Moneywise24 Personal Finance

I am not sure whether there is such a word like ‘drag-down’, especially since English is not my native language. But, I am well-known for little linguistic experiments. In this post I want to take some time to write about a phenomenon, which I simply want to call ‘the drag-down effect’, which refers to the attempts of other people dragging you down to your place in society, which you are so eagerly wanting to break out from.

I come from a family, in which personal finance has never been a priority. You want something more expensive? Then take a loan and use your salary to pay the loan. Want to prosper financially? Get a good job at a top-tier employer and make a career. Want to invest something? Then take some mutual funds, managed by a specialist at your bank.

I do not want to say that this type of lifestyle is bad, but it is not what I am choosing for. I take much pleasure in investing in stocks and options, I feel much more free knowing that I have no large debts, which I will have to keep paying even my financial situation for some reason deteriorates. And I feel fulfilled knowing that I am getting the most out of my money I can, during the situation I am currently at.

Still, I find many people in my environment, my family, my friends, trying to drag me back down into the situation I am just so eagerly trying to escape. When I told my family that I am into stocks and options, I hear at least 10 reasons why they are so risky and I’ll be broke within a year. When I tell my friends that I am saving up to buy a car when winter comes, they try to convince me with all their power why a loan is so much beneficial, and I can truly buy the car I want. And when I tell my neighbors that I spend some hours during the weekend analyzing stocks and companies, they find enough reasons why it is a waste of time.

I tried to find more information on this topic, and came up with two major topic focuses where this phenomenon seems to be well-known.

Becoming the alpha male of the group

Flirting and seduction has grown to a major industry during the past decades. In fact, the main goal is to turn a shy man, or boay, into a true and self-confident man, i.e. an alpha male. These websites, books, and videos discuss how true men behave, how they talk, how they walk, and what their place within a group is.

Knowing the the drag-down effect is considered as being very important among those who want to become the alpha male, since a sudden change of behavior within the group might result in a different social status within the group; and this might simply not be accepted by the group. Each group has its own dynamics, and each person has his place within the group. Therefore, the group members will try to drag down a person who is trying to change his social status within the group, back to the place at which the group believes this person belongs.

Back to personal finance, when you are starting to do things different than your most important peer groups, they will notice and may want to drag you back down to where you came from. This is usually done at a very psychological level, through comments, or destructive advices.

Show me your friends, and I’ll tell you who you will become

Another well-known phenomenon is that many people tend to become more and more like their peer groups. As such, many motivational books deal with this topic and warn the reader that they should carefully select their friends, or at least take notice of how intensive their contact with their different friends is. As such, if you have friends who are energetic, positive thinking, good in personal finance and building wealth in general, you could take an example from that, as well as the motivation to keep going and reach that same level as your friends. But it also works the other way around; spending too much time with people who have brought it to nothing, or who are depressed, might infect you as well, and drag you down to their standards of living, and way of thinking.

So, what can I do?

I find it extremely important to be aware of the fact, that people might want to drag you down to the place where you came from. In fact, sometimes I whiteness how much joy some people feel, when others are doing bad. Now, I do not want to set ‘criteria’ for my friends, or for selecting people who I allow myself to become befriended with. However, I do notice a few things when I speak with someome:

• Is the person a positive thinker or a negative thinker? I prefer positive thinkers, as they motivate me. I do have some negative thinking friends in my social circle, and I meet up with them every now and then. But I keep the contact to a minimum.
• Is their feedback constructive or destructive? If I tell these people something out of my life, perhaps something I am trying out, what is the feedback like? Will this person try to hold me back via destructive feedback, or will his words motivate me to carry on?
• When a person is giving me feedback on something, is he a specialist in the field, or is he pretending to be specialist? This gives me some grip on how much I would value his feedback, and perhaps act upon it… or not.
• When I tell a person some of my achievements, is he genuinely happy for me and congratulating me, or is he jealous and trying to find reasons why the achievement wasn’t a true achievement?
• Is a person genuinely interested in ME, or is he interested in what I could do for him? I live in a bigger city where banks dominate the skyline, and it is astonishing how many people focus on topics such as assets, jobs, salaries and networking, in stead of real personal topics, aiming at getting to know each other as two equally worthy people.

In My 24 Commitments, I already wrote an article about The Right Social Circle, recognizing the fact that a person is largely influenced by his peer groups. But how do we get to that? I can say that with 33 years of life experience, few friendships have grown to be genuinely and truly genuine. I consider getting to know people, networking, and gaining friends, as an important part of life. However, just as important as networking is in general, it is as important to know how to network, and where to put the focus on.

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You might ask yourself, how does traveling actually contribute to personal finance, and what can I learn learn from it? Actually a lot. A can speak from my own personal experiences; traveling has many benefits, which can be applied to your personal life, also personal finance. And I believe it’s a good thing, traveling broadens horizons, you get to know new people, new experiences, and generally get to see many different situations from different perspectives.

If you have traveled a lot already, especially outside of your own country or cultural circle, you probably know what I talking about. Applied to personal finance, I believe having traveled a lot offers major benefits. I want to discuss a few of them below, but of course you are more than welcome to post comments with additional ideas.

The Unknown

One of the major features of travel, in my opinion is being confronted with the unknown. In the most extreme case, you would not speak the language, the cultural differences are like worlds apart, and you feel fairly lost in this new surrounding. However, since you are in a foreign country, far away, you have no choice to deal with it. It can be quite overwhelming, and it is also why many travelers, who meet each other on distant trips, tend to stick together during their voyage; it is a way of trying to keep the known and the unknown balanced out.

Being confronted with such an unknown situation will surely lead to more flexibility and a more ‘risk taking’ mentality when you get back, at least it did with me. And the more often you throw yourself in such unknown situation, the more you get used to it. I can only tell from my own experience, it has definitely benefited me.

Your life isn’t really that bad

My trip to Kenya in 1998 made a huge impact on my life; Kenya is a very poor country, and myself being originally Dutch (I was 19 at that time) I realized for the first time in my life how good a life I am actually leading. I used to complain about the huge loan I had to take to study, and about the small room I was living in… but I had never truly realized that there are literally billions of people on this planet, who simply don’t have enough food to eat, and whose life conditions is beyond what I could have ever imagined. Sure, I had seen it on the television and in the news quite often, but it is nothing compared to going to such a country and seeing it all live. I became more of a relaxed person, and not so money focussed.

Different cultures, different mentalities

I find it fascinating, how different nations think differently. A great example is a Dutch/German comparison. I am originally Dutch, but currently living in Germany, and honestly the Germans are much more formal and closed than the Dutch. Usually, when I meet a German people and I tell them I am Dutch, they are always so amazed how open, relaxed, friendly and easy going the Dutch are, they really seem to like that, while on the other side they are complaining about their the closedness of their own people. Yet, these people don’t change, they are caught in routines of what they just said they did not like. A bit of a long trip might give you real in-depth insights of how other cultures think, act, and related to each other, and you could adopt something of that. But more importantly, traveling lets you related other cultures to your own, and you can look at your own habits a bit more objectively; it makes you a more free person in a sense.

Getting to know people

If you are an open minded person, you will surely make many contacts while traveling; either with other travelers or with some locals. This is a great way to expand your network, and who knows you have a business partner some day, or who knows what a network might be useful for.

Traveling is a great passion of mine, and I try to plan a trip as often as I can. I believe traveling greatly contributes to the quality of my life, my development, my way of seeing things, and definitely also my personal finances.

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If there is one thing I learned during childhood and my teens, it is how important good friends are.  Then, during education and throughout my career, I learned in addition to that how important a good network is; not only in respect to the many social contacts, but also to opportunities which may arise through the network, for example a job posting at the company you always wanted to work for. Many job postings nowadays are not even publicly advertised, as they are being filled through existing networks of friends, co-workers, ex co-workers, family, etc.

If there is one thing I did not learn during childhood, it’s how be a great networker; I had to acquire all the skills during my adulthood. Nevertheless, from what I have learned I believe everyone can be a great networker, no matter wheter they have experience or not, whether it involves a personal network or a professional network.

I have written below five basic considerations, which are the result from my own experience. You do not have to follow these, and as I mentioned these are some really basic considerations, something to keep in the back of your head when meeting new people; real professional networkin goes far beyond these five steps.

1. Be open to meeting new people

When I did not know anything about networking, I was quite sceptical when meeting new people. I tended to keep my distance, awaiting to get some more insights about their motivations. I felt much more comfortable in my old group of friends and acquiantances than I did when meeting new people. When I did meet new people, it was usually via the friends and family and friends I already have, and usually I tended to think of them as their friends, not mine.

When I went abroad for my studies, I recognized how important it is to be open to meeting new people, since I didn’t know anybody in the new, big city. I started to open up, and escape my old habits. While I was doing that, I started to notice how closed other people often are when it comes to meeting new people and building personal relationships.

The best way for me to start being more open was to engage into small talk with just about anyone: the waitress at the bar, the people at university, my co-workers at work, and sometimes even some complete strangers in the bus. This has literally replaced my old habits with a set of new habits, being an open personality, enjoying to meet new people with the most different backgrounds and stories. Often the conversation just stays as it is, but sometimes personal contact details are exchanged.

2. Focus on the relationship, not the outcome

For many people, networking does not have the best possible image; it has the image of meeting people for the purpose of wanting favours from them. Although I have met quite some ‘networkers’, who do exactly that, their networking attempts will usually result in a very superficial network with little meaning.

A very powerfull mindset is to focus on the relationship, rather than the outcome. With building relationships, I mean being in regular contact with that person, and really focus on getting to know each other. Depending on the type of contact, you may want to go for a drink or meet up regularly if you are working on a more personal network, or you might keep a bit more distance if you are building a network with customers, business partners, or generally work-related. Nevertheless, the relationship will need to be worked on from the moment of meeting that person, and the right mindset focuses on intensifying that relationship continuously.

Focusing on the relationship does not mean you can not ask or give favours; it simply means that this is not where you want the focus to be; people might sense that there is something strange about the situation of meeting you.

3. Networking is an imbalance of giving and taking

Family members, friends, and members of a network do favours for each other. That’s what they are for, and that is what makes the connection with another person special. Once a relationship exists, it is perfectly normal to ask someone for a favour, or for someone coming to you for a favour.

Some people I know keep a journal of all favours they had given or received… I am not a big favour of that. To me, it does not matter that I have done two favours to someone and have not received anything back. In my opinion, there is always  fine imbalance between giving and taking. I am always prepared to give, as long as the imbalance does not become too big. People, who are only our for a profit, have lost nothing in my network.

I have to note, that a favour does not always have to occur free of charge. A friend of mine, for example, is a lawyer. Once I had asked him to look into a topic for me, that he is specialized in. Of course I paid him, although he did give me a small discount; in the end he is putting time and effort in my request, and I honestly believe that it should be rewarded in one way or the other.

4. Be present

With being present, I basically mean that people notice you, and are invited to chat with you. It does not matter whether I am at a party, a networking event or a party, I try to show presence as much as I can. For example, I might talk with one person for 20 minutes, and agree with him we should stay in touch for an after-work drink some time… then I go to another place or room, and initiate a conversation with other people. I do not want to jump from one conversation to the other as if it were speed dating, but also do I not want to clinge to the known and comfortable.

5. Self-Marketing

When I just started with networking, I needed at least a few minutes to explain someone what I do for a living, and what I had done in the past… and I wasn’t doing it effectively either. I recognized, that self-marketing was extremely important when building a network, if I wanted others to really get to know me and my strengths within a short period of time. Because else why should someone within my network offer me a job if that person does not know my strengths and what I am all about? This is an important point to think about: how can I communicate what I do and my strenghts in the shortest possible time?

Networking truly covers much more that only the few points mentioned above, but these few steps have helped me tremendously.

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Surely you know the process: you arrive at a club with your friends, pay high entrance fees, and at the end of the night you spent another 100 Dollars and you try to compensate for the high costs during the rest of the week. However, clubbing does not need to be all that expensive.

A typical night out with your friends probably starts out at home; you have a few drinks, you dress up and take a taxi or the car to the club or a bar. In a club, you will usually pay rather high entrance fees in order to enjoy the privilege of too loud music and bad air. Once inside, you might drink one or two cocktails, go for a dance, talk with a few people, have some more cocktails or wine, and the same routine is repeated until the sun sets in the morning. You still remember having at least 100 Dollars in your wallet at the beginning of the night, and still only a 10 Dollar note left.

I find going out very important; it is a good chance to have fun with your friends, to socialise, and basically to have a good time. I believe it is essential to having a high-quality life. However, with the right mind-set, going a night out does not need to be that expensive, nor do you have to ask others to buy you drinks.

Do not pay entrance fees

I have never understood why clubs charge entrance fees just to ‘come in’. Clubs are virtually the same as bars, only that the music is louder and there is a dance floor. I personally avoid clubs which charge too high entrance fees. I might make an exception if an artist I want to see is performing, but else I have no business there. Alternatively, I will find low-budget clubs or I will simply go to a bar in stead. In my experience the people are somewhat more relaxed.

Stay away from cocktails, long-drinks and everything expensive

Cocktails, long-drinks, and everything which is rather expensive has become a fashion. In Europe, a cocktail can quickly cost 11 Euros (around 16 US Dollars). Drink three of those, and you have already spent half of your 100 Dollar budget. In stead, it makes much more sense to stick to either non-alcoholic drinks, or simply beer if you must drink alcohol. Not drinking alcohol by the way does not mean you can’t have all the fun. It is simply a matter of the right attitude, and you will also feel much better and vital the next day.

Avoid taking a taxi

Taxis are typically the expensive beginning and/or ending of a great night out. The typical reasons why people take taxis are either out of convenience, because they had too much to drink (and either they can’t drive or they want to get home quickly), or because no public transportation is running during the night. One remedy could be to simply drink less alcohol, this would allow you to drive your car during the night, or you could take public transport without feeling bad. Additionally, you may want to check when public transportation is running, and either take back the last option of the night, or take the first option in the next morning.

Give rounds, but don’t spend drinks

If I am on a night’s out with my friends, we usually give rounds. I am happy to do that, because I know that I am getting the drinks back. Additionally, I know that my friends will not order the most expensive drinks available. I trust them, and it is give-and-take. On the other side, I will never spend drinks on people I don’t know or I have just met. Especially particular women use this strategy, in order to have a free night’s out. Particularly men are subconsciously trained to spend women drinks as a part of the flirting process. Simply don’t do it, unless you really want to, and it is someone you trust.

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