Habits

What exactly are habits, and why are they so hard to change?

To answer this question, let’s turn to the field of neuroscience – the study of the human brain and its function – and see how it applies to our everyday lives.

Let’s go back to the goal of losing weight and the desire to live a healthier lifestyle. That is your destination.

And you know, consciously, that in order to reach your destination, you need to change your daily habits – for example, you need to drink more water and less soda throughout the day.

The problem is, even though you know consciously that’s what you should do, it’s hard to do; because you’re so used to drinking soda instead of water throughout the day.

(Substitute any habit you want to change here – procrastinating when you know you should be taking action; overeating; smoking, etc. I’m using the desire to lose weight and get in shape as an example.)

What you’ve probably tried to do is to use your “willpower” – which is essentially using your conscious mind to fight your subconscious habits.

And while you were probably able to make some changes for a short time…

After a while, it became easier to just give in and go back to your old habits.

This, incidentally, is why so many people who go on diets lose weight for a short time, then end up gaining it all back.

But what happened? Why wasn’t your willpower or conscious effort strong enough to change your long-term behavior, when that’s what you really wanted?

What happened is, your brain is performing a process that neuroscientists are now calling “The Habit Loop”.

Take Action Challenge:

Change your habits, change your life.

(NOAH ST.JOHN http://www.Successclinic.com)

7 Step Success Formula

My 7 Step Success Formula By Craig Ballantyne I just finished my morning meditation session. This marks the 87th day in a row that I’ve meditated for at least 10 minutes. I started meditating to bring more calm, focus and patience into my life. It wasn’t easy. I almost quit – several times – during the first few days in developing this new habit. And this wasn’t the first time I tried to take up meditation. But each time in the past I had failed miserably. There was the time in 2006 when I tried to use meditation to help deal with my anxiety attacks. I only lasted a week. Then in 2009 I worked up to 15 sessions in a row before shamefully giving up. But this time I knew it would be different. This time I had my 7 step success formula in place. Before, I went about it in a haphazard, non-serious way. Each morning, after I’ve written Turbulence Training workout programs or ETR essays for two hours, walked the dog, and finished my Daily Document review (but before I go to the gym), I sit down on my meditation pillow, close my eyes, sit upright with legs crossed, and focus on my breathing. At first the habit was excruciatingly painful – both mentally and physically. It was almost impossible to turn off my “monkey mind.” My brain would shift from thought to thought to thought, reviewing my to-do list or coming up with other ideas to implement or people to contact. And frankly, my mind still wanders during each session, even though I’ve made significant breakthroughs in my ability breathe deeply and focus on practically nothing. I’m getting better every session. I’m not giving up on this habit. It’s made me more calm during the remainder of the day. I no longer feel a tiny bit of tightness and anxiety in my chest when my schedule becomes overwhelming. I breathe better (sounds silly, I know, but most of us don’t know how to breathe properly). I relax easier. I have more patience – and this was sorely needed. This simple meditation habit, now almost 90 days strong, has made a big difference in my life. It’s become a success habit. (And I’m going to show you my 7 Step Success System for any area of your life.) This time I was able to stick to my meditation habit because this time I also listened to my own advice. Over the past 16 Turbulence Training Transformation Contests, I had been telling you and 90,000 other TT readers that: “Success is simple once you accept how hard it is.” Now don’t get me wrong. I’m not saying that success is easy. I’m staying that it is simple. Big difference. That means, if you understand and accept that success – in any area of life – requires sacrifice, only then you will be psychologically prepared to make those sacrifices. Then, and only then, with the right mindset in place, success simply becomes a matter of following proven blueprints, and never, ever giving up on what is important to you. Once you accept this fact, you’ll be ready to successfully apply this formula to transform your life. After reviewing my own success habits, and those of the dozens of winners of my 16 Turbulence Training Transformation Contests, I’ve identified the following 7 Step Success Formula: SUCCESS = Outcome Goals + Process Goals + Action + Accountability + Support + Incentives + The Deadline Let’s walk you through those 7 Steps. 1) Outcome Goals – This is simple. If you want to lose 15 pounds in 6 weeks, that’s your Outcome Goal. It’s your Vision. It’s the Destination you want to arrive it in a given time frame. That’s Goal Setting 101. 2) Process Goals – These are a little different, and yet an often forgotten part of a Goal Setting program. Process goals refer to what you are going to do in order to succeed. For me, I had to make time each day to practice meditation. For someone that wants to lose belly fat, your process goals will include 3 Turbulence Training workouts per week plus 90% compliance to your nutrition program. By hitting your process goals, you’ll ultimately achieve your outcome goals. 3) Action – All the optimism and goal-setting in the world does you no good without Action. You must plan and prepare to take action. And then you must force yourself – even on those tough days, for example, when you want to skip your meditation session or workout because you are tired or too busy – to take action. Action takers rule the world. However, there’s one Politically Incorrect truth that I must share with you. You need to know this, because if you don’t, you might give up. Worse, you could be giving up just when success was around the corner. So read this once. Let it sink in. Read it again. And then print it out. Post it on your computer or your fridge. It’s that important. Here are some of the most important words of wisdom I could ever share with you… Success comes in spurts. There will be times when you’ll work and work and work, and you’ll feel like you’re getting nowhere. You might be experiencing this right now. So stay strong and keep on pushing. Believe me, I know how you feel. Back in 2006 I struggled with an anxiety attack that lasted more than six weeks straight, but I never gave up on looking for solutions. And what I discovered was that success only happens by taking action every day, strong and steady, by overcoming obstacles and powering through the dips, by trudging onward through tough days and getting energized by great days. The backbone for your success and persistence will always be a clear vision of what you want to achieve. Make sure that your Outcome and Process Goals are clear. Realize that each action you take is a small victory for you, and each accomplishment is another step closer to your big breakthrough. Everyone goes through those struggles where it feels like nothing is working, those dips, those stretches where you are seemingly making no progress, and then suddenly… WHOOOOOSH. Success. The scale will change by 2-3 pounds seemingly overnight. The person of your dreams will walk into your life. A big break will happen at work. Whatever it is, it WILL happen if you keep taking action. It happened to me and it will happen to you too. I dealt with the anxiety every single waking moment for six weeks, and then I finally found the answer to my problem. And poof, I was cured almost instantly. Success. It comes in spurts. Trust me on that. So never, ever, EVER give up on what is important to you. But how can you help yourself to stick with your action plan and process goals through these tough times? The answer is in the Four Pillars of Success, which are also the final four steps of our formula. Once you’ve nailed down the first three steps – you’re ready to use the final four steps to make your transformation stick.  These four steps are Accountability, Social Support, Incentives, and The Deadline. 4) Accountability – Research shows that being accountable to an authority figure increases your chances of success. This might be me, in the TT contests, or your doctor, or your pastor or your supervisor at work. But you need accountability. It can also come from your friends and family too, as we’ll see in the 5th Step. For my meditation success, I held myself accountable to Matt Smith, my business partner, and my chiropractor, Dr. Michael Sommers. Both of these men have been long-time practitioners of meditation and gave me expert advise on making my sessions better. Without them, I might have given up. 5) Social Support – Lean on positive people in your life to support you when things are going well, and yes, to give you a kick-in-the-butt to get back on track when you are slipping. I used the support of other members in the Turbulence Training forums to stay on track with meditation (as I do everyday to stick to my nutrition, as well). And almost every single winner of the TT Transformation Contests has done the same. The more active they are in the forums, the better results they are getting. You can’t go it alone and expect to succeed. You must find positive people – and research shows that online support groups work as well as ‘real life in-person’ support – to be there when you need a shoulder to lean on. 6) Incentives – There are two ways to implement Incentives into your Success Formula. You can use the “carrot” or the “stick”. The “carrot” approach is based on a reward you’ll give yourself for taking action and hitting your process and outcome goals. For TT Contest winners, it’s the big cash prizes that motivate them to action every day. On the other hand, you can motivate yourself with negative consequences. That’s the “stick” method. For example, you can punish yourself for not taking action or for not hitting your outcome goals. When I quit swearing late last year, I created a virtual swear jar. Each curse word cost me $10 that had to go to a charity I did not want to support. (You can also choose to donate to the political party you don’t support.) I quickly cleaned up my swearing habits in just six days with this approach. Incentives work! 7) The Deadline – This might be the 2nd most important component after Action. Without The Deadline, we will procrastinate. Our outcome goal of losing 10 pounds of belly fat drags on and on and on without success, unless we say, “I’m going to lose 10 pounds of belly fat by Memorial Day (May 27th, 2013)” and then make this public to our Accountability partners and Social Support while attaching an Incentive to it. If you do all of those things, I guarantee you’ll have dropped those 10 pounds by the big day. That’s the power of the Four Pillars of Success. They make you take action, stick to your process goals, and achieve EXACTLY what you want in life. Put it all together and you have a formula for SUCCESS. It doesn’t matter if it’s losing belly fat, learning how to meditate, finding the life partner of your dreams, re-establishing your relationship with God, getting a raise, or starting your own business, those 7 Success Steps are a proven blueprint to helping you achieve EXACTLY what you want in life. Put those 7 Steps for Success into place today, and never, ever, EVER give up on what is important to you.

Craig Ballantyne is the editor of Early to Rise and author of Financial Independence Monthly and Turbulence Training. He is also the co-creator of the Early to Rise $100,000 Transformation Contest. Though this round of the Transformation Contest has closed it’s not too late to get access to all the helpful tools and advice that has helped many people make a positive change in their lives

Simple Stuff – Challenges

(Simple Stuff is simply a bunch of inspirational, motivational and other quotes meant to make you think, reflect, smile, even laugh a bit. Hopefully helpful, useful stuff….)

That thing you’re dealing with right now, Jim… is not by chance. It’s the beginning of the most exciting transformation of your life, so far. Birds in the sky… (Michael Dooley http://www.tut.com/   The Universe)

 

Death is a challenge. It tells us not to waste time… It tells us to tell each other right now that we love each other.-Leo Buscaglia

As you navigate through the rest of your life, be open to collaboration. Other people and other people’s ideas are often better than your own. Find a group of people who challenge and inspire you, spend a lot of time with them, and it will change your life. –Amy Poehler

What allows us, as human beings, to psychologically survive life on earth, with all of its pain, drama, and challenges, is a sense of purpose and meaning.-Barbara de Angelis

You have to motivate yourself with challenges. That’s how you know you’re still alive.-Jerry Seinfeld

It’s our challenges and obstacles that give us layers of depth and make us interesting. Are they fun when they happen? No. But they are what make us unique. And that’s what I know for sure… I think.-Ellen DeGeneres

I challenge you to make your life a masterpiece. I challenge you to join the ranks of those people who live what they teach, who walk their talk.-Tony Robbins

Women, like men, should try to do the impossible. And when they fail, their failure should be a challenge to others.-
Amelia Earhart

The only use of an obstacle is to be overcome. All that an obstacle does with brave men is, not to frighten them, but to challenge them.-Woodrow Wilson

Being rich is all about having the right habits

Being rich is all about having the right habits. That’s the message from Tom Corley, who spent five years observing how rich and poor people lived, worked, and even slept. Then, Corley wrote about his research in a book called “Rich Habits: The Daily Success Habits of Wealthy Individuals.”

Here’s what he found:

First: Be an early bird. Because among people making six-figures a year, about half wake up at least three hours before they have to be at work. Then, Corley says they use that extra morning time to focus on self-improvement like reading and exercising, because those things help them be more productive at work.
Another daily habit that can make you rich:Don’t gossip. According to Corley’s research, wealthy people are a whopping 14 times less likely to say they spread gossip, compared to people earning less than $30,000 a year.

–
Also: Spend less time using the Internet. Corley says most people who struggle with money spend at least an hour a day surfing the Web, or watching TV. But rich people are HALF as likely to go online every day. Instead, they spend that extra hour connecting with others in the “real world,” doing things like networking, socializing, and volunteering.

–
Another helpful habit: Make more “to-do” lists. Because wealthy people say they cross off 70% percent of the tasks on their to-do list every day – including short-term and long-term goals, meaning, rich people love getting stuff done.

–
Finally: According to the book, wealthy people are calorie counters. They generally limit alcoholic consumption, keep their junk food snacks to less than 300 calories per day, and weigh less. And it makes sense that successful people would weight less, 75% of executives in a recent survey said that being overweight is a “serious career impediment.” Overweight people are 3,000 times more likely to get passed over for a promotion. And fair or not, overweight applicants get turned down for jobs more than any other group.

http://www.tesh.com

Video from an Eagle’s point of view

See a video strapped to a flying eagle.

Simple Stuff

(Simple stuff is simply a bunch of inspirational, motivational and other quotes meant to make you think, reflect, smile, even laugh a bit. Hopefully helpful, useful stuff….)

The world is moved along, not only by the mighty shoves of its heroes, but also by the aggregate of tiny pushes of each honest worker. –Helen Keller  <!–[if !supportLineBreakNewLine]–> <!–[endif]–>

My heroes are and were my parents. I can’t see having anyone else as my heroes. –Michael Jordan  <!–[if !supportLineBreakNewLine]–> <!–[endif]–>We’re our own dragons as well as our own heroes, and we have to rescue ourselves from ourselves. –Tony Robbins

A hero is no braver than an ordinary man, but he is brave five minutes longer. –Ralph Waldo Emerson

A hero is someone who understands the responsibility that comes with his freedom. –Bob Dylan

A hero is an ordinary individual who finds the strength to persevere and endure in spite of overwhelming obstacles.-Christopher Reeve  <!–[if !supportLineBreakNewLine]–> <!–[endif]–>

Being a hero means being your real self, doing what you really want to do, going got ‘it’ whatever it is, not trying to appease others – Jim Frey

My belt holds my pants up, but the belt loops hold my belt up. I don’t really know what’s happening down there. Who is the real hero? –Mitch Hedberg

BONUS-

CNN revealed the 2013 Top 10 CNN Heroes — now it’s time to let them know which inspire you the most. Vote for the CNN Hero of the Year at http://CNNHeroes.com/ — once a day, EVERY DAY thru 11/17.

Influence: The Art of Getting What You Want

I often read a site called EarlytoRise.com. Much of the writing is by Craig Ballantyne, or at least the content is managed and edited by Craig. Often good stuff…here is another…..

Influence: The Art of Getting What You Want

There’s a book – that I hope you already have – that not only explains our irrational buying behavior, but also gives up a step-by-step blueprint for influencing other people. As legend goes, this book was originally written by the researcher to help people protect themselves from being manipulated. However, so many marketers recommended this book that now the author is a marketing consultant himself. Funny how things work out, isn’t it? Today, you’ll hear how the proven sales principles from the book can work on anyone.
Craig Ballantyne
“The hardest thing to fool people about over any extended period of time AND the ‘secret sauce’ of profound influence over others is authenticity. My own income soared as I learned this and presented my authentic self.” – Dan Kennedy

---

The Art of the Sale

By Yanik Silver

A few years ago, I was in Aspen for a Maverick Business Adventures experience. Along with high-level networking and business coaching, we also enjoyed whitewater rafting, rock climbing, rappelling, mountain biking, and an intense Jeep 4×4 tour to the top of a local mountain that ended in a breathtaking view.
But the day before I left, Aspen also taught me an interesting marketing lesson…
As you probably know, Aspen is filled with great boutiques, restaurants, and art galleries. I wasn’t planning on buying anything, but enjoyed looking in the galleries – and that’s where our story starts.
The first part of any sales process is typically grabbing the attention of the prospective customer – and my attention was caught by a piece in one of the windows. It was cartoonish yet sophisticated. So I popped into the gallery. The piece was by an artist named Todd White, and it was called “My Heaven and Hell.” The gallery had a bunch of White’s prints, and as I browsed through them I started getting the “story” of the artist from the gallery salesman, Johnny. He told me how White had worked on “Ren & Stimpy” and helped created “SpongeBob SquarePants.” I’m a big fan of animation, so this intrigued me.
If you have read “Influence: The Psychology of Persuasion” by Robert Cialdini, you know that this is a good example of one of the persuasive techniques used by salespeople. “Story” helps the salesperson make a deeper connection with his prospect and start to set up the sale. (“Story” is important to the buyer, because he knows he’ll be able to tell it to people who admire the item after he’s bought it.)
Johnny followed this with a laundry list of celebs that collect White’s work – an example of what Cialdini calls “Social Proof.” Then he showed me a brochure with illustrations of prints by White that were no longer available because they had sold out. “He does them in very limited quantities (like 150),” Johnny explained. This is an example of another tried and true sales tactic described by Cialdini: “Scarcity.”
As I perused various pieces, Johnny would throw in an occasional comment. (For instance, he explained that “My Heaven and Hell” depicts the good and devilish sides of White’s ex-girlfriend.)
Every time I showed interest in a piece, Johnny asked me if I wanted him to move it to a better light. I declined several times, because I knew where this was heading. But, finally, I let him move two of the prints to a cozy little back room. (The purpose of the back room is to give prospects a chance to imagine how the artwork might look in their homes.)
At this point, what Cialdini calls “Commitment” and “Consistency” takes over. I’m making small commitments toward buying, starting with picking which prints I like the best. And psychologically, Cialdini tells us, once you’ve made a commitment, you’re more likely to behave in a consistent manner by sticking with that commitment going forward.
Meanwhile, I was offered a beer, Champagne, or water – an example of Cialdini’s principle of “Reciprocity” at work. Giving prospects a treat is a good way to make them feel like reciprocating in some way – presumably by making a purchase. I’d been through this same kind of presentation before. Still, it was interesting to watch it unfold with my psychology hat on – especially since the gallery was doing something that I hadn’t seen before: They were playing a DVD about Todd White’s career, his press coverage, his works, and people who are his collectors. Another way of injecting social proof into the sales process, plus what Cialdini calls “Authority.”
When I kept going back to my favorite piece, Johnny asked me what it would take for me to buy it right then and there. I shrugged my shoulders. Then he said, “What if I can talk the owner of the gallery into giving you a crazy price on two of them?” I said I would be willing to negotiate price, but only on the one piece. In Cialdini’s terms, this is an example of reciprocation (by me) after a “Concession” (on price).
The owner then stepped in. He pointed out that the print I had chosen was hand embellished, not simply “a print.” And he talked to me about the frame itself – its multiple layers and how ornate it was. Cialdini calls this the “Value Buildup.”
Finally, the owner gave me a “Reason Why” he was able to give me a discount: It was the end of tourist season and the rent was due.
We negotiated down to about 50 percent of the “retail” price, and shook hands. A few weeks later, a huge crate arrived at my house with my “All Lit Up Again” print by Todd White. How many of the above sales tactics are you using to try to persuade customers to buy? If you’re using just one or two, it’s time for you to take a good look at Cialdini’s book.

[Ed. Note. Yanik Silver’s successful Underground seminar series is an important event for any serious business owner. You can gain access to these events even if you can’t make the trip through his DVD series

Simple Stuff – labels, expectations

 (simple stuff is simply a bunch of inspirational, motivational and other quotes meant to make you think, reflect, smile, even laugh a bit. Hopefully helpful, useful stuff….)

 

Do you want to know who you are? Don’t ask. Act! Action will delineate and define you. –Thomas Jefferson

Never allow yourself to be made a victim. Accept no one’s definition of your life; define yourself. –Harvey Fierstein

Once you label me you negate me. –Soren Kierkegaard

If you accept the expectations of others, especially negative ones, then you never will change the outcome. –Michael Jordan

I’m not in this world to live up to your expectations and you’re not in this world to live up to mine. –Bruce Lee

Never idealize others. They will never live up to your expectations. –Leo Buscaglia

 

If you only have a hammer, you tend to see every problem as a nail. –Abraham Maslow

Winners make a habit of manufacturing their own positive expectations in advance of the event. –Brian Tracy

Expectations are a form of first-class truth: If people believe it, it’s true.-Bill Gates

You can’t base your life on other people’s expectations. –Stevie Wonder

 

If you were to look up your name in the dictionary, how would you be defined? Would three words just about cover it, or would your epic narrative consume page after page—or even demand a volume of its own? – Tony Robbins

How to create harmony in a group

A video and quick blog From: robbinsmadanestraining.com

Know anyone who has a strained relationship with a family member or friend? Or a business partnership jeopardized by misunderstanding? Of course you do.

Well, in today’s Robbins-Madanes intervention, you’re going to see a process for setting aside resentments and reuniting people. There is no stage, no audience – just Tony and a family around a table.

You’ll learn a process for looking beyond limiting communication patterns, perceiving people’s true deeper needs, and healing your relationships. In 45 minutes Tony was able to resolve a conflict that had caused this family untold struggle and pain for over 5 years.

Click here to see it

We begin the story with Tony surprising Ron and Marie as they pull up to their house… and then comes the real shock! I hope you’ll take the opportunity to learn this valuable process for yourself, your family and friends, and your clients.

Greatest Financial Gift You Can Give to Your Children

The Greatest Financial Gift You Can Give to Your Children

I recently read this and wanted to pass along…..

By Tom Dyson- palmbeachletter.com
I wrote this essay for your children and grandchildren.

You’ve probably heard about America’s huge debt load. The U.S. government’s financial obligations now exceed $663,000 per American family. This burden will fall on the youngest Americans.

It’s unethical. It’s unfortunate. But it’s the reality.

With this giant financial obligation bearing down on them, it’s critical that now—right now—your children and grandchildren learn about money and finance. They need to know the basic principles… like how to be independent, why debt is dangerous, and how to grow money.

They don’t teach finance in schools. If you don’t teach them this knowledge, no one will. They call this financial illiteracy.

If our children are financially illiterate, they have as much chance of survival as a swordsman in a gunfight. There will be no mercy for the financially illiterate in the future. It’s likely these people will live as indentured servants to the government and its creditors.

But if our kids have a grasp of finance and its basics—and they obey its laws—they will grow up rich. They will be in a position to help other Americans, too.

Below, you’ll find the three vital financial concepts all children need to understand. Please pass them on to your children and grandchildren as soon as you can. I have three young children… And these three concepts are my starting point for their financial education.

First of all, our kids must know that they are not entitled to money or wealth… or anything for that matter, even Christmas presents. They must earn money. I want my children to learn that they shouldn’t expect anything to be handed to them. I don’t want them to rely on the government for their livelihood, like many people do right now.

So many people treat money and prosperity as an entitlement. The government even calls its welfare programs “entitlements.” This word—and what it represents—gets stamped into young people’s brains. Kids act as if they are somehow entitled to toys, video games, and cars. But why should they be? Just because they have parents, it doesn’t mean they should get everything they want… or anything at all, for that matter.

I plan to regularly remind my children of this when they are old enough to understand it. And I’m not going to pay my kids an allowance. An allowance would reinforce the sense of entitlement. They can make money by earning it: doing the dishes, making their beds, mowing the lawn… there are a million things. My wife and I will pay them for doing those things. But I’m not going to just give them money.

The second concept our children need to understand is debt. Debt is expensive. If you abuse it, it will destroy you. Like the entitlement mentality, debt is an enslaver. It robs you of your independence. I avoid debt in my personal life… and when I’m choosing investments.

The best way to illustrate the cost of debt is to calculate the total amount of interest the debt generates in dollars over the lifetime of the loan, instead of looking at the interest rate (like most people do). Once you look at it like that, you can see how expensive borrowing money really is.

For example, say you borrow $100,000 with a 30-year mortgage at 7%. Over 30 years, you’ll end up paying $140,000 in interest to the bank. In the end, you’re out $240,000 for a house that cost less than half that. Not a good deal.

The third thing our kids need to learn is the power of compound interest and the best way to harness it.

Compound interest is the most powerful force in finance. It is the force behind almost every fortune. The brilliant Richard Russell calls compound interest “The Royal Road to Riches.” And it’s mathematically guaranteed.

Let’s say, for example, you have $100 earning 10% annual interest. At the end of the  first year, you’ll have $110. During the second year, you’ll earn interest on $110 instead of $100. In the third year, you’ll earn interest on $121… and so on. This is the power of compound interest. The numbers get enormous over time, simply because you’re earning interest on your interest.

 

I really have to hand it to all of you. There is no doubt that you all work incredibly hard to help us hang onto and build up our assets. You clearly spare no effort and hold nothing back. Platinum Level subscriber Bob T.

Because time is the most important element in compounding, it’s an incredibly powerful idea for children to understand. They have the ultimate edge in the market: the time to compound over decades.

The stock market is the best place to earn compound interest. You buy companies that have 50 years or more of rising dividend payments ahead of them. Then you let the mathematics work.

As soon as my kids are old enough to understand some arithmetic, I am going to sit down with the classic compounding tables and show them which stocks they have to buy. I’ll use Coca-Cola, Johnson & Johnson, and Philip Morris as examples.

After that, assuming they have the discipline to follow through, they will get rich. There’s no doubt about it.

In sum, you have the responsibility to educate your kin about finance. If you don’t, no one else will, and they will suffer for it.

Encourage them to work hard and avoid the entitlement mentality. Teach them the power of compound interest and explain the dangers of debt.

If you do this, you will equip your kids and grandkids to survive financially in the difficult circumstances ahead. You’ll provide them with something that nobody can place a price on: the power of independence.

Good investing,

Tom Dyson them, it’s critical that now—right now—your children and grandchildren learn about money and finance. They need to know the basic principles… like how to be independent, why debt is dangerous, and how to grow money.
They don’t teach finance in schools. If you don’t teach them this knowledge, no one will. They call this financial illiteracy.

If our children are financially illiterate, they have as much chance of survival as a swordsman in a gunfight. There will be no mercy for the financially illiterate in the future. It’s likely these people will live as indentured servants to the government and its creditors.

But if our kids have a grasp of finance and its basics—and they obey its laws—they will grow up rich. They will be in a position to help other Americans, too.

Below, you’ll find the three vital financial concepts all children need to understand. Please pass them on to your children and grandchildren as soon as you can. I have three young children… And these three concepts are my starting point for their financial education.

First of all, our kids must know that they are not entitled to money or wealth… or anything for that matter, even Christmas presents. They must earn money. I want my children to learn that they shouldn’t expect anything to be handed to them. I don’t want them to rely on the government for their livelihood, like many people do right now.

So many people treat money and prosperity as an entitlement. The government even calls its welfare programs “entitlements.” This word—and what it represents—gets stamped into young people’s brains. Kids act as if they are somehow entitled to toys, video games, and cars. But why should they be? Just because they have parents, it doesn’t mean they should get everything they want… or anything at all, for that matter.

I plan to regularly remind my children of this when they are old enough to understand it. And I’m not going to pay my kids an allowance. An allowance would reinforce the sense of entitlement. They can make money by earning it: doing the dishes, making their beds, mowing the lawn… there are a million things. My wife and I will pay them for doing those things. But I’m not going to just give them money.

The second concept our children need to understand is debt. Debt is expensive. If you abuse it, it will destroy you. Like the entitlement mentality, debt is an enslaver. It robs you of your independence. I avoid debt in my personal life… and when I’m choosing investments.

The best way to illustrate the cost of debt is to calculate the total amount of interest the debt generates in dollars over the lifetime of the loan, instead of looking at the interest rate (like most people do). Once you look at it like that, you can see how expensive borrowing money really is.

For example, say you borrow $100,000 with a 30-year mortgage at 7%. Over 30 years, you’ll end up paying $140,000 in interest to the bank. In the end, you’re out $240,000 for a house that cost less than half that. Not a good deal.

The third thing our kids need to learn is the power of compound interest and the best way to harness it.

Compound interest is the most powerful force in finance. It is the force behind almost every fortune. The brilliant Richard Russell calls compound interest “The Royal Road to Riches.” And it’s mathematically guaranteed.

Let’s say, for example, you have $100 earning 10% annual interest. At the end of the  first year, you’ll have $110. During the second year, you’ll earn interest on $110 instead of $100. In the third year, you’ll earn interest on $121… and so on. This is the power of compound interest. The numbers get enormous over time, simply because you’re earning interest on your interest.

 

I really have to hand it to all of you. There is no doubt that you all work incredibly hard to help us hang onto and build up our assets. You clearly spare no effort and hold nothing back. Platinum Level subscriber Bob T.

Because time is the most important element in compounding, it’s an incredibly powerful idea for children to understand. They have the ultimate edge in the market: the time to compound over decades.

The stock market is the best place to earn compound interest. You buy companies that have 50 years or more of rising dividend payments ahead of them. Then you let the mathematics work.

As soon as my kids are old enough to understand some arithmetic, I am going to sit down with the classic compounding tables and show them which stocks they have to buy. I’ll use Coca-Cola, Johnson & Johnson, and Philip Morris as examples.

After that, assuming they have the discipline to follow through, they will get rich. There’s no doubt about it.

In sum, you have the responsibility to educate your kin about finance. If you don’t, no one else will, and they will suffer for it.

Encourage them to work hard and avoid the entitlement mentality. Teach them the power of compound interest and explain the dangers of debt.

If you do this, you will equip your kids and grandkids to survive financially in the difficult circumstances ahead. You’ll provide them with something that nobody can place a price on: the power of independence.

Good investing,

Tom Dyson