Financial smarts begin with mindset

Haydn Sallmann
Your first step to wealth creation is to remove those short-term liabilities.

I'm not much of a reader but the books I read in my formative years have shaped my thinking and proven to be very influential later in life.

I've always gravitated towards books that build your skill set and enrich your life.

I'd rather not use the word ‘self-help’ as that brings with it some connotations. Let's just say the 'story' in fiction is never enough for me.

In the book, Rich Dad Poor Dad, I was introduced to the concept of wealth creation through investing in assets, rather than looking to solve short-term needs and buying liabilities.

Author, Robert Kiyosaki, describes in his book that higher education and a job don't guarantee wealth.

It's the application of financial knowledge which separates the wealthy from the lower class, he writes.

Kiyosaki compares two case studies of financial knowledge through his two ‘dads’ in the book.

After reading Rich Dad Poor Dad, it became simple – don't buy things that will cost you money in the long-term or depreciate quickly without deriving value from it.

It also prompted me to apply a mental filter to every purchasing decision and spending requirement and whether it would bring new net value to my life.

Where possible I would take the emotion out of a purchase and take a holistic approach to all financial decisions.

Today, we live in a material world with glamorous lifestyles on show across various social media platforms.

There's definitely no shortage of temptations/liabilities; clothes, bags, jewellery, holidays and experiences are all around us.

Unfortunately, none of these things has a net impact on revenue coming into your 'business'.

Once spent, the money is gone and the items start to depreciate.

For example, designer handbags are much sort after and often expensive. When you consider spending $2,000 on a bag just remember that as soon as you have taken it out of the box, it's probably worth about $1,000.

There’s no doubt that bag will bring you some joy, but it will never bring a single dollar back into your life.

Alternatively, if you left that money in a term deposit you will earn interest, if you bought shares you would get dividends and if you buy into a business you have the potential of capital gains.

I think you get the picture.

It’s okay to reward yourself now and then, but try to buy assets where possible and keep yourself honest when it comes to buying liabilities.

Haydn Sallmann
Billin Founder and CEO

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