through being in some form of Finance related environment for over 13 years three years studying finance and then a further nine years working in banking one of the key skills I've learned is how to spot the signs that contribute to financial success so in this video I wanted to share with you four things that tend to dictate whether or not you're doing well financially how reliable those four things are and how to stay on track number one are you playing the right game there are two games you can play to measure your financial success and
one of the main reasons people tend to feel behind financially is because they are playing the wrong one they are playing the status game where we're all trying to one-up each other I really like the way Nevada talks about the status game he says the problem is that to win a status game you have to put somebody else down and that's why you should avoid playing status games in life because it makes you a very competitive it makes you a angry person you're always fighting to put other people down to put yourself up the status
game is an external ranking to everyone else the size of your home the brand of your shoes and everything else that you can see and compare yourself to on social media for instance say I bought a Porsche that will only improve my status if you don't have one if everyone else has one it doesn't help me climb up the ladder so you're using other people as a reference to where you are the issue is that when you start playing this game and comparing internally with everyone else's projections you're constantly going to feel on edge because
someone else has to lose for someone else to be able to win and there's a sentence in the book The Millionaire Next Door which reads wealth is not the same as income if you make a good income each year and spend it all you're not getting wealthier you are just living high that leads me to the second game you can play which is the wealth game this isn't about what everyone else can see but instead it's about what's going on behind the scenes it's the money in the bank that is being invested into assets is
the business that you're trying to build on the side it's the money that you're spending on self-development it's all the things that have a positive Roi and that can ultimately buy you freedom and buy you the power to live life on your own terms the key is to make sure your evaluation of financial success isn't based on the status game once you wrap your head around that you will realize you're doing far or better than you think you are financially because the status game is only like a movie trailer it shows you the best bits
and leaves the rest out that leads me to the second point which is how much should you be earning one way to know where you stand financially is by looking at the average wages and according to the ons the average annual salary in the UK is 27 756 pounds and the average salary Nationwide in the US according to Forbes is 59 428 the truth is these numbers actually make very little difference to how we see ourselves because firstly according to research it's our own friends and our peers that have a bigger influence on our self-evaluation
or financial excess rather than society as a whole and secondly no matter how much we earn it's psychologically easier to feel bad bad about that number then feel good about it there is a concept called loss aversion which is that the pain of losing is psychologically twice as powerful as the pleasure of gaining for instance if we found a hundred dollars on the ground we would be thrilled it would make our day but if we lost that same 100 our pain would be far bigger than the initial joy that we found in the same thing
according to a research paper on social comparison the same concept can be applied to our earnings if you found out you earn more money than your friends or your colleagues you might feel slightly more content with your earnings but that feeling would fade pretty quickly but on the other hand if you found out you're earning less money than them that would have a way bigger impact on your happiness levels and you'd feel a lot less satisfied with how much you're making we can be outperforming 99 of the people around us but if there's even one
person in our Circle who appears to be doing better it can make us question our own success and the worst part is without knowing this psychologically will keep us in a never-ending cycle of discontent and as we rise through the ranks and make more money and level up so to speak so does our peer group and The Benchmark We compare ourselves to so how does one escape this I'll go into the actionable points that you can do in just a moment but firstly let's talk about rule number three which is getting the three fundamentals right
number one the first of the three fundamentals is to be fully aware of your relationship with money this means knowing your Financial Health your income and your expenses and then finding ways to live below your means in other words increase your income and or reduce your outgoing so that you have enough money left over to save or invest in some form of another one way to do this is through using a Tracker that can show you where you stand financially and if you're spending less than you earn I have a free one that you can
use in my description box which really Dives deep into every category of your life so you can be fully aware of your relationship with money that leads me to the second fundamental which is having an emergency buffer this is a specific amount of savings you would have access to in the case of an emergency and having this one thing alone sets you way ahead of a lot of the population in fact 40 of the people in the UK don't even have one month of living expenses to support them if they lost their income and only
39 of Americans could cover a one thousand dollar unexpected expense if you have a healthy emergency fund tucked away even just one month of living expenses to start with you're doing a lot better than most people and then the final part of these three is far easier said than done especially in the current climate and that is to have manageable debt this isn't just about using debt to buy things you don't need it also means not finding yourself in a position where debt is the only way you can play your bills on time the average
American has 32 878 dollars in depth not including their mortgage and UK credit card debt is at an all-time high 46 of 25 to 34 year olds have taken out an additional credit card which according to UK economists such just that people are boring more to protect their Lifestyles from The Surge and inflation so this just goes to show if you're able to save a portion of your income have an emergency fund and you're able to pay your bills on time without going into debt you are way ahead of most people but after knowing that
how does it make you feel any better probably not loss aversion and that's where the fourth rule comes in and that is to use the lens of an individual rather than Society there is a quote that is if you change the way you look at things the things you look at change as I was doing the research for this video and drawing back on my own experiences a Common Thread became really clear to me in all of this and that is our perception of how well we're doing is massively driven by society's expectations and comparisons
massively without a doubt Society applauds lavish Lifestyles external rankings monetary achievements but if we rewire our thoughts to look at our own Success Through The Eyes of us as an individual as opposed to Through The Eyes of society we can see ourselves from a completely different lens and when you do this it sets you free from comparison until gets you free from expectations it gives you the freedom from not having to play the game where other people are making the rules status games entirely he says you should think about how you'd answer this question would
you rather be the world's greatest lover but have everyone think that you're the world's worst lover or would you rather be the world's worst lover but everyone else think that you're the world's best in other words would you rather be at the top of your ladder socially even if you're not and you're a complete fraud or would you be at the bottom of your ladder socially knowing deep down yourself that your number one so those are the four fundamentals that tend to dictate whether or not we're doing financially and how on track or off track
they are thank you for watching if you like this video feel free to share it with someone who might be feeling financially behind but needs a little bit of reminder that they are actually on track I hope to see you next week
