Hi, my name is Bob Brooks and welcome to the prudent money channel. You know, the whole objective behind this channel is to provide you with financial education so that you can be a better decision making industry, effective decision making is at the heart of long term financial success. Let's talk a little bit about the common denominator of success. The secret of success of every person who has ever been successful lies in the fact that he or she formed the habit of doing things that failures don't like to do, once again lies in the fact that he or she formed the habit of doing things that failures don't like to do. This was a quote from a book by Albert grade in 1940. And it's so true.

I mean, you could apply the at the old 80 2020 rule to this because 20% of people who are successful are doing, they're practicing the habits that the other 80% of the people won't do. And this so applies to money and the habits that we have and this is what We're gonna be talking about today, because here's the shocking statistics, average savings of a 50 year old is 42,000, average net worth of a 55 to 64 year old now this is, you know, think about that 55 to 64 is a time period in a person's life on that investment time timeline that you should have bulk of your money accumulated for retirement. But yet, the net average net worth is $45,000. Between the ages of 30 and 54 80%, believe that they won't have enough to retire in 41% of those in their, in their 50s said that they have not saved anything at all.

It's just shocking statistics. But this is a good representation of the finances of people in America. And that's incidentally one of the things we want to change to what we're doing here at the vitality network is change those habits teach good habits and change the outcome of your financial future. I've mentioned this book before in a video that I did munication and marriage is Seven Habits of Highly Effective People. A powerful book by Stephen Covey. It's an old book, it's been around for a long time.

And the information is timeless. I mean, I think everybody should read this book. This should be on everybody's bookshelf. He talks about the seven habits and keys in on the third habit of putting First things first, prioritizing those habits that lead to long term success. In fact, it was such an important habit, he followed up with a book First things first, in fact, it was almost twice the amount of information in his first book, but an extremely important thing is prioritizing those habits that give us long term success. Now he illustrates with a matrix and now this is I'm going to talk about it from a time management perspective.

And then I'm going to shift to shift this to the emotional decision making with money and apply the same about the same thing that he's doing. He has four quadrants on this the urgent Urgent important things that we do, then not urgent but important things the urgent and not important and the not urgent not important. So basically, the premise is, is that where you spend your time on a daily basis, do you which quadrant do you spend it in? Now, his key point is that it should be quadrant to the, you know, it's not urgent, but it's important. It's the things it's it's what people in the 20 percentile of success are doing. It's the habits that people do that make them long term successful.

But what we end up doing is we we kind of work down here and this urgent, not important. Some interruptions, some phone calls, email, it's doing the things with our time, that make us feel like we're accomplishing something, but we're really not because it's all short term things. It's all feels urgent, but it's not important. And what ends up happening is that we spend all of our time down here, and then we end up in urgent animation. Because we put off the things that were important to begin with. And so now we're operating in a in a, in a crisis mode, deadline mode, trying to try to meet deadlines.

It's chaos. And this is what we want. Obviously, we want to stay out of this by focusing on not urgent but important things. I'll give you a good example. I and this is a for my own life is that I would catch myself putting a list together the night before of what I needed to take care of. And so I had ranked in a items, B items and C items.

Well, the next day, first thing in the morning, I sit down with a cup of coffee and I start working on my computer, and in my eyes automatically shift to my email. Now email, checking email is not an item, right? But I start going through the emails, and maybe really looking at some research and then start looking at my list. I'm 30 minutes into my day. And looking at my list and the B items, I think well if I knock off some of these B items, I can accomplish a lot of my list and then I'll focus on the items. It's such a backwards way of thinking you get the items done first, but why we don't do the items, or the quadrant two items is because it takes extra work, maybe we're uncomfortable with it, maybe it's something we're kind of dreading for a reason of insecurity, whatever it is, what kind of putting those off.

That's the problem that Steven Covey illustrates with this time Mac matrix is we're not doing the quadrant two activities. So what ends up happening is we hang out here in quadrant three. As a result, we end up in quadrant one where if everything's urgent, everything's on fire, you're dealing with crisis, and then we get burned out. You get burned out and then you escape to not urgent not important, that time wasters. The things that we just you know, we go to Facebook just to get away in things like that, to where you're kind of getting away from reality. Now there's nothing wrong with killing some time, but during a productive work day, that's not what you Want to do you want to be focusing once again, on the not urgent, but important items.

And that's that's the challenge because it's not really urgent. You know, relationship building didn't seem urgent at the time, but it is important planning may not seem that urgent, but it's important. And the more that you focus on, by the way, the key point is that the more that you focus on quadrant two activities, the less likely you're going to be in quadrant one. That's the key focus. So if you find that your life is in chaos, and you're kind of managing by crisis, managing to get deadlines, and always just kind of running up to those deadlines, then start focusing on what can i How can I organize my time by a quadrant to lifestyle? Now, if we take this same premise, and we look at it from an a, a, an investment standpoint, it's it's very applicable.

From an investment standpoint, we're talking about effective decision making so much time management, what do we do do with our time that helps us and what kind of activities do we undertake with our investments that help us to become effective decision maker, decision makers and I was doing an interview just the other day I was talking about this is that the key to long term success is the ability to make effective decisions. If you want to make effective decisions, you have to be informed in order to be informed, you have to be intentional about getting an education on how money works, that's what the prudent money channel is about. So we build that hierarchy, so making you a more effective decision maker. So let's break down kind of how we deal with money in each quadrant. quadrant three activities urgent but not important. opening up your statements.

Now you might think, isn't opening up your statements important. It is important only if you open in Follow me on this, only if you open up your statement and you can interpret the results. Now you might be thinking well, I can see it's either a gain or a loss. You can interpret a gain or loss in one of two different ways. You don't It's not just that you made money or you lost money. And if you did practice quadrant two habits, you would have learned how to interpret your results, you would have learned how that fit into the bigger picture of your plan that you worked on as a quadrant two activity.

Most people just open up their their statements, they see a loss, they start to panic a little bit, maybe two months, they panic some more if there's two months of losses, maybe there's a big loss, and then they find yourself in quadrant one in crisis mode, trying to figure out what to do on the verge of making an emotional decision. Now, we talked about this in a lot of the videos, is that if you filter your decision making through emotions, chances are you're going to make a bad decision. That's just the way it goes. You got to be able to step back from the emotion. That's the key to investment quadrant two habits. Being a quadrant two investor, you can do that and do that successfully.

Hand holding calls to your advisor. You get that statement. You don't like the results. Obviously you feel a sense of urgency. See, to call your advisor. But that but what's your agenda is?

For most people I know that sounds odd but I think about it and think about your own life, they call just to want to be told everything's alright. Because if everything's all right, then they don't have to make a decision. Making decisions with investments can be really tough and you got to be a quadrant to investor so that you can make yourself to get yourself to the point where you can make effective decisions. So they call their advisor advisor says nine times out of 10 Oh, listen, everything's gonna be okay. You know, we took a little bit of loss was no big deal. We'll come back.

Oh, good. Well, I just want to make sure I just need some reassurance that the right way to do that, if you had been practicing quadrant to active habits is you call the advisor and say listen, what if it doesn't? What's your plan B? What are you going to do instead why and you know, the questions to ask and you make that a productive call, instead of a what I call a hand holding call. Daily checking up your account, one of the worst habits that people can practice because that in itself can create If you look at an investment account, it goes up and down and can kind of all over the place, sometimes some months, and they can create emotional investors, especially once again, if you don't know how to interpret the results. Yes, you check that daily account to make you feel like you're doing something.

It's kind of a sense of urgency. Why did my investments do today, but not a good idea? When it comes to controlling your emotions, then spending time going to investment get rich quick classes, there's tons of them. give you one example, you can see a commercial on real estate. And they talk about how you don't have to put any money down. You don't take any risk.

It's easy. You can manage it, you can manage the buying and selling a real estate from your home and you make tons of money. So you look at this and go, well, investments aren't working out. So well. I got a there's a sense of urgency to do something else to make money. So this is kind of where we hang out as investors in this quadrant three activity.

Now what happens as we talked about, if you're in that quadrant three, and that's the kind of activity That in that kind of habits that you have, then you quickly end up in quadrant one, where everything's urgent, everything's important. Everything is kind of a crisis. And in terms of what I'm talking about with this matrix, this is where all the emotion builds to a head. You get big losses in your account, you quickly you're falling behind in your goals, not knowing where you are. And I gotta tell you something, people that I've met with for years, come into my office and they go, Hmm, I'm just not prepared for retirement. They could have a million dollars sitting in accounts and still think they're not prepared.

You know why they're not they don't think they're prepared because they don't know. And I'll ask the question, so how do you know you're not prepared? Well, I just, I'm just not prepared. Well, if you're required to investor, you would know where you are. And you wouldn't end up and as a quadrant one investor, you have a bunch of investment, emotion, investments, stress, not reaching your goals. That's the feeling of anxiety that you are experiencing, and I see this with people, they feel that anxiety, they're living in that quadrant one when there's no need to be there at all.

Now, what happens in quadrant one as an investor, when you're dealing with that is that it's that constant stress, that financial stress, you escape, you get down to quadrant four as possible as quickly as you can. Because here's where all the stress is. I truly believe this and working with people is that they, they're in quadrant one, the emotions high, the stress is high. And it's high because they are fearing they've got to make a decision. And they're scared to death to make the wrong decision. This is why people stay stuck in investments, because they're not good decision makers.

And they know they have to make a decision but they don't want to for fear of making the wrong decision. So they escaped decision making by going into quadrant four. And a couple of couple things I think that investors do I'll start with the bottom one first denial is so easy to ignore the problem. I've talked to people to go well, you know what, I just don't look at the statements. You know, fortunately pop culture Finance will tell you, I've seen people heads of mutual funds will get on programs like CNBC and said, Just don't look at your statements. That's horrible advice.

Obviously, you want to be connected once again and be able to interpret that. But what people do is they do not they just live in denial. And I call it the statement in the drawer strategy. I talked about this in a seminar one time, where investors will, they'll get their statements with all the intentions of looking at it, but they're, they're scared to death to look at it. So they throw it in the drawer. I said, you know, everybody's got a strategy.

That's a strategy, not a good one. But that's a strategy. And it'll search the internet for predictions and forecasts, looking for something to tell them what to do. And, you know, this is where this this concept of belief renting comes in. I talked about this in some of the videos is that we listen to people and people. Everybody's got a prediction, right?

Everybody's telling you what to do. You don't know why you're taking the advice, because you're kind of sounds that that prediction or forecast sounds good. Sounds reasonable. And you know, you kind of buy into it. You don't know why. You're buying into it.

Cuz you're renting the belief always talks about owning your belief and know why you believe the way that you do. So you're looking for someone to tell you what to do once again, so you don't have to make a decision. So we hang out in this quadrant for which makes it absolutely worse, a worse situation. But the stress the emotional stress is so is so that we just kind of get burned out by it and move on to quadrant four. This is where you want to be quadrant two activities, make sure that you're on the right in the right investments for your risk level. I can't tell you how many times I've looked at a person's investments and just just scratching my head as to x I know the risk level, why they're in such aggressive investments.

And this causes so many problems down the line. And if you've got to be able to everybody's got what I call a prudent money DNA when it comes to risk, how they react to risk. You know, some people can't stand to see any loss on a statement. Some can stomach it, some can stomach it up to a certain point. Some people understand how to interpret it. It's all in your financial DNA, your your prudent money, DNA.

So making sure that you're you have the right risk level is key. And I'll tell you a resource, you can go to prudent money calm, there's a risk survey there, it's something that I created, and which if you fill that out as 10 to 12 questions, take about 10 minutes to do, I will send you back a risk analysis and tell you what how you are wired, when it comes to risk. The second one is identify and fix any problems that you might have with your investments. And this, this is just keeping everything kind of audited, you know, with with, you may have a mutual fund in there that's not acting right, or a mutual fund that all of a sudden, you it's kind of been predictable. Now, it's not so predictable. And you need to make sure that you're sticking with the right investments that you've chosen based on your risk level.

So it's important to honor that you can see how these things keep you out of crisis mode. Make sure you're working with the right advisor. They can get your from point A to point B, I did a video on how to pick a financial advisor that you can trust. This trust is so key, you might want to watch that it'll help you to evaluate your relationship with your financial advisor. You can waste a lot of time if you're getting the wrong guidance. So you can see how key that quadrant two activity is of making sure you're with the right person.

And making sure you're getting good advice. Make sure that you have a plan B in the event Plan A is not working and know when to implement that plan B. This is key most investors just did not there's a whole video on this. most investors just have a plan A attack that you know in Plan A works well when the markets going up. But when the markets going down, what's your plan B. Now pop culture finance will tell you just stay invested.

That's Plan A. I don't know about you, but I don't want to be in a plan a strategy and a plan B world. Now ahead of time. Now think about this for a second. If you're really in tune to these quarters To activities and these habits, and you know what your plan B is, then you know what, what point you're going to pull the trigger and say, I'm going to plan B. And there's a lot of different ways to do that. But this isn't the point that I'm going to plan B, do you think you're going to be stressed, you're making confident decisions, you're not going to be in quadrant one, you're going to remain a quadrant two, investor, make sure you have a plan so that you know where you are going.

So very critical. I wish that everybody would really consider making sure they got a plan and making sure that they know that they're on track. And that that's the thing that can produce quite a bit of stress, financial emotional stress in your life, that if you don't have a plan, you certainly don't know if you're on track or not. But by having a plan, you know, you're on track and you know where you are, and you're not living in a state of denial. be intentional about tracking, you can have a plan but it makes no sense. It does you no good.

If you're not working that plan. No one where you need to be at the end of each year and making sure that you're on track. Being a quadrant to investor is all about one. I think it circles back around to habits, having good habits, making sure that you know that you're on track making sure that you know your risk level, making sure and here's the thing is that if you practice these habits, it doesn't really take that much time once you kind of get your system up and running. These are the things that make us an investor long term successful because here's the reality of it. You just don't have time to time for bad habits.

Long term success is dependent upon good habits.