6 Forces Behind All Financial Decisions

Today we are discussing the 6 Forces Behind All Financial Decisions, per Tony Robbins in the book The Path by Peter Mallouk and Tony Robbins.

The Path was written during the COVID-19 shutdown of 2020 and the proceeds were all donated to Feed America, which I thought was very altruistic.

So, Tony Robbins is a professional Personal Development coach and over the years he found that all people are motivated by 6 Human Needs.  These human needs motivate all of our decisions, including those about money.

Force/Need #1 Certainty

The first human need is certainty.  We need some certainty in our lives.  As a parent we know that to have a healthy child and to be healthy as a parent, we need to have a steady schedule of when we go to bed and wake up.

We need to have healthy foods daily and we need to communicate with each other.  The love and companionship we have is also a certainty to look forward to everyday.

A child gets very upset if the schedule changes without knowing why or if there really is no schedule.  Honestly, so does the parent.

So certainty is very important to creating a stable and happy home life.

In terms of money, certainty is like a regular paycheck, regular dividend payment, collecting rent regularly from tenants, etc.

Some of us highly value certainty, and this creates stability.  I highly value certainty.

I like investing in U.S. Treasury Bills at the moment that pay over 5% in interest.  I also like investing in preferreds for dividends, as opposed to common stock.  I also like investing in income producing real estate.

The drawbacks of over valuing certainty is getting paralyzed when there is change.

If I stay in U.S. Treasury Bills and don’t switch out when interest rates are low, or if there are better investments available, then I will lose out on the growth of my investments.

If I only look at preferreds and never invest in common stock I might lose out on a lot of growth opportunities.

I was lucky that I didn’t really understand the stock market when it was booming and I invested in it regularly.  My stock portfolio grew quite a lot from 2009 to 2016 when I quit my job.  Then I used the money to buy real estate in Hawaii, which has also appreciated a lot in value.

I didn’t experience the paralyzing fear of those who saw their stock portfolios tank from the housing crisis of 2008 because I wasn’t in the market then.

If someone pulled their money out of the stock market and didn’t put it back, they would have missed massive gains when the stock market climbed after the housing crisis.

I realize how much I like certainty recently!

My husband recently changed jobs and now needs the car for 6 and 1/2 months.  We share a car, so I have been biking Jordan to school and to do errands more.  The problem (in my certainty-loving-mind) is that he sometimes needs it and sometimes doesn’t.

So I’m not always sure if I’m driving or biking the next day, and neither is Jordan.

I’m adapting the best I can for now and embracing the 2nd human need.

Force/Need #2 Variety/Uncertainty

The 2nd human need is Variety/Uncertainty.  We all need some variety, to make life exciting and interesting.  The only certainty in life is change right?

Well, I like uncertainty to a degree.  I like it when I’m not doing well and want things to change.  Then uncertainty is great.

When I’m doing well, I don’t want uncertainty.

Someone who highly values uncertainty my be chasing the next new and great investment, they may be addicted to gambling, or may be constantly planning vacations but never looking at their finances.

I notice that in the book they don’t have any positive financial outcomes from this human need.

I can think of a few.  A person who likes and is good at investing in businesses and keeping tabs on latest developments and technologies.

A person who likes to invest in real estate and is good at finding profitable deals in commercial, residential and vacation real estate investments in the same location or in a variety of countries.

Some people who love variety will invest in business and real estate and lose a lot of money too.  But if you are good at it then this might be a profitable outlet for variety.

Force/Need #3 Significance

I do this blog and do online lives and videos to fulfill my need for significance and a later human need, growth.

According to the book what we buy and talk about can also bring us significance.  The examples they give are buying a fancy car, or a socially conscious Toyota Prius, because both want to form of significance for their choice.

Other ways to that significance can creep up is by:

1. wanting to be smarter than everyone else so studying stocks and business and spouting tips to friends and anyone who will listen (only sharing winners and not losers)
2. demonizing the market as “capitalist pigs” and then neglecting investing altogether
3. using spirituality as an excuse to not worry about money, saying it is “the root of all evil”, or “not of the divine”. Yet all this person does is worry about money.
4. hating the general population and putting all your money in cryptocurrency and evangelizing a decentralized future to your friends incessantly

If you highly value significance, then you might be striving to be a millionaire/billionaire at the expense of diversifying your money.

The example in the book is a man at 40 years young who did well creating a marketing company, and sold it for about $125 million.  Then he took all his money to build luxury condos in Vegas in 2006.  When the housing crisis hit, he was $500 million in debt!

He wanted to be a Billionaire, and was almost there at one point with a Net Worth of $800 Million.

It’s important to understand if you have a high need for significance, and how that plays out in your financial decisions.

Force/Need #4 Love and Connection

This is a very strong human need for me.  I love feeling the love and connection with my son and that’s one of the reasons I quit my job.  I wanted to have the freedom to spend time with him when he needed me.

This was of course a major financial decision.  I now make money with dividends and interest, selling online and contract services, and income producing property.  I actually Net the same amount of money that I used to at my job, but I have the time to spend with my loved ones.

Here’s some examples from the book of how love and connection are a powerful force behind financial decisions:

1. Shopping/Traveling/Going Out with your friends to spend time with each other, even though you can’t afford it
2. Having a shared commitment to financial freedom with your spouse, and buying each other trips or gifts at milestones
3. Choosing your friend to be your financial advisor (even though you know they earn money on commission)

I’ve actually experienced all 3 of these.  What about you?

Force/Need #5 Growth

One of the main reasons I quit my job at the bank was that it did not offer growth opportunities.  When I applied for them I was rejected.  I knew that the old form of banking was soon going to be outdated as well.

I now read and research wealth, investing, finance and personal growth on my own.  I blog about it and I also learn through trial and error.

This is a lot more fun for me, and I have positioned myself so that I have the time for personal growth.

I knew that was extremely important to me.

I love blogging because I get to learn new things, and share them with others.  The act of writing reinforces the information I’m learning and I can easily access what I’ve learned by searching my blog.

The book doesn’t really give examples of this force/need of Growth in financial decisions.

I obviously made a huge financial decision by quitting my job.

You might change jobs, or modify your work and/or hours to give yourself more growth opportunities.

Force/Need #6 Contribution

This is the need to help others and feel the good that comes from circulating good.

Tony Robbins gives examples like:

1. a couple who saves money for their retirement, their children’s college and their church.  They feel fulfilled helping themselves and others in their community.
2. a man with great wealth who decides to give now, instead of waiting to die and passing it on to his children.  He finds great joy in seeing what his contributions do for the organizations he helps.
3. a family of 4 who have an annual meeting on where their charitable giving will go.  They can donate to their own organization and report back on how the money was used.

I also blog as a contribution to the world that has access to internet.

I want to help others like me, who had a job and lots of debt, discover how to create financial freedom.

I notice that when I can actually see that I’ve made a difference in someone’s life, it really does feel good.

Using the 6 Forces/Needs to Create Financial Freedom

Now that you know the 6 forces/needs that motivate all decisions, how can you use this knowledge to create financial freedom in your life?

Tony Robbins says people will follow a course of action if it fulfills at least 3 of these forces/needs.

I would start by choosing actions that you need to do to become financially free.

For example, paying yourself first.

Perhaps when you get money you pay your bills first?

I used to do that.

In order to become financially free though you must pay yourself first.

Put aside money for your financial freedom.

Using what we’ve learned, the only way that you will do this is if you use at least 3 forces.

I will use Certainty, Growth and Significance as the forces to fuel paying myself first.

Certainty – I like the certainty of making more and more passive income the more that I invest.  So I would use my money to put into conservative investments at the present moment, such as U.S. Treasury Bills or Preferred Stocks.  I would avoid common stocks, riskier preferreds and other risky investments.  I would also invest in real estate and businesses that I’m knowledgable in.

Growth – I would grow by reading and learning about how to make better investments, and better financial decisions.  For example, reading this book The Path.

Significance – I will blog and make live videos about what I am learning, and share my knowledge with others.

Now you try.

Pick a behavior that you want to do, and find at least 3 forces to help you actually take the action you want!

Let me know what you do in comments below =)

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