice before you do anything with your growing account. Ask around and find a financial advisor who has already achieved financial independence by investing his or her personal money in the areas that he or she recommends to you.

[00:03:36] Your ability to choose excellent financial advisors can be the critical factor in making good investment decisions. Develop the habit of investigating before you invest in anything. The rule is, spend as much time investigating the investment as you spend earning the money that you're thinking of investing. Fast financial decisions are usually poor financial decisions.

[00:04:03] Develop the habit of taking your time, of moving slowly, of finding out every detail of the business or investment before you ever think of writing a check. Never allow anyone to pressure you into an investment decision. Never allow yourself to feel that a financial investment decision is urgent and must be made immediately. A wealthy man I worked for once told me, investments are like buses, there will always be another one coming along.

[00:04:34] Sometimes the best investments are the ones you never make at all. Make a habit of thoroughly understanding the investment before you ever think of parting with your hard-earned money. If there's anything that you don't understand, or which seems too complicated for you, don't put your money in that area at all. Wealthy people never trust in luck. An important habit for financial success is the habit of insuring properly

[00:05:02] against any risk that you cannot write a check to cover. It's amazing how many people have spent years accumulating money and then lost it all because they didn't have proper insurance policies in place. Develop the habit of using what I call worst possible option thinking. Always ask yourself, what's the worst possible thing that could happen in this situation? No one likes to spend money on insurance,

[00:05:27] but it's one of the smartest things that you can possibly do on your road to financial independence. By insuring properly, you'll never be caught off guard by an unexpected accident or emergency. An additional benefit of being fully insured is that it gives you a feeling of calm confidence that allows you to think more clearly and be much more effective in everything else you do. Wealthy people cover their assets. As you begin to accumulate money,

[00:05:57] develop the habit of protecting your estate from unnecessary taxes and frivolous lawsuits. Invest in the services of a lawyer who specializes in wills and estate planning. Set up a family limited partnership under the direction of a good lawyer and transfer your assets into the partnership so that they cannot be seized in a lawsuit or taxed away if something were to happen to you. As the old saying goes, a stitch in time saves nine.

[00:06:28] Small actions that you take in planning, investigating and ensuring your assets can save you an enormous amount of money on your road to financial independence. Do your homework. In addition to the habits discussed before, another important habit that wealthy people develop is the habit of carefully considering every expenditure before they make it. This involves getting as much information as possible

[00:06:55] on the various prices and costs involved in any financial decision. The power is always on the side of the person with the best information. Develop the habit of negotiating more effectively to get higher prices when you sell and lower prices when you buy. A good negotiator can save or gain 10%, 20% and more on every financial transaction. Each dollar saved or gained is additional money

[00:07:23] that you can put away to accumulate and grow in your financial fortress account. Develop the habit of asking for higher prices when you're selling and asking for lower prices when you buy. Ask for lower interest rates. Ask for better terms and conditions. Ask for immediate payment when you sell and ask for deferred payment when you buy. Ask repeatedly. Ask pleasantly. Ask courteously. Ask expectantly.

[00:07:52] Ask confidently. But don't be afraid to ask. Ask for what you want. And if you don't get it, ask for something else. Achieve financial independence. Slowly. Most great fortunes are built slowly. They're based on the principle of compound interest, what Albert Einstein called the greatest power in the universe. In 99% of cases where people become wealthy,

[00:08:20] it's over a long period of time. And it's based on slow incremental growth as the result of compound interest. Every dollar that you save, properly invested and protected, has the ability to grow 5-10% each year. As your money grows, it compounds on itself and grows even more. According to Stanley and Danko, it takes the average millionaire 22 years to accumulate a million dollars from the time he gets serious

[00:08:49] about his financial life. Most wealthy people get rich slowly by gradually increasing their earning ability, saving more and more from their income, and investing it carefully and intelligently so that it grows and compounds over the years. You must do the same. More than the millionaire mindset. Achieving financial independence as the result of developing million-dollar habits is a great goal in itself.

[00:09:19] But it's not the most important thing. It's the person that you have to become in terms of courage, character, thoughtfulness, and persistence that is most important. As the result of becoming financially successful over a long period of time, you will feel truly happy and satisfied with yourself and with every other part of your life. This is the most worthwhile goal of all.

[00:09:48] You just listened to the post titled The Millionaire Mindset to Achieve Financial Independence by Brian Tracy of briantracy.com. And now a word from our sponsors at Betterment. When investing your money starts to feel like a second job, Betterment steps in with a little work-life balance. They're an automated investing and savings app, which means they do the work. While they build and manage your portfolio, you build and manage your weekend plans.

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[00:10:45] That's B-E-T-T-E-R-M-E-N-T dot com. Investing involves risk. Performance not guaranteed. Firstly, the fact that you're listening to this show is a great indication that you already have or are on your way to developing a millionaire mindset. As someone who talks about money literally every day,

[00:11:09] in my experience, the vast majority of people have no interest in thinking about or discussing their personal finances. I think the reason is because it's such a source of shame for many people. It's tied up with a lot of emotions. And many people equate their net worth with their self-worth, even though there is absolutely no connection between the two. So the fact that you're here and willing to think critically and honestly about your finances

[00:11:39] is cause for celebration. On another note, I strongly disagree with the advice here that you need to find a good financial advisor in order to improve your finances. You have more access than ever to financial education and it's absolutely possible to teach yourself everything you need to know about money. The reality is no one is going to care about your money as much as you do.

[00:12:05] And unfortunately, the way that most advisors are compensated creates a conflict of interest. Unless your situation is particularly complex, you most likely don't need a financial advisor. And even if you do decide to use one, it's super important that you yourself are financially savvy so that you can determine if the advice they're giving you is even good. There are a few situations that I would use an advisor.

[00:12:35] For example, to review my asset allocation and drawdown strategy as I prepare for retirement. But I would only ever use a flat fee advisor that doesn't sell financial products. These are also often referred to as advice-only advisors, and you only pay them for their time. The trouble is, only about 3% of advisors are flat fee or advice-only, so they can be hard to find.

[00:13:03] I believe it's much more advantageous to consult a CPA to advise on strategies to lower your lifetime tax burden, as the tax laws are always changing, as well as a lawyer for estate planning. You're going to get much more bang for your buck here, and these resources are typically much less expensive than a financial advisor. That'll do it for today and another installment of Optimal Finance Daily. Have a happy Thursday.

[00:13:33] Thank you for being here every day and listening, and I'll see you on the Friday show tomorrow, where your optimal life awaits.