Last night, I took a break from writing and watched a TV program on the history of a young man named Alexander Graham Bell. Bell had just patented his telephone, and was having growing pains because the demand for his new invention was so strong. Needing a bigger company, he then went to the giant at that time, Western Union, and asked them if they would buy his patent and his tiny company. He wanted $100,000 for the whole package. The president of Western Union scoffed at him and turned him down, saying the price was ridiculous. The rest is history. A multi-billion-dollar industry emerged, and AT&T was born.
The evening news came on right after the story of Alexander Graham Bell ended. On the news was a story of another downsizing at a local company. The workers were angry and complained that the company ownership was unfair. A terminated manager of about 45 years of age had his wife and two babies at the plant and was begging the guards to let him talk to the owners to ask if they would reconsider his termination. He had just bought a house and was afraid of losing it. The camera focused in on his pleading for all the world to see. Needless to say, it held my attention.
I have been teaching professionally since 1984. It has been a great experience and rewarding. It is also a disturbing profession, for I have taught thousands of individuals and I see one thing in common in all of us, myself included. We all have tremendous potential, and we all are blessed with gifts. Yet, the one thing that holds all of us back is some degree of self-doubt. It is not so much the lack of technical information that holds us back, but more the lack of self-confidence. Some are more affected than others.
Once we leave school, most of us know that it is not as much a matter of college degrees or good grades that count. In the real world outside of academics, something more than just grades is required. I have heard it called “guts,” “chutzpah,” “balls,” “audacity,” “bravado,” “cunning,” “daring,” “tenacity” and “brilliance.” This factor, whatever it is labeled, ultimately decides one’s future much more than school grades.
Inside each of us is one of these brave, brilliant and daring characters. There is also the flip side of that character: people who could get down on their knees and beg if necessary. After a year in Vietnam, as a Marine Corps pilot, I intimately got to know both of those characters-inside of me. One is not better than the other.
Yet, as a teacher, I recognized that it was excessive fear and self-doubt that were the greatest detractors of personal genius. It broke my heart to see students know the answers, yet lack the courage to act on the answer. Often in the real world, it’s not the smart that get ahead but the bold.
In my personal experience, your financial genius requires both technical knowledge as well as courage. If fear is too strong, the genius is suppressed. In my classes I strongly urge students to learn to take • risks, to be bold, to let their genius convert that fear into power and brilliance. It works for some and just terrifies others. I have come to realize that for most people, when it comes to the subject of money, they would rather play it safe. I have had to field questions such as: Why take risks? Why should I bother developing my financial IQ? Why should I become financially literate?
And I answer, “Just to have more options.”
There are huge changes up head. Just as I started with the story of the young inventor Alexander Graham Bell, in the coming years there will be more people just like him. There will be a hundred people like Bill Gates and hugely successful companies like Microsoft created every year, all over the world. And there also will be many more bankruptcies, layoffs and downsizing.
So why bother developing your financial IQ? No one can answer that but you. Yet, I can tell you why I myself do it. I do it because it is the most exciting time to be alive. I’d rather be welcoming change than dreading change. I’d rather be excited about making millions than worrying about not getting a raise. This period we are in now is a most exciting time, unprecedented in our world’s history. Generations from now, people will look back at this period of time and remark at what an exciting era it must have been. It was the death of the old and birth of the new. It was full of turmoil and it was exciting.
So why bother developing your financial IQ? Because if you do, you will prosper greatly. And if you don’t, this period of time will be a frightening one. It will be a time of watching people move boldly forward while others cling to decaying life rings.
Land was wealth 300 years ago. So the person who owned the land owned the wealth. Then, it was factories and production, and America rose to dominance. The industrialist owned the wealth. Today, it is information. And the person who has the most timely information owns the wealth. The problem is, information flies all around the world at the speed of light. The new wealth cannot be contained by boundaries and borders as land and factories were. The changes will be faster and more dramatic. There will be a dramatic increase in the number of new multimillionaires. There also will be those who are left behind.
Today, I find so many people struggling, often working harder, simply because they cling to old ideas. They want things to be the way they were; they resist change. I know people who are losing their jobs or their houses, and they blame technology or the economy or their boss. Sadly they fail to realize that they might be the problem. Old ideas are their biggest liability. It is a liability simply because they fail to realize that while that idea or way of doing something was an asset yesterday, yesterday is gone.
One afternoon I was teaching investing using a board game I had invented, CASHFLOW, as a teaching tool. A friend had brought someone along to attend the class. This friend of a friend was recently divorced, had been badly burned in the divorce settlement, and was now searching for some answers. Her friend thought the class might help.
The game was designed to help people learn how money works. In playing the game, they learn about the interaction of the income statement with the balance sheet. They learn how “cash flows” between the two and how the road to wealth is through striving to increase your monthly cash flow from the asset column to the point that it exceeds your j monthly expenses. Once you accomplish this, you are able to get out of the “Rat Race” and out onto the “Fast Track”.
As I have said, some people hate the game, some love it, and others miss the point. This woman missed a valuable opportunity to learn something. In the opening round, she drew a “doodad” card with the boat on it. At first she was happy. “Oh, I’ve got a boat.” Then, as her friend tried to explain how the numbers worked on her income statement and balance sheet, she got frustrated because she “had never liked math. The rest of her table waited while her friend continued explaining the relationship between the income statement, balance sheet and monthly cash flow. Suddenly, when she realized how the numbers worked, it dawned on her that her boat was eating her alive. Later on in the game, she was also “downsized” and had a child. It was a horrible game for her.
After the class, her friend came by and told me that she was upset. She had come to the class to learn about investing and did not like the idea that it took so long to play a silly game.
Her friend attempted to tell her to look within herself to see if the game “reflected” on herself in any way. With that suggestion, the woman demanded her money back. She said that the very idea that a game could be a reflection of her was ridiculous. Her money was promptly refunded and she left.
Since 1984, I have made millions simply by doing what the school system does not. In school, most teachers lecture. I hated lectures as a student; I was soon bored and my mind would drift.
In 1984,I began teaching via games and simulations. I always encouraged adult students to look at games as reflecting back to what they know, and what they needed to learn. Most importantly, a game reflects back on one’s behavior. It’s an instant feedback system. Instead of the teacher lecturing you, the game is feeding back a personalized lecture, custom made just for you.
The friend of the woman who left later called to give me an update. She said her friend was fine and had calmed down. In her cooling-off period, she could see some slight relationship between the game and her life.
Although she and her husband did not own a boat, they did own everything else imaginable. She was angry after their divorce, both because he had run off with a younger woman and because after twenty years of marriage, they had accumulated little in the way of assets. There was virtually nothing for them to split. Their twenty years of married life had been incredible fun, but all they had accumulated was a ton of doodads.
She realized that her anger at doing the numbers-the income statement and balance sheet-came from her embarrassment of not understanding them. She had believed that finances were the man’s job. She maintained the house and did the entertaining, and he handled the finances. She was now quite certain that in the last five years of their marriage, he had hidden money from her. She was angry at herself for not being more aware of where the money was going, as well as for not knowing about the other woman.
Just like a board game, the world is always providing us with instant feedback. We could learn a lot if we tuned in more. One day not long ago, I complained to my wife that the cleaners must have shrunk my pants. My wife gently smiled and poked me in the stomach to inform me that the pants had not shrunk, something else had expanded me!
The game CASHFLOW was designed to give every player personal feedback. Its purpose is to give you options. If you draw the boat card and it puts you into debt, the question is, “Now what can you do?” How many different financial options can you come up with? That is the purpose of the game: to teach players to think and create new and various financial options.
I have watched this game played by more than 1,000 people. The people who get out of the “Rat Race” in the game the quickest are the people who understand numbers and have creative financial minds. They recognize different financial options. People who take the longest are people who are not familiar with numbers and often do not understand the power of investing. Rich people are often creative and take calculated risks.
There have been people playing CASHFLOW who gain lots of money in the game, but they don’t know what to do with it. Most of them have not been financially successful in real life either. Everyone else seems to be getting ahead of them, even though they have money. And that is true in real life. There are a lot of people who have a lot of money and do not get ahead financially.