In the previous chapter we asserted that your financial future is largely dictated by your past. Understanding you past is the first step to changing your future. Sound money management is not founded in a budget but in our mind. We must shift our paradigm about money to properly manage it. This includes having a positive impression about money and therefore attracting it. It also includes feeling comfortable having money. If we don't feel comfortable with money it becomes water in our hands, easily lost.

We will talk first about our opinions about money we develop as a result of our environment growing up. To have a greater chance of financial success in life, we need to embrace the positive opinions we have about money but also recognize the negative opinions we have fostered and change them.

Let's think about this in another way. Perhaps you hate your boss. You feel that all he does is sit in his big office designing his upcoming vacation while you are doing all the work. This bitterness will be reflected in your interaction with him as well as with other people. The likelihood of your being recognized for your accomplishments declines with each passing day. You then begin to strive more for recognition by working harder and more independently. Slowly you withdraw and are no longer considered a "team player". A pernicious cycle has developed which becomes harder to break. An easy and common path to follow to which the root is resentment; fostered by any one of a million reasons, the resentment of the thing that you ultimately desire (to be the boss) has caused you to lose any chance of obtaining what you say you desire.

The first principle of money management, obtaining sufficient money, has been compromised. Money you don't have cannot be managed. Think about your situation in life and ask yourself if you are sabotaging yourself. Don't think your job is a dead end with no prospects, don't perpetually persist at your job hoping and searching for something better. The very act of doing this has tainted your prospects there and anywhere else. It is your perception that has hindered you. Make the most of every day, and set yourself a standard of the highest work ethic. Your current job may not be what you desire but my changing your mentality, that situation will change, both in you mind and physically.

If we now go back to the analogy of before, what would you do if you became the boss? Answer. It depends. If you have not changed your paradigm, you will be fighting the deep held opinion that as the boss you are not earning your pay. This is the opinion you had about your own boss and you will have it about yourself. This can be quickly remedied by realizing how much the boss really does, or it can break down your self worth, which is the most damaging thing that can happen.

When promoted, most people will quickly realize that the higher your pay, the greater the expectations. The bigger problem with thinking your pay is not earned is that this opinion will probably keep you from ever having the opportunity to realize your true worth. Subconsciously you will sabotage opportunities to excel or to be promoted or more commonly, retreat at the first setback by justifying that you don't really want the promotion because it would mean you were no longer putting in an honest days work.

I know very few people who think they make enough money. Of the vast majority of people who don't think they make enough, responsibility is placed on various people. The person in the analogy above placed the responsibility on his boss. Others may place blame on their family or other responsibilities holding them back. The third class recognizes the responsibility to make money as their own. The different personalities are easy to spot. Those who complain about how much they make are placing responsibility on someone else. Those who recognize the responsibility as their own remain quiet. Recognizing that as an employee, no matter what position you are filling, you will never get paid what you are worth. It is a simple fact that an employee is not worth having if they don't provide to the company more value than they cost. Once you recognize your responsibility, you can hide from it and remain status quo, or do something about it.

No matter what you do, if you are stuck in the opinion that money must be hard earned to be honest money, changing that opinion will be one of the hardest things you ever do, but it will change your life. Those of you who are bitter towards someone else because they seem to have the easy life or made easy money, this bitterness in many ways will be your own barrier. A barrier either because you believe life should be easy, or because you believe easy money exists independent of hard work. Easy Money is simply your hard work being distributed to you as an annuity.

What does this mean? An annuity is an investment vehicle. How it works is you deposit money into the annuity to start. The annuity grows at a compounding rate until you are ready to start withdrawing the money. The money is withdrawn at a defined rate, but you get a lot more back than you put in because of the compounding interest. Like a monetary annuity, when you see someone how appears to have lots of money and an easy life, think about what it took to get to that position. For a person to be retired at 40 years means they spent at least 20 years working very hard to reach that point. The same principle applies to the person who inherits their money. Hard work was put in long ago, just in this case the annuity grew so well that the life of the annuity extends beyond one person's life.

In summary, a good financial paradigm starts with your understanding that you must have a positive attitude about money, yourself, and your potential. You need to accept that there is nothing wrong with having money, that all the money you have was earned. You must also believe in yourself and have a firm conviction that you can accomplish anything. Finally, you must work for it. To be worth it, it will be difficult at first, and eventually you will be able to withdraw the dividends of your labors as easy money. What you must do to earn your money is different for every person, but the method employed should maximize your personal strengths and be in concert with your personal feelings and moral compass. If anything you are doing does not align with your personal feelings of honesty and morality, you will forge a connection between your money and dishonesty. You will feel worse about yourself, in turn breaking down the key element to obtaining wealth, your self esteem. You will also contradict the ultimate purpose of obtaining wealth, which is to live a happier life. Having money does not do any good if it cannot make you happy.

The next chapter: Chapter 4 - Self Esteem, we discuss the vital relationship between self-esteem and wealth. Click Here to continue.