In the first post, Vanessa Stoykov wrote about unlearning what you know about money, this is the second in a series. These posts have been written for Morningstar Australia where they initially appeared.
I have a feeling I could be seen as the killjoy of the century by stating that one of the things we need to unlearn about money is desire.
What do I mean by this? Well, it's nothing to do with physical passion, but everything to do with want, rather than need.
It's something that took me a long time to grasp the concept of--and to be honest, at times I still struggle with it.
A classic example for me has always been cars. Since I was a teenager in Gunnedah admiring V8 Commodores, I have always loved sports cars. I promised myself by the time I turned 25, I would be driving a BMW. This was due to the fact that, as a kid, my family watched Sale of the Century. I always equated smart people, and ultimately winners, as having this car as it was the ultimate prize.
This resulted in me spending a large portion of my time obsessing over how I was going to have this car. Funnily enough, this is the closely related to another "unlearn" lesson around belief, but more on this next week.
I believed I would get there, and I did--a week before my 25th birthday, I took delivery of a bright blue 3 Series. If only that was the end of the story. Alas, no. I can say that since then I have owned seven sports cars.
Now when I say I "owned," what I should say, is "financed". The funny thing about cars is that the new car smell and feeling wears off. It usually took me only a couple years before I was eyeing off the next car, and desiring that feeling of new again.
The flipside of this desire, however, is the fact that you never actually own anything. It finally dawned on me that owning a car was not an asset--it was a liability.
Too often it is easy to want the newer things--the bigger TV, the latest outfit, new golf clubs, or a bigger house.
What this desire does, however, is trap us. I found I was working to pay these cars off--trading them in and starting at zero again. Too often the things we want end being the things that stop us from attaining financial freedom, because I have learned in my forties that the person with the cash wins.
Not the person with the best cars, outfit, or home. A lot of the time, these things are paid for on credit--and ultimately end up costing us way more than the asking price.
Now we drive our people mover with pride (fully owned after five years of paying it off) and my Mercedes convertible (okay, some things never change!) for the long term. I don't look at other cars or spend time thinking about what is next.
I also put more focus on buying investment pieces (whether it be clothes, or bags, or anything else) that I love and that will last. A funny thing I have noticed over the past 20 years of working with some incredibly wealthy people in finance is that most of them are obsessed with getting value.
They drive cars for 10 years, live in the same houses, and only buy when things are a bargain. While I used to question why, I now know the answer--it is the obsession with finding value, eliminating desire for things that really trap us, and slowly accumulating wealth that creates long-term financial freedom.
Freedom, after all, is what we all desire.
