Recently a friend of mine asked me what steps I took to change my mindset around handling money. Now, this is not the everyday conversation I tend to have with friends, and I have very far away from “making it,” however, this friend, in particular, was trying to manage his own situation and wanted to get some starting points to adjust his own mindset, as he liked the way he saw me progressing within my situation.

We had a good discussion but I left thinking perhaps I wasn’t too clear on that point or I didn’t say everything I thought might be worth saying; so after a little ponder, I thought it would be useful to lay down some of the defining points I think helped me change my mindset which I feel has helped me get to where I am.

Drive

Growing up in the South-East of London, there weren’t many academic role models that I could aspire to. For a short period of time in my youth, I found myself hanging around a group of young guys who’s interests revolved mainly around girls, bling and being a “menace to society.” But it was my drive that steered me away. I believed the people who I was hanging around with were not on the same wavelength as me. I was a square peg trying to fit into a round hole — the shoes did not fit. I was determined to thrive not just survive like my mother had to.

Having drive, determination and discipline are keys to achieving any goal. Coming from what is known as a “working class” background and being raised by a single mother, who worked three separate jobs to provide for her son, I made an early promise to myself to build on the foundation, which my mother — whom I am forever indebted to — laid down for me. Like most, I have always wanted to do my parents and family proud. Parents (especially mothers) are naturally always proud of their children and want to share their child’s life story with anyone within close enough range, and so I have always strived to give my mum something to talk about:

– I was the first one in the family on my maternal side to graduate from university (top 10%).
— I have had two six-month stints working and living abroad (Spain and Singapore).
— I bought and managed my first rental property at the age of 19 (with a little help).
— I worked for one of the most prestigious investment banks in the world.
— You get the gist…

But don’t be fooled, I was never the A* student. I was never the top of my class in school, but I was in the top classes (although, in my school that wasn’t too difficult). Thinking about it, I went to school to meet expectations which I felt was good enough — until College. In college, I started making my own money working in a studio and part-time in retail and that was when I began realising my time-value potential. After I got a taste of the independence and the empowerment that earning a salary was given me, I then started rigorously saving my wages, I never once blew through my paycheck. I had an appreciation for the time and effort it took to make that money and so I learnt early on to respect it.

And that’s the drive: paying my own way I felt I was personally driving away from working class on the road towards the middle. That’s where I wanted to go and that’s where I am still heading. I was determined to never put myself in a position where I had to work three jobs to make ends meet.

Read Books… Lots of them

Like a lot of young boys from working class backgrounds, I did not have that many exemplary leading figures to look up to when I was younger. My father is an electrical engineer but it was only when I got to know him a little better in my teenage years that I benefited from learning how he solved problems, his work ethic and approach to life, however, he wasn’t the best teacher (sorry dad!).

It was only in my early twenties, in 2009, when I started picking up books when I really felt I my mindset shifted. I started reading books like ‘Rich Dad Poor Dad‘ which really resonated with me as Mr. Kiyosaki described the mentality of his two fathers from different backgrounds. This book was definitely the impetus for my journey for personal growth and self-education. By reading these types of books, I noticed my mind opening up to the endless possibilities and opportunities that lay ahead.

Some of my peers had this “nouveau riche” mentality which was very compelling and easy to get tangled up in — the consumerism of shiny things in order to show social status. Although I was guilty of buying into brands (everything in moderation), this is something I was determined to resist and break away from as I realised that longevity means more to me than keeping up with the Jones’.

Save

As I mentioned, when I was younger I observed my mum working very hard but for some reason, she was never flush with money. Now, I put this down to a couple of reasons: 1) she was raising a growing boy by herself, and 2) she had expensive taste. This meant that she was fully enrolled onto the rat race that many of us find ourselves on, with no visible junction to get off. Observing my mother peddle on this hamster wheel naturally put fear in me to being in a similar position when I grew older, I, therefore, tended to save what I could for a rainy day. There was no hard percentage amount I aimed for, however, I remember in the early days of when I was earning a wage and living with my father, I endeavoured to save roughly 60% of my wages (the joys of living at home). I knew I valued financial freedom (a buzzword of mine after listening to Tony Robbins at 18) way too much.

Investing and Leverage

Hmmmm.. This was not easy! This can be (and was) an expensive lesson to go through, and I would not recommend following my steps — for your own good.

I introduced myself to the world of investing and finance in the year of 2008 — not the best year to discover such a thing for a wide-eyed student! I made money but gave it back just as quick. Not only did I find out about the markets I found out about leverage!

My very first day playing with the markets I was working in a phone shop in Kensington High Street station where we could access the internet through the shop PC. It was a quiet day and my spread betting account had just been opened. My student loan had landed a few weeks prior so my account was looking relatively healthy. I funded my account £500 and placed my first trade — long oil! I topped up a customer’s pay as you go phone and then checked my account. In about 10–15 minutes I had nearly doubled my money! After being in shock for a few seconds and watching the screen flash red and blue, I closed my position. My mind started spinning. Was it this easy? I just earned my months salary in 10–15 minutes! I felt as if I found the secret only the select few in the world knew. I walked out to get lunch with my head high and thought I found my calling. I was even tempted to do a little shopping on Kensington high street. When I returned I logged in again expecting to repeat the previous performance. Long story short I ended up giving back my winnings and finished off the day slightly down — the house won. But I had that taste of victory!

Over the years, I have stepped away from attempting to day trade and speculate as it is an emotional rollercoaster and I found it was in no way beneficial for my very small wallet. It was an expensive life lesson — a lot of my student loan went into the black hole — however, it was a valuable lesson that I feel aided me to progress in life, especially with my approach to money. Playing with the markets was a means to understanding investing, finance and leverage.

Now, leverage can be destructive but it can also lend itself as an agent of productivity. I personally like leverage for investing in property. We all want to buy a house one day and pay off the mortgage before retirement. But many fail to think of the mortgage as a tool, a lever that allows you look at a house with a value you have a fraction of. When the banks put up 90 percent of a property value for you to pay over a period of 25–30 years there are many assumptions going into that transaction but most assumptions are fair and conservative (these days at least). Property has been my best investment so far. When I look at property I see the potential to increase my exposure to the property market via leverage. If I look back, in the past 25 years, property prices (at least in London) has increased at a greater rate than inflation (which is a good thing as a property owner), but the reason property investing pays extra dividends is the capital growth you have on the 90 percent you have a mortgage on. If your property goes up 10%, your initial investment has pretty much doubled (assuming you’re a first-time buyer with a 10% deposit). Of course, property prices can go down and you need to look at the future demand of properties in your chosen geographic location but I would suggest getting involved in property as early as possible… I know it’s hard and it’s not getting any easier.

Life is a business

I tend to think of my working life very similar to a business: you have a marketing and branding department which handles daily costume and optics on sites such as LinkedIn; you have a customer service department which handles everyday relationships; you have a product management team, who looks at your needs and potential features I require (apple watch?); and then you have the c-suit, who sits around feeling like their in control of everything with an aura of smugness around them. Your role, as CEO of YourLife.inc established since [enter date of birth here] is to manage the whole house… The ultimate goal of a CEO is to make sure the company performs well (i.e. make profit… and preferably more than last year!). And therefore, you need to make a profit (after tax) each year.

Try this: Make a Start a spreadsheet today in something like Google Sheets and mark down your current net worth along with today’s date. If you have net debt still mark that down. Now, that’s your start of year number. I want you to report quarterly (every three months) earning reports on that spreadsheet so your c-suite can see it. As a CEO, you need to be transparent and true to yourself in order to push YourLife.inc forward towards those goals. If you can set an economic target for YourLife.inc, quarterly profit you are aiming for even better.

Changing your mindset to think of your life as a business is a step in the right direction. It is too easy to work the whole year and have no clue where your money has gone. When that happens, you don’t know whether it’s been a successful year or not. Of course, you should enjoy the fruits of labour, but if you want to a healthier bank balance for the house, car or early retirement you need to start looking at your life as a business.

Originally published on The Deep Blue Ponder

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