Did I tell you how much money I make?
I make about $2,000 per month.
It’s not much, but for me is plenty. My living expenses are about $1,500 and I like to put $500 per month in my retirement account.
Then I adjusted my entrepreneurial activities to the point where I would be making $2,000 per month and I stayed there.
In other words, $2,000 has become my anchor, $2,000 was one of my mental limitations. I have been very comfortable there until very recently when I began to have health problems. I destroyed the cartilage of one of my knees and I figure that’s the beginning of many other health issues I will face in the future.
To prepare for a future of aging, I have to move my anchor to a higher level. I have to break through my mental limitations
My story is not unique. Most of us make up a given number as the amount of money we want, or we deserve, or we can get and we anchor our brain to that number.
A waitress has her income anchored to a waitress number
A Fortune 500 CEO has her income anchored to CEO number
And all of us fall somewhere in between.
What is the Anchoring Effect?
The anchoring effect describes a common human tendency to rely on the first piece of information offered (the anchor) when making decisions. Once the anchor is set, decisions are made by adjusting around the initial anchor, regardless of the legitimacy of the anchor.
As we anchor our income to a number, we limit our incomes.
In this era of the internet, where we have access to billions of people through our laptops and smart phones, those income limitations are mostly self imposed and if we want to, we can break through them.
How to break our self impose anchor limitation
The first thing we have to do is to change the way we think and what we believe about making money.
It’s not the lack of desire which holds people from having more money, but the lack of belief in our ability to make it happen. Here are a few tricks to change that belief.
Don’t be afraid to use other people’s money
One of my biggest limitations was being afraid to use leverage. I had the opportunity to buy more real estate at great prices, but I was afraid to borrow more money.
During the downturn of the stock market (2020), I mustered the courage to borrow $10,000 to buy more stocks at a discount price, those stocks are now 10% above my purchase price. I borrowed at 2.45% interest.
If we think about it, all the big businesses in the U.S. and Canada have been created with other people’s money. Yet, when it comes to us, we hesitate because we are afraid.
Set high goals for yourself
It cost the same to dream big or to dream small, yet many people decide to dream small.
My dreams have been small; survival plus a little bit more. But I could have just as easily chosen to have a bigger dream.
Many of us have the same problem. We set our mental limitations and we stay in our comfort zones.
You don’t need a specific reason to save
Make sure you have so extra cash for the unexpected.
Everyone’s life is a continuous chain of surprises. Savings that aren’t earmarked for anything in particular is a hedge against life’s inevitable ability to surprise the hell out of your at the worst possible moment.
The Psychology of Money by Morgan Housel.
Believe that Money is abundant
During the time of Covid-19, the U.S. created six trillion dollars. This amount is extremely difficult to understand, but my point is that there are unlimited amount of money in the world, and some of that money can come your way.
Money is fluid, you just want some of that fluidity to pass through your bank account and stay there for a little bit. If you believe in this abundance, you have a bigger chance of getting rid of your money limiting beliefs.
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