Jedi Mind Tricks for Your Money

Adam Herod
Jan 9, 2019
5 min read

There are a litany of distractions out there attempting to sap our income. Here are some Jedi-level skills for you to keep focus on your financial goals.

May the fortune be with you.

#jedi #starwars #money #lifehack #saving #investing #thewealthmap

Control

Yourself in the Face of Hollow Spenders and Brands

If you live in America, you will be inundated with opportunities to spend at every turn.

Thanks to targeted marketing schemes, your interests are being tracked across the internet and social media.

If we have any sort of barrier against spending frivolously, it is constantly being attacked by marketers. And don't forget that we live in one of the greatest consuming countries in the world, so we are constantly battling against some of the best marketers on the planet.

In light of masterful marketing techniques, we must work hard to keep control of our monthly income and stick to our financial goals.

Throw in a society that more often values tangible goods, such as: clothing and vehicle brands, and you have a recipe for a pure lack of financial discipline in order to keep up with those around you.

Literally, your neighbors and friends can make you live paycheck to paycheck - but only if you let them.

Some would be surprised to learn that many millionaires dress plainly and drive Toyotas, Hondas and at the most BMWs.

Millionaires spend about $50 or less on jeans, $35,000 or less on vehicles, and never let their monthly mortgage payment represent more than 28% of their total income for the month. The Next Millionaire Next Door

Here's what you can do to practice control.

Watch your favorite show on cable, but don't skip the commercials. See if you can withhold from grabbing a snack when you see commercial after commercial for foods and drinks.
Work on being impenetrable to new tech, vehicle deals and shopping sales marketed to you during that time period. Do this for a week, and be mindful of how your mind reacts to these stimuli.

Go to a local store and investigate a new device and see if you can walk away at the end of the discussion. At the forefront of your meeting, make the salesperson aware that you are only investigating new options and that you don't intend to buy today. This will put the power in your corner and you can work on controlling yourself in the face of sales pitches.
A higher version of this challenge would be to visit your local vehicle dealership and engage with a salesperson, but work at a smaller level before you head up to the big leagues. Remember, you're not wasting their time if you're investing in your consumer knowledge.
One of my acquaintances admitted he had no intention of buying into a timeshare, but lost control and is now in a timeshare that he cannot get out of.

Alter

Your Mindset and Enjoy The Pinch of Putting $ Away

There is no glory without pain, and my goal every month is to make sure my checking account gets as close to zero as possible.

Selectively, I live paycheck to paycheck in order to maximize my savings and my investments.

I have to come to look forward to payday, when I get to go in and select my brokerage investments and pay down my debts even further. A few of my accounts are investing automatically, without my direct involvement, and this is exciting too!

But it took a while to get comfortable with purposely bringing my checking down every month. It's a little hairy, but I gain confidence every month when my money gets dropped into accounts and investments with returns ranging from 2% to 7%+.

"Judge me by my size, do you?" Yoda

Even a little can get you headed in the right direction.

A lot of people put off investing or saving in order to pay down debts, but if you can start investing even as early as your 20s you will be able to take advantage of compounding.

Some advisors recommend making the minimum payments on your major loans, such as student loans, and then investing a decent chunk on a monthly or even bi-weekly basis.

Start with $50 bi-weekly and after a year you will have invested $1,200. Put that into an account that earns a baseline 7% over 10 years and you'll have over $18,000.

After 10 years, your goal will be to increase your bi-weekly contributions and grow your investment even more!

I made sure to keep my baseline investment amount for the first 10 years of my career, and when I received a raise I would add more to my debts to cut them down and free up more income before I hit 30.

I could have added more to my investments, or split it 50/50 between my investments and debt payments; however, it was more beneficial to cut down my smaller debts and free up extra income in order to build an emergency fund and prepare for any unexpected financial setbacks, surprise vehicle payments, or new little family members.

Mind

the Universe of Markets, But be Unaffected

Buffett recommends sticking to your investment strategy and ignoring the markets, but we have to keep a pulse on the changes happening.

You can check every day on marketwatch.com, or have updates sent to your inbox from bloomberg.com

"A Jedi uses the force for knowledge and defense, never for attack." Yoda

Market downturns are hard to stomach, and it is hard not to internalize the decreases in principal that occur; however, it is important to stick to your overall strategy and ride out any dips in the market.

Money magazine determined that since 1920 the average market downturn lasted 1.4 years overall. Falls happen quickly and recoveries happen slowly.

Depending on where you are in your career it can be difficult to know how much exposure you should have to stocks, but those in their 20s, 30s and even 40s can keep quite a bit in stocks.

To determine your comfort level and ideal ratio of stocks to bonds take Vanguard's Investor Questionnaire.

Analysts are now skewing their recommendations for late career employees, suggesting those nearing retirement keep more in stocks in order to plan for a longer than expected retirement due to an increase in life expectancy.

Stocks will expose you to more risk, but with a longer retirement window it is important to look for the greater returns stocks can provide.

Deflect

And Move Extra Funds to a Faraway Account

The harder it is to access your savings, the more likely you are to build wealth.

We have to embrace the pinch and move money around. Remember, the goal is to have more for saving - not more for spending.

So once your checking has been cut down each month you want all other funds to be nearly inaccessible.

"Do. Or do not. There is not try." Yoda

If you have to log in to a separate account to access your money, you are less likely to access that money unless you have a dire need.

I like the following accounts for anyone starting out.

Basic checking account at a major bank to receive all funds and pay bills.
Basic savings accounts for a smaller amount of cash and any short term needs (i.e. vehicle maintenance, weekend vacation).
High interest online savings account earning at least 2% APR for a large emergency savings balance.
Brokerage account with a secure yet low fare trading site. This is only recommended if you've met the 10-15% investment level for your 401(k), paid off the majority of your debts, and have investigated whether or not a Roth IRA is right for you. The brokerage account will be for a small amount of continuous investment that you will then plug into a large number of stock-heavy ETFs and a few conservative ETF funds.

Only when you've deflected enough money into the following accounts should you consider taking big vacations or getting nicer vehicles.

The goal here is to stuff your 401(k), emergency savings, Roth IRA, and brokerage account until you've created enough layers of security to weather any oncoming storm.