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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I had quite an interesting flashback lately; as I was sitting on my couch and letting some things pass through my mind, I was struck by the fact that there are so many things I could have done much sooner, and thereby enhance the quality of my life and my personal financial situation. Then, why hadn’t I? Quite simple really: I just didn’t know… or at least I didn’t know they were that important.

In order to help some of the younger readers, I have compiled my personal top 10 list of things I wish I knew when I was a teen. I sincerely hope that for some of you it would mean a positive change of where you are at, and where you are going.

#1 – I wish I had learnt earlier to set my goals in life. It may seem a bit stupid, but during my teens my top priority seemed to have a lot of fun, while at the same time I didn’t really know where I was heading. I had no real goal in life, which at a later age resulted in me trying out many things which were not going anywhere. Now, at the age of 32, I realize that what I do isn’t really what I want to be doing, and it is much harder to change the entire structure of my life.

#2 – I wish I had studied more. I focussed on the ‘fun factor’ of life so much, that I really didn’t realize the importance of a good education. At present, I have a bachelor’s degree, and I realize that many jobs that I really want require a Master’s. Also, graduates or even post-graduates earn much more than bachelors.

#3 – I wish I had worked more. I know that parents are supposed to support their children up to a specific age legally, in The Netherlands it was up to 27. However, this also means being dependent one one’s parents. There were so many things I wanted, which I never got. In The Netherlands, everyone is allowed to work when they reach the age of 15, and I wish I had grasped that opportunity, to build on my own financial freedom. Additionally, when I went to college, I took a huge loan which was absolutely not necessary; I could have financed everything by working on the side… in stead I am now stuck with monthly payments which cut a big hole in my budget.

#4 – I wish I had aimed for independence sooner. I lived at my parental house until I was 21, then I moved out because I was going to college in another city. However, I could have moved out much sooner, enjoying all the freedom of living by myself. I am sure it would have done me good, and it would have relieved me of all the pressure at home; it would have made me more mature, and given me more energy.

#5 – I wish I had started tracking my finances earlier. I don’t even remember all the money I spent on drinks, clubs, going out, and other unnecessary items. Sure, a good social life is crucial, but if I would have tracked my finances carefully, I would have discovered that there was so much savings potential; I could have gotten most out of my money.

#6 – I wish I had started investing sooner. In stead, I used to park some of my money on my savings account, completely ignoring the benefit of higher return rates from investments. Investing some of my money would have allowed me to build wealth, and my future.

#7 – I wish I had done more sports. Actually, I had hardly done any sports in my late teens and twenties, simply because I had other priorities and I was lazy. However, doing sports regularly would have given me more energy, it would have kept me fit, and it would have built a routing, making it easier to do sports at a later age as well.

#8 – I wish I had discovered the importance of networking. I always tended to see networking as some form of superficial ‘blabla’, which I could do without; I wanted to take responsibility for my own successes. Now, I realize that networking is an integral part of life, making things easier, finding the good jobs, or even getting some tips and hints on things… and it is a great way to build a large social circle.

#9 - I wish I had become entrepreneurial sooner. It is much easier to ‘crash and burn’ when you are younger: your living expenses are much lower, and since you are not accustomed to a higher living standard, it is not difficult to give things up, or to re-build a life if things go wrong. The older you get, the more difficult it becomes. Actually, I started becoming familiar with website development back in 1998, when I developed my first website Dutchtrav.com. Too bad I had never really taken the time to develop it back then, it could have generated some nice revenues.

#10 – I wish I realized the value of time. I remember myself saying ‘I can do that later’, or ‘there is still so much time’. And before you know it, you’re 30, and you realize that you could have gotten so much out of your life. The years are literally passing by, and time is lost, it will never come back again. Therefore, I wish I had learned to enjoy every single moment in my life, and living it to the max.

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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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