Seeing how fewer and fewer of us remember the days before the internet, all interactions with people were face to face, this give the ability for verbal, nonverbal cues, and other human intuition to raise red flags that something may not be right and avoid the person or situation. Scams have existed longer than money, reinvention of scams has evolved along side each of our cultures.
As a society we teach the next generation of stranger danger, but as we grow older the importance of discernment is more important One must keep it mind not every stranger = danger, but everyone is not a friend or ally either. As humans we give a certain amount of initial trust towards humans, this is 100% natural. Trust can be gained and taken away with words or actions with ease often this is used against us by criminals to manipulate even the best of us.
Question: How do you believe the internet blurs the lines of trust? How is that so?
Principle #1 Never..NEVER.. trust a online stranger with any financial Investments or information!
My small 12 years of 3,723 years financial industry has been around I have heard the simplest and most elaborate schemes in order to gain access to other persons financial holdings. Anyone that has served in the financial sector understands this happens on a consumer and business level far too often with far to few ways to stop it in its tracks, by the time we find a solution the the hold problem, a new opportunity is hot & heavy in action.
If we cut age from the variable list, the most common factors are the following:
- Trust in Perpetrators: Victims tend to trust the individuals or institutions involved, often because of long-term relationships or perceived legitimacy
- Vulnerability: Such as those experiencing financial hardship, illness, or loneliness
- Isolation: Lack of a support network or limited communication with family and friends
- Desire for Quick Gains: Individuals seeking rapid financial growth or high returns on investments
- Overconfidence: Belief in their ability to detect and avoid fraud can make individuals overlook red flags and become victims.
Question: Can you reflect to a time you were or almost scammed? What red flags did you overlook?
A recent DigiWealth client story: Different Call Same Story
I received a call on a Tuesday afternoon, a gentleman was asking if I can help him tansfer his funds back into fiat (U.S Dollars). I said Absolutely, let me ask a few questions before we set a time to meet. While asking what what token he is holding, he was very unsure. He mentioned his friend set everything up for him. I then follow up with, is this a person you know. He says yes, I asked in person or online. He replied, Online. My red flag is at full alert. I asked him if he has ever met this person in real life.
Principle #2 Your Finances, Your Responsibility
In my personal experience and belief most people only want enough money to not have to think about it again. Majority do not want obsean with but rather no longer needing to think about spending on a daily or monthly basis. Which is why most do not want the responsibility that comes along with finances literacy, this would require gut checks not everyone is ready to confront.
Being responsible with your finances require not only an overview, but a grip on your finances, a discipline of time and energy. The commonality is people want the outcome of having money but not the responsibility of knowledge of how to keep it. This is why majority of Lottery ticket winners often end up in a similar or worse financial situation than before they won the big bucks.
5 Bullet points on How to be responsible for your finances.
- Budgeting: Establish a clear, realistic budget to track income and expenses, ensuring that spending aligns with financial goals.
- Spending Discipline: Differentiate between needs and wants, and prioritize essential expenses.
- Debt Management: Be aware of the terms and conditions of any loans or credit products you use to avoid hidden fees and high-interest rates.
- Financial Education and Awareness: Continuously educate yourself about topics like budgeting, investing, taxes, and retirement planning.
- Investments & Planning: Develop short-term and long-term financial plans, including savings goals, investment strategies, and retirement planning.
Question: Do you have a memory when you decided to assumed responsibility of your finances or deferred to someone else? When and Why?
Principle #3 Interest is a Friend or Foe; Which for you?
The famous 8th wonder of the world: compound interest. Let’s imagine using a calculator to compare the daily accrued interest on your debts with the interest earned from your investments. Which one is growing faster? Hint: if it’s not your investments, you’re moving backward, which I’m sure is not your intended goal.
It’s so easy to fall into the trap of making payments on readily available credit, thinking we can pay it off later. However, we often miss the bigger picture: what is the total amount due each month versus what is the total amount earned, including investments?
Imagine if taking just 1-2 days out of the month to review, adjust, and optimize your finances could alleviate the daily stress of financial uncertainty. By ensuring that your investments are growing faster than your debts, you can measure your power of compound interest—working for you, not against you.