How to Make It and How to Hold on to It
The Rules of Money — Book Review
The rules are simple, easy to understand and practical. Maybe might seem to be overly simplistic, but at times, the simple solution is the best one. I rated the book at 4/5 of Goodreads.
The road to riches actually is paved with hard work, long hours and luck. Moreover, says Richard Templar, wealthy people follow a basic set of principles that many other people tend to ignore which reminds me of my personal favourite, The Richest Man in Babylon. This is again, like any other Richard Templar’s book, is an easy to follow, practical guide. I would recommend everyone to read it.
The Rules of Money — Pin
- Riches demand hard work. Be prepared to put in the necessary time and effort.
- Get-rich-quick schemes are a myth.
- Assess our current financial situation first.
- Evaluate your definition of wealth and be realistic about how to achieve it.
- Learn to control your spending.
- Obey the fundamental principles of smart spending.
- Borrowing and lending money are both very bad ideas. Debt is the root of all evil.
- Never include illegal or unethical behaviour.
- Sharing your wealth with the less fortunate is noble.
- It’s true: money doesn’t buy happiness.
The Rules of Money — Book Summary
The Rules of Money — Thinking Wealthy
Believe it or not, there’s plenty of money is out there for the taking. Hundreds of people who were raised in abject poverty managed to become millionaires because they were determined to succeed, take Gary Vaynerchuk for example. They simply refused to let circumstances stand in their way.
If you think of yourself as a working stiff who is destined to struggle through life groping from paycheck to paycheck, your self-fulfilling prophecy is likely to come true. Attitude is half the battle. And the mind is a powerful tool, hence, learn to control your personal narrative. Make it a Learned Optimism if you have to.
Don’t be lazy
“Most people are too lazy to be rich.”
To start out in the right direction, decide how you define wealth and how you’re going to achieve it. Some people might consider themselves wealthy if they don’t have to worry about the bills and have enough money in the bank to survive a six-month emergency.
Others might characterize wealth as having a million-dollar home on a pristine beach or a shiny sports car in the driveway. Since, money can’t buy happiness, defining how much many you need to survive and be happy might be a wonderful start to your personal financial freedom journey.
Learn how the wealthy think
“If you are serious about being wealthy, you will have to learn how the wealthy think.”
You have to know where you’re going and be realistic about how to get there.
If you want to make a fortune in the stock market, but don’t enjoy working with figures or reading the business section, you won’t make it.
If you want to invest in property, but have no money and can’t get a loan, it’s not going to happen.
Secret reality check and game plan
Start with a reality check and develop a good game plan, but keep it to yourself. Sharing your ideas may invite good-intentioned pessimistic opinions that would discourage you. Besides, few other people really care what you do. If you have a good idea, others may be jealous. So, keep it to yourself first.
“The only thing that can hold you back is yourself and your own money myths.”
Work Hard — There’s no shortcut
Be prepared to put in the necessary time. Bill Gates didn’t get rich working from nine to five. Hollywood actors who make millions of dollars per movie spent hours in classes and workshops, paying their dues in nondescript community theatres.
You have to be willing to work hard and long. Only a handful of people have money dropped in their laps. Everyone else should be prepared to put in the hours. Rich and lazy don’t go together.
The Rules of Money — Money Myths and Truths
We weren’t thought much about money, what we’ve learned mostly are hearsay and myth. One of the common myth I’ve heard is that rich people are bad and money is the root cause of all evil.
Common money myths—
- Money equals heartache.
- You can never have enough.
- Being poor has more merit.
- You can’t make money honestly.
- Money is for the other guy.
- Money destroys relationships.
“The very first thing you need to do on your wealth quest is to get loans [and] debts paid off as soon as possible and do nothing else until that’s done.”
The truth is, everyone needs money. With money, we can do good or bad things. It is a tool, it’s ourselves that are either bad or good. Money might not change us, but it might reveal who we truly are.
But these two sobering thoughts are still true:
- Acquiring wealth through dishonest or illegal means will irreparably damage your soul.
- Money will not fix all your problems or guarantee your happiness. There are many happy poor people and many miserable rich people.
The Rules of Money — Getting Wealthy
Get a grip on your current financial standing.
- Gather all your bank records, credit card receipts and utility bills.
- Double-check the interest rates you’re paying. Account for every dollar you spend.
- For one week, keep a detailed record of your spending, including each candy bar from your office vending machine.
I personally use “Money manager” app to track my spending.
Identify where your leaks are and focus on minimizing them. Saved money can be used to make more money.
Now, take the hard medicine: free yourself from debt. I personally worked hard to pay off my debt. It was a worthwhile effort. A huge burden off my shoulders.
Debt is painful and it constantly tugs at your sense of well-being. Paying interest on anything except a mortgage is not a sound business practice.
In order to keep our purses overflowing, we need to ensure that the incoming earning stream is more than the outgoing stream. If more money is going out than is coming in, you must immediately take corrective action.
Rich people know exactly how much they’re making and what their expenses are.
No Shortcuts to Success
There are a lot of advertising promising easy riches. Most of them sound too good to be true. Wealthy people find all this very amusing.
I mean, is it logical for someone who knows how to make millions easily would teach the knowledge for $10? Doesn’t make sense to me.
This reminds me of the quote from George Bernard Shaw.
Hard work is mandatory to achieve wealth so don’t entertain get-rich-quick schemes. The only one making money from those scams is the guy cashing your check.
Think like a rich person; don’t be a sucker.
Put Stock in the Market
Simple, get expert advice, learn to manage the risk and learn a lot of the techniques, strategy and know-how yourself to protect your best interest. Pay attention to the details. Warren Buffet would suggest value investing and do not try to time the market. It is literally impossible to time the market. Regardless whether you’re an expert or not.
“Pay attention to the details.”
Warren Buffett, for example, selects businesses that offer products or services people always need. The best way to build wealth in the market is to invest in solid companies for the long run. Speculating, perhaps by reacting to news reports or anticipating sudden movement in a stock, may be exciting, but it is not likely to make you rich. Put your money into firms with solid value. If you are going to speculate, invest in industries or services you understand. If talk of a foreign currency or tech stocks makes your head spin, stay clear. Investing in something you can’t even understand is treacherously dangerous.
“The simple truth is that the rich know how to control their spending urges – that’s why they’re rich.”
Pay attention to the fees
Get expert advice but avoid professional advisors who promise to trump the market for a handsome fee. As you save money, you’ll undoubtedly hear from such so-called professionals who want to handle your dough.
They’ll likely to offer you sure-fire investments, partnerships or services “guaranteed” to return a quick buck. Of course, they’ll want money upfront. You need to run the other way.
There are no such things as guaranteed returns.
The old cliché applies:
“If it sounds too good to be true, it probably is.”
Instead, gravitate toward counsellors who try to match the market by investing in solid stocks with minimum fees. Rich people who have made money in the market and have husbanded their gains also are good sources of advice.
The Rules of Money — Getting Even Wealthier
When you’re debt-free or started to accumulate money, congratulate yourself. But then, you have to step up your game. Be prepared to take advantage of opportunities others don’t see.
Consider cultivating “money mentors,” individuals with proven track records who can help you make important decisions. This could be your neighbour, the bank president, or your cousin, the restaurant owner. They’ll be flattered that you’re asking for their advice and they’ll give it to you straight. Then, you have to decide whether to listen. This as The Richest Man in Babylon suggest, always seek expert advice.
“Understand that wealth is a consequence, not a reward.”
Being a savvy investor also means recognizing when to let go of an investment.
Signals that it is time to sell may include:
- Reading a newspaper report about questionable accounting practices.
- Finding a more profitable place to invest your money.
- Observing poor performance for a number of quarters.
- Believing that you’ve maximized your return.
Happy Money — The Science of Happier Spending
“Money isn’t – and never will be – the cure. It is the oil that smoothes the wheels. It isn’t the engine.”
Happy Money – The Science of Happier Spending suggest that money can’t buy happiness, but money can buy us the experience that provides us with memories of joy and happiness.
Rich people constantly think about how to get the most out of their money. You should too. Always look for better interest rates. Even when you have a lot of money, you need to apply sound, fundamental spending principles and avoid costly pitfalls.
Fundamental Spending Principles:
- Spend only what you’ve budgeted for today.
- Never incur debts that you plan to pay off with future income.
- Never count on future income.
- Never borrow or overdraw for impulsive purchase.
- Think about whether you really need an item. You can always go back for it tomorrow or do without it for a little longer.
We Won’t Be Young Forever
No one really likes to think about getting old. And fewer people, it seems, are adequately planning financially for their old age. Even those enjoying a wealthy lifestyle need to consider the ramifications of retirement and its inevitable impact on their income.
Put away money for your old age so you can handle medical and prescription bills not covered by insurance, as well as potentially astronomical long-term nursing costs.
In case of emergencies
Emergencies happen all the time, but people often are too caught up in their daily lives to prepare. Create a large enough emergency fund to deal with unexpected unemployment, catastrophic illness, troubled children, legal woes and even natural disasters.
Park this contingency money in high-interest savings account that you can withdraw from immediately. You can also keep your cash in a safe deposit box.
Money can buy us happiness, but charitable acts soothe our souls and can make us happy. The feeling that we are able and did something to elevate the suffering of our fellow human being is truly wonderful.
No one can force you to be charitable. After all, it’s your money.
But many successful people get a big thrill from helping others, a warm feeling nothing else can duplicate. Maybe it is a good idea to start with your relatives or friends who are in trouble.
But lending them money with the expectation of being repaid will invariably lead to disappointment and frustration, so make sure you are prepared to write off the loan and can afford to take the loss. Personally, I found out that I will feel good about yourself by helpings others.
You might be interested to read Richard Templar’s The Rules of Work.
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