Our finances play a huge role in our lives. Yet, people rarely discuss them or educate themselves on this topic. One of the things I learned early in life is that saving money isn't that difficult. Saving is all about maintaining a lifestyle that costs less than your earnings. With planning, discipline, and time, you will save money. The challenge is to make good investment decisions once you have saved that money. If you’ve ever considered investing in a business but haven’t pulled the trigger, check out three philosophies for a useful perspective.

1) Diversify Differently

We’ve all heard about the importance of diversification, but let’s look at it a little differently. Most people place all of their eggs in one basket, with all of their income coming from one source. Their investments are all in one place. If anything happens to either the income source or the investment, they’ll be in trouble financially. You may think that's not you, but many people reading this right now have one job (one source of income) and invest all of their money in the stock market (one place). Being one-dimensional is highly risky. Protect yourself by having diverse income sources and diverse investment vehicles.

2) The Plan Never Goes According to Plan

The second point relates to planning. Mike Tyson famously said, “Everyone has a plan until they get punched in the face.” For a plan to be useful, it must be able to survive the vagaries of reality. In other words, it must include a significant “margin of safety.” There’s a misconception that being conservative and avoiding risk is the only way to have a margin of safety, but that’s not true. A margin of safety is raising the odds of success at any given level of risk by increasing your chances of survival. The magic is that the higher your margin of safety, the greater your chance for a favorable outcome.

3) Barbelled Personality

Morgan Housel, the author of “The Psychology of Money,” explains that it’s vital to have a “barbelled personality”—optimistic about the future, but paranoid about what could prevent you from getting to the future. Successful individuals believe the future is bright and that everything is moving upwards and to the right, while also understanding that things can and will go wrong. They understand the need to be vigilant, prepared, and sometimes even paranoid. In contrast, people who are solely optimistic tend to take foolhardy risks that lead to loss. And people who are solely paranoid believe that everyone is out to get them and never take any risks. Neither path works. The only path to success combines optimism and paranoia.

Improve Your Financial Decisions

Money is a universal asset circulating in the world. To become financially independent, you might need to change your current mindset and adopt a few wealth-growing practices. First, you’ll have to acknowledge your current financial situation. Misguided financial decisions are what stand in the way between your current life and the life you desire. It’s time to get real.

I’ll close with another quote from Morgan Housel, “Money’s greatest intrinsic value—and this can’t be overstated—is its ability to give you control over your time.”

Schedule a call with me to discuss how investing in a franchise business can put you on a path to financial freedom.