The Quest for Wealth

6 Steps for Making Mindful Money Choices

James R Langabeer

• Publisher: Routledge
• Year: 2022
• ISBN:
  9781000571523
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Investitionen & Wertpapiere

The Quest for Wealth - A Roadmap for Mindful Money Choices - Winner of the 2023 Bronze Medal, Global Book Awards for Business & Money

Have you ever made a terrible money choice? Like most people, you are probably living paycheck to paycheck and wondering if you will ever be able to retire or get out of debt. You might find yourself working an extra job and still not getting ahead. The numbers are staggering, with average American consumer debt exceeding six figures with little cash reserves. The coronavirus pandemic has only fueled our uncertainties and fear.

It doesn't have to be this way. Wealth is not only about making more money—it is about learning how to align and improve our brain's emotional and analytical functions. Wealth is about making more mindful money choices. But you also need a proven path to follow.

In The Quest for Wealth, internationally acclaimed author James Langabeer shares his 6-step Mindful Money Management Model. With the right tools and practices, you have all you need to be financially independent. The financial decision strategies offered in this book will help you learn how to tame your brain and get on the road to wealth.

James Langabeer, Ph.D., is a behavioral economist who coaches leaders on improving decision-making around wealth and health. With training in both decision sciences and finance, James' passion is to enhance prosperity and reduce wealth inequality for everyone.

I Crossing the Bridge of Better Choices

DOI: 10.4324/9781003231844-1

“Wealth is the ability to fully experience life.”

Henry David Thoreau

Before starting the 6 steps, we must lay a foundation to cross the first significant threshold—the bridge of better choices. In Part I, we talk about the brain’s role in financial decision-making and how certain emotions tend to sabotage our quest. In Chapter 1, we start with defining wealth—what it is, and what it is not. In Chapter 2, we discuss a framework for making better choices. We cover psychology and our brain’s impacts on financial behaviors in Chapter 3. Fear, doubt, and uncertainty are sure barriers to our success, so we cover that in Chapter 4. We also address why we haven’t been able to reach our destination already. When we have these in place, we should have the tools for successfully crossing the threshold and beginning our journey.

Chapter 1Wealth

DOI: 10.4324/9781003231844-2

“Someone is sitting in the shade today because someone planted a tree a long time ago.”

Warren Buffett

The question I often hear is, “How do I get rich?” If you Google that term, over 1 billion sites claim to show how you can become rich quickly. While we all wish there were one magic pill that would make us have bountiful financial resources, there are very few shortcuts to wealth. But some paths are shorter than others. Yet we have more high net worth individuals (HNWIs, or millionaires) now than ever before, with a reported 24 million worldwide.^[1] Only a tiny minority of people just fell into this wealth. For most, it resulted from arduous work, good timing, great support, reasonably good execution, collaboration, and lots of luck. As many people are discovering, through a series of deliberate money choices, achieving wealth is possible and highly likely. We need both rules (or mindful money practices, as I call them) and decision tools. The primary aim of this chapter is to describe wealth and set the stage for better money choices.

The Quest

In the following 12 chapters, we will walk through 6 steps on the path towards wealth. I collectively refer to the route, best practices, and personal decision strategies on the quest for wealth as the Mindful Money Management Model^TM (or M4 for short). M4 is my proprietary path based on decades of research and practice in this area. The model shows you how the brain often works to sabotage our financial decisions, but more important, it provides you the path and tools needed to overcome. Moving through these steps will help get you from where you are to where you want to be while avoiding the hazards created by our brains’ thoughts and emotions. Each chapter outlines very brief and practical tips to guide you through this journey.

You’ll see that a critical concept to achieve wealth lies in our ability to confront uncertainty (risks and fear) and ambiguity (lack of clarity). We learn to recognize our risk and money temperament and adopt financial discipline. Want to know the real secret to wealth?—we are our own worst enemy! Our daily choices can either sabotage our wealth or cultivate it. While very few of us will ever get rich overnight, we can become wealthy over time with minor changes and tweaks to how we view and interact with money choices.

As you will see in the M4 roadmap, the journey has several bridges (conceptual hurdles) you need to cross. These bridges represent changes in our way of thinking, acting, and feeling about money. Once you get started, there will be 6 steps, 2 major bridges, 30 mindful money practices, and 20 critical behavioral traps lining the path. You will also need to avoid the top 10 high-risk financial habits. In the following 12 chapters, we will discuss all of these. Figure 1.1 presents the quest. Prepare yourself by reviewing the way forward.

Figure 1.1 The Quest for Wealth.

Wealth

Did you know that people have been on a quest for wealth for over 10,000 years?^[2] Well before Indiana Jones started his quest for the Holy Grail. We tend to think that this is a new phenomenon. Some of us might trace it back only as far as Adam Smith’s remarkable thesis highlighting how productivity and free markets develop wealth in the same year the United States gained independence as a nation.^[3] Why do we all want to achieve some measure of wealth? Well, it affords us freedom—freedom to do more of what we want and less of what we don’t. While I am not advocating greedy behavior, I want financial independence and control of my destiny. I am sure if you are reading this book, you do as well.

What do you think of when you hear the word wealth? Money? Rich? Bank? The most straightforward definition of wealth is that of an abundance (or over-abundance) of financial resources. From an economic perspective, we calculate wealth as total assets (the things we own) minus what we owe to others (liabilities). In other words, wealth is our marketable net worth. Marketable implies that you can sell those assets, and they would convert into cash at some point. Add up all items of value you own and subtract out all that you owe. This concept we will come back to many times. Net worth is one quantitative measure of our financial health.

Sometimes being wealthy is equated with being rich or being famous, but they are not the same. I could be momentarily rich when I win the lottery, but next year after spending it all on new cars and clothes, I will be right back in the same condition. My perspective of wealth suggests four critical qualities: time, behavior, spirit, and relativity.

1. Temporal. Wealth should stand the test of time. It should be sustainable and not just a simple increase in money for a limited time.
2. Behavioral. Wealth determines (and is caused by) how you feel. It has an emotional component and involves more attitude than being simply a concrete financial construct. Emotions impact our perception of whether we have achieved wealth. In this way, I refer to wealth as “financial health.”
3. Ethos. Wealth is part of our ethos or spirit. It is not solely an accumulation of money or physical possessions. It has a spiritual connotation relating to our beliefs, values, goals, and aspirations. Our spirit, or money mindset, is critical to our quest. We will discuss this multiple times in this book.
4. Relativity. Wealth is relative. We each have our own “version” of wealth. I might feel wealthy with much less in my accounts than my neighbor has. Their aspirations are not your aspirations. Wealth is relative to our own needs, wants, emotions, and lifestyle. We shouldn’t compare our wealth, or lack of wealth, with other people; it is only comparable to time and our unique aspirations and lifestyle. Therefore, we could achieve our version of wealth with much less money than you might think. When I say “your version” of wealth, I refer to being comfortable with what that looks like for us individually. I don’t need $200 million in the bank for my definition of wealth, but I also don’t want just $200. Finding the equilibrium level of individual wealth is what remains important in our quest (Figure 1.2).

Figure 1.2 The Dimensions of Wealth.

Wealth involves a combination of all four qualities. It is derived from our emotional comfort and attitude (how we feel about where we are financially speaking) and our relative lifestyle (desired standard of living). When we achieve wealth, we emotionally feel that we have reached sufficient resources and emotional comfort to live our desired lifestyle permanently. Wealth is equal to financial resources plus emotional and lifestyle amenities. Alternatively, I like to view wealth as financial health. You are wealthy if you are financially fit and healthy.

Wealth = Financial Health ≠ Rich

Wealth is relative. Some of us might feel wealthy if we had $10,000 in the bank, while others may have millions and still feel wealth alludes them. At one time, wealth was a magic number—let’s say, $1 million. If you could become a millionaire, you were wealthy. With inflation, some people today think that is not enough. Others believe that is nearly impossible to achieve.

Although the term high net worth individual (HNWI) is often used to indicate somebody with a million dollars in marketable net worth, really, there is no specific dollar amount that makes you wealthy. I know of many people who did not have anywhere near $1 million, yet they were comfortable and happy their entire lives. I have had grandparents who had only a small pension and Social Security and felt quite wealthy. It is highly contingent upon your expectations and lifestyle.

Lastly, more is not always better. I still remember that famous movie Wall Street, starring Michael Douglas as Gordon Gecko, a New York investment adviser who will do anything to get rich. His favorite quote is something like, “Greed is good. Greed is right. Greed works.”^[4] He goes on to say that the search for more of everything is the right thing to do. I am not sure that’s true since wealth is within our spirit or ethos. Wealth is a spirit of abundance, and we need only enough of it to live the life we are destined for. We don’t need more than that. We must set an intention to achieve our version of wealth.

Managing Wealth

In this book, we will walk through the steps towards wealth. The term wealth management implies the active, mindful process of growing, preserving, and controlling our financial resources over the long term through mindful and consistent financial decisions. Wealth management is about making rock-solid choices that help you accumulate assets, sustain them, and then direct them to others (should you desire). Sometimes wealth, given its temporal nature, is inter-generational and passed between generations. Those with a significant degree of resources and the ultra-wealthy often leave a financial legacy to benefit future generations. Others are generous with their money and give it to charitable organizations. Other people might want to be wealthy to live financially free and travel the world after retirement.

We all need a reason, a purpose, for any successful journey. Achieving abundance without an intention will not ultimately be fulfilling. Wealth is about the spirit and emotional sides, so you need to go deeper and find your “why” or your purpose. What is your reason for taking this quest?

Mindful Practice 1 Find your “why” for wealth before starting the quest.

Wealth brings about a change in our mindset a...