(00:05): Confidence is more important than ability when it comes to getting ahead. Would you agree? Let me say that again. Confidence is more important than ability when it comes to getting ahead. In this podcast episode, we share how Profit First can help build confidence and help you get ahead even if you continue to suck at numbers, never learn accounting lingo and continue to dread meetings with your accountant. Hi, I'm Amanda and welcome to the Wealth Financial Podcast, episode 120, Using Profit First to increase financial confidence.
(00:47): Hey Ann, I'm Brandon and I'll be the first to tell you that I relate to what Amanda just said. That's my ability with bookkeeping reading and p and l or balance sheet and other business account acumen is probably a little below average. I mean, I've learned a lot, but it's just not what I'm excited to learn about. I mean, literally when we have the luckily I like our accountant and it's fun to have those conversations, but I'm kind of dreading that part of it. I mean, so many other things I'd rather learn, but here's what I do know. I must control the cash flow of my business. I mean, I must control the cash flow of my business and I need to have the confidence to make smart financial decisions. And I won't, shouldn't hand it off to just Amanda to decide for me. I mean, even though she's really smart and that's great and I won't, shouldn't listen to every word or accountant says as if it's gospel, right?
(01:59): As someone who is in control of running a business, I need to be engaged in order to get ahead. I can endlessly say that I agree that confidence has helped us get ahead way more than ability. At first, it was for me naive confidence, but that only last so long. Over time, it has developed into true confidence. I really do know what I'm talking about here. Profit First has been a big part of that journey for me and the other methods that we teach. And if you're looking to get ahead in your business, I believe today's episode is crucial to your journey. This is one not to miss. And again, we're gonna share how I've grown in confidence because of this. Are you sick and tired of hearing the same old conventional financial advice? We feel you we're fed up with those same old truisms that fall flat when you get into the unique opportunities and challenges of specific situations. This show is all about bringing you historic wisdom around building wealth with practical insights on how to apply it to your journey when conventional financial thinking doesn't get you where you wanna go. You need wealth, wisdom, let's master wealth building together.
(03:20): So as we jump in, I think the first question we need to ask is this, What is confidence? So as I was doing research for this episode, I found that the best info on how to define confidence, how to think about confidence comes from Dr. Richard Petty at the Ohio State University. Go Buckeyes. He's got, oh wait, I hope we didn't lose a whole bunch of subscribers right there, , but he does have an excellent TED talk on the topic and I happen to have been born and raised in Ohio with an older brother who's a huge Buckeyes fan. So I'm sure you'll forgive me for loving my brother so much that I love his football team as well. But we'll put a link to this Ted Talk in the show notes. We highly recommend watching it. We're gonna kind of take what he talks about in that TED talk and apply it to money. What he doesn't do that a lot in the TED Talk. Really great thing Ted talks a really short to listen to. So we highly recommend listening to that, watching that if you want to learn more about confidence.
(04:22): Yeah, totally click on that in the YouTube link there and you'll be able to find it or in the show notes. So fun fact, confidence is important. I mean, it's so important that the government tracks, I mean they call it this consumer confidence. You might have been hearing those words a lot lately as an indicator of pending recession or if we're in one already. I mean literally. Have you heard that in the news Consumer confidence? Yeah. And that came did Dr. Petty mentions that too back when he was recording this Ted talk like confidence is super important. The government even tracks consumer confidence. But I think that one of the most critical things we need to understand in order to understand confidence. So we have to first know what it is not. And confidence is not the same as self-esteem. Self-esteem is how you think of yourself. Confidence is how sure you are of how you think of yourself.
(05:22): So you might believe you aren't good with money, you have maybe a low self-esteem with money. I mean that was probably more me in that, right? But confidence is how strongly that you believe that high confidence that you aren't good with money means you either one, take action to garden and protect what you have or two sperm freely without a care in the world. You might be on both ends of the spectrum. And I talked to both, right? Low confidence that you aren't good with money means you're open to questioning that belief and perhaps discovering ways you can still control money without me naturally being good at it, but you aren't confident enough to try something new.
(06:13): Yeah, the big difference between somebody has a low self-esteem is whether that if they have a high degree of confidence in that low self-esteem that they're not good with money, they take action. If they have a low confidence in that low, they'd never take action and easy. So if you wanna get into it a little easier, the flip that around, someone could have a high self-esteem, they believe they're great at money, but if they have low confidence to go with it, they're just gonna continue where they are. Whereas it's the person that has the high self-esteem and the high confidence who's gonna be a billionaire by the time they're 50 or something like that, right? They're the ones that are gonna get ahead. Yeah, An easy way to think about it is that I think is consistent with Dr. Petty's work is that self-esteem is a belief confidence of what moves that belief into action. So there's belief and action.
(07:11): So this is kind of the definition of confidence, but then we wanna know, well how does confidence play out in the world? What does it look like? And there's been very little research on the relationship between success and confidence. That statement I just made about someone who has high confidence in high self-esteem is likely to make more money, has never been researched until Dr. Petty. So he developed a survey, he as of seven years ago when he was recording that TED Talk, he had had 150,000 people complete that survey and they found that as confidence goes up, so does income. The more confident you are, the more income you're likely to make. But as any researcher would tell you, correlation doesn't always equal causation. That's why they started research studies that make people feel more confident or more doubtful, and then they see what happens. So there's other kind of research studies that have come since
(08:08): Then. So they did the survey to see how is confidence out there in the wild? And then they did the research to see how can we manipulate confidence. So one of the first things they did was they brought these probably university students in and they had them think positive thoughts or think negative thoughts. They gave them different degrees of power. They just saw what they did based on how confident they would be and what kind of self-esteem or positive thinking or negative thinking they were bringing in. You can kind of imagine this if you were about to sit down and review your p and l or your balance sheet to determine how you're gonna improve your business, how do you think the process would go if a first you looked in a mirror and you told yourself how smart and successful and awesome you are, or B, if you stood in front of that mirror and you told yourself how ignorant and failing and awful you are, or if you told yourself which one of those is gonna bring you to your numbers and how are they gonna impact how you go about reviewing those numbers and making decisions and moving into action on improving your business based on those sets of numbers.
(09:16): When you do that, those affirmations, I always go back to Stuart Smalley on Saturday at live. Good enough. I'm smart enough and gosh darn it, people like me. There's a reason they made that. Yeah, I mean I would look in the mirror and say those things and anyway, you might wanna go to Saturday live and check out those kits. So how we think is very important. High confidence and negative thoughts won't get you as far as high confidence in positive thoughts. I mean here's the big quote as we think. So we are as a great philosopher, said that, right as we think so He said it a little differently, I think he said as a man to think of. So he is, but wanted to make it a little more inclusive there, but it also doesn't end there. Sure, it starts with our thoughts, how we think. So we are, but Dr. Petty and his team also manipulated things like how much power people have and they ended up developing this new theory called self-validation theory. The self-validation theory suggests confidence actually serves as a magnifier for our thoughts. Whatever thoughts we're thinking, positive or negative, confidence magnifies them.
(10:31): So how we feel about our thoughts is important. I mean it's super Important. We can see this, try this along with us. Say, I am smart with money. So first we're gonna do it while nodding our heads up and down. Here we go. I am smart with money. I am smart with money. . Now try it shaking your head side to side. I am smart with money, I am smart with money. I'm a little more inflictive than Brandon is in how we talk. But you can see it changes how those words are perceived. Even just how you act out your thoughts, what actions are going with your thoughts. Kind of the standing in the mirror analogy there too, but also nodding up and down or side to side Perhaps. Financial confidence is as simple as sitting up straight or standing in a power pose as your approach, your numbers. I would be If only it were that simple, I And I am working personally towards a standing desk so I can be more confident. And it's one of the purchases in our new office that I'm looking forward to. But I've realized that in saying, Oh, I wanna be more confident by standing. That helps. And Amanda is proving that live.
(11:54): Oh, I just think sitting's the new smoking. So I'm standing to not be a Smoker. Sorry, I guess I'm a smoker over Here. Yeah, . But it's really, it's not that simple. It's not like our confidence is gonna just increase because we get standing desks. I mean that could help us. But first we wanna mention two other ways that the self-validation theory plays out more so as a warning to you. So those thoughts, how you think could potentially be manipulated here with building your confidence from external sources that want it to go in a certain way. Brandon's got the first example there. Yeah. Have you ever noticed that powerful people use their thoughts more often than those who lack power? Most of us are tempted to do something we know is bad for us or for others, but it's the powerful who tend to act on it more. That's why politicians seem to be always getting into trouble. Confidence can magnify good or bad thoughts. It's not that politicians have more bad thoughts than the rest of us, it's that they have more power to put those bad thoughts into action. I mean, I've seen that with plenty of not just politicians but people in the music industry and other places.
(13:18): And so as if we're gonna build our confidence within our businesses, our financial confidence, particularly within our business, we have to know where those temptations are, where those negative thoughts lead us so we can steer more toward the positive thoughts. Cuz we're gonna amplify our thoughts, whatever thoughts we have as our confidence grows. So let's try to have more of those positive thoughts. So those are what get amplified. Now the other thing that self validation theory also explains is why humans feel more confident when we are against something than when we're for something. Just think about all the negative political ads that we hopefully get a break from for a little while now that the midterm elections are done. But also think about how we have protests. People are way more likely to line the streets in objection to a harm rather than support of a cause. So as you're thinking about financial confidence, think of how are people giving you an enemy? How are people causing you to be against something so that you will work with them or make this financial decision or that financial decision And just be aware of that. Know that could be a source of using confidence in a negative way or maybe in a positive way. There are great things to protest and we should get behind them. Just something to be aware of.
(14:33): So let's start making this practical. Where does confidence come from? We can start with things like nodding our heads up and down and standing up straight. I might even get a better chair for my office or better yet stand more, which is what we're gonna be doing hopefully in the next month or so in my office. Those are a couple Things as soon as it gets back in stock. But really some women took Dr. Petty's research and they wanted to develop a confidence code. So they went around interviewing women, asking them what made them so confident trying to get behind, well what could we use within our careers to actually build confidence? And they actually named a book that they published with what they found in the confidence code. Now, full disclosure, we didn't read their book. I read a lot of articles of them being interviewed, talking about what's in their book. But what I found most helpful was a one star Amazon review of the book. Again, one star from Mrs Z Saint Pier. I love reading one star Amazon reviews before I buy something, if I'm gonna buy it even off Amazon, I'll still read the Amazon review and read the one stars in particular to see, well, okay, what's the worst that could happen here? So this is what Mrs. Z Saint Pierre says. I will sum up the confidence code for you and save yourself some money. Think less, take action, be authentic. Got it, Great. Now apply for the job as ahead of Facebook. End quote, Think less, take action more. Be authentic. Let's break those down. Think less, not don't think but think less. Is that what you said?
(16:17): Yeah. So a lot of what, especially women but also men get into is the pursuit of perfection. We think our confidence is gonna come from getting it perfect and confidence does not come from perfection actually when you aim for perfection and then you don't hit it because none of us can you actually decrease your confidence. So instead they say think less, which we found in our entrepreneurial days to be actually really powerful. How we work that out is we set a deadline where we're gonna research, we're gonna play around with our ideas, we're gonna talk to people, get feedback, kind of play around with it. And then we have a deadline where we're gonna make a decision. Parkinson's law supports this. Parkinson would say that the more time you give yourself to think, the more time it'll take you to think. But if you give yourself less time, you're still gonna do it. And maybe you're gonna even do it better because you set that deadline, you made the decision, you move forward. So think less.
(17:16): And it's also where having frameworks and methodologies allow you to think a little more upfront to set up the framing and then think less as you use the method going forward. So putting it on the front end, And I think that's a hundred percent why Profit First is really at its core just a framework and that framework allows you to put some thinking into it to get started and then save a ton of brain power later. As you're just working the framework, your work, working the percentages, you're moving things forward, you're getting into the rhythms And then it moves on from thinking to take action. First of all, we love how that comes after Think Less. First you have to think at least a little bit and then you need to take some action. Why we love setting a deadline for thinking about it, then we can move forward in action.
(18:14): And this is also why we love Profit First, because Profit First, it requires you to take action. Mike even suggests in his book to complete an action before moving onto the next chapter. We love that we find more people implement Profit First and do it successfully when they use bike's advice there and implement as they go throughout the book. And as a system, profit First is a hundred percent not passive. It requires action typically on the 10th and the 25th of each month. Yeah, a major part of how Profit First builds confidence is in these first two things, think less and take action. Mike gives you a process that works with your natural tendencies to move you from getting stuck in the weeds of your numbers to taking action, to gain control of your business and increase your profits. So there's think less take action, but there's one more. Be authentic. Keep your actions in line with your values and beliefs.
(19:20): This is more about not letting social pressures cause you to think or act in a way that is contrary to who you are and who you want to be. For more on this, go back to our last episode In one 19, Kim Profit First helped build Wealth. And by the way, if you missed that last episode, go back to that anyway because it really helps to build the framework of this episode. So Let's sum this up again. How does Profit First help build confidence? In some ways you could think of profit first, like the power pose or the head nodding. It's going to put you in the right framework to approach your numbers and get the confidence that you need. That comes just from the positive thinking to begin with. But then also profit First reduces thinking time.
(20:12): You spend some time defining your allocation percentages, then you use them. You notice patterns, look for opportunities and go forth. In a crisis or opportunity situation, you could simply look at your bank account balances and move forward. No other thinking is required cuz you already did it. Secondly, profit First moves toward action. You're taking action regularly. I can't say it this early in the morning and rhythmically. And that action gives you insight into your business and how it's really doing. And then finally, Profit First keeps your value primary. I don't know of any actions more confident building than taking a quarterly profit distribution and using it to bring joy. Again, that's in our last episode. And I love when we have those profit distribution days, They help us be more authentic to use those Profits. This is also why we love embedding Profit first into our still method. The S is set your sites. I mean it's crucial to bringing positive thinking into tracking your in and out and used my profit distribution to kind of some fun goals.
(21:32): Yeah, so the track your In and Out in the Still method is where you do your allocations and profit first Language. And then from the S we go into the I, which is inspecting your progress. This is part of that still method. Yeah, so we got set your sites, track your in and out, inspect your progress. Inspect your progress is where you see how your current allocations compare with your target allocations at Profit First Land. And then of course looking for those 1% adjustments, making those little micro things. Yeah, that's the first L. Look for your 1% adjustments helps move your current allocations toward your target allocations and profit first language there. And of course the last L is live deliberately now. If you want more on our still method, go visit still method.com. That's still method.com. And you can download a simple pdf workbook on how to set your site, track your in and out inspect look for 1% adjustments and live deliberately. There are amazing questions
(22:36): There. So here's our conclusion for today. Let's go back to where we started. If confidence is more important than ability when it comes to getting ahead, then confidence is crucial to growing your business and your wealth. To get more financial confidence, you need more than a power pose or a head nod. As good as those things are, you need a system that's gonna help you think less, take action and be authentic. We believe that's why Profit First is so effective. Sure, you see insights into how to make more money and reduce expenses. But even more powerful, you build your confidence in yourself. In other words, you get both increased financial confidence and greater financial ability by implementing the Profit First Method. Profit First builds self-esteem and the confidence to put your positive thinking towards positive action.
(23:33): So are you ready to start Profit First and get more serious about Profit First? We believe so much in this system that we've developed a 12 step online quest to help you think less, take action and stay authentic. You can get started quickly, easily move forward. And for the month of November you get complimentary. That means free access to the implement profit first in 12 easy steps when you join our Wealth Wisdom financial community. It's our step by step guide to setting up profit first in a way where it won't be too burdensome or overwhelming to keep going with it for years and years to come. We've got cheat sheets, checklists alongside community support. You can find all the details at www.wealthwisdomfp.com/profit. Again, that's www.wealthfp.com/profit. We'll put a link in the show notes so you don't have to type all that in as well.
(24:37): And before you go, don't forget to hit that subscribe button because in our next episode, we wanna build on top of these last few months and show you how to fill in your redefinition of budgeting and your implement implementation of profit First with a concept that has helped us build wealth and financial confidence more than budgeting and profit first combined. I mean, stay tuned. You don't wanna miss that One. And until next time, keep building and protecting your foundational wealth so you're ready for the next adventure. Life brings your way. We hope you live long and profit topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting or investment advice on such matters. Please consult a professional who knows your specific situation.
This is thepodcastfactory.com
