TheRulesofMoney:HowtoMakeItandHowtoHoldontoIt

ExpandedEdition

RichardTemplar

VicePresident,Publisher:TimMooreAssociatePublisherandDirectorofMarketing:AmyNeidlingerAcquisitionsEditor:MeganGraueOperationsSpecialist:JodiKemperSeniorMarketingManager:JuliePhiferAssistantMarketingManager:MeganGraueCoverDesigner:AlanClementsManagingEditor:KristyHartSeniorProjectEditor:LoriLyonsProofreader:ApostropheEditingServicesSeniorCompositor:GloriaSchurickManufacturingBuyer:DanUhrig©2012byPearsonEducation,Inc.PublishingasFTPressUpperSaddleRiver,NewJersey07458AuthorizedadaptationfromtheoriginalUKedition,entitledTheRulesofWealth,SecondEdition,byRichardTemplar,publishedbyPearsonEducationLimited,©PearsonEducation2012.ThisU.S.adaptationispublishedbyPearsonEducation,Inc.,©2012byarrangementwithPearsonEducationLtd,UnitedKingdom.FTPressoffersexcellentdiscountsonthisbookwhenorderedinquantityforbulkpurchasesorspecialsales.Formoreinformation,pleasecontactU.S.CorporateandGovernmentSales,1-800-382-3419,corpsales@pearsontechgroup.com.ForsalesoutsidetheU.S.,pleasecontactInternationalSalesatinternational@pearson.com.’Companyandproductnamesmentionedhereinarethetrademarksorregisteredtrademarksoftheirrespectiveowners.Allrightsreserved.Nopartofthisbookmaybereproduced,inanyformorbyanymeans,withoutpermissioninwritingfromthepublisher.RightsarerestrictedtoU.S.,itsdependencies,andthePhilippines.PrintedintheUnitedStatesofAmericaFirstPrintingJanuary2012ISBN-10:0-13-290781-XISBN-13:978-0-13-290781-1PearsonEducationLTD.PearsonEducationAustraliaPTY,Limited.PearsonEducationSingapore,Pte.Ltd.

PearsonEducationSingapore,Pte.Ltd.PearsonEducationAsia,Ltd.PearsonEducationCanada,Ltd.PearsonEducacióndeMexico,S.A.deC.V.PearsonEducation—JapanPearsonEducationMalaysia,Pte.Ltd.TheLibraryofCongressCataloging-in-PublicationDataTemplar,Richard,1950-2006.Therulesofmoney:howtomakeitandhowtoholdontoit/RichardTemplar.--Expandeded.p.cm.ISBN978-0-13-290781-1(pbk.:alk.paper)1.Wealth.2.Finance,Personal.3.Money.4.Success.I.Title.HC110.W4T462012332.024--dc232011045649

Contents

AcknowledgmentsIntroduction

PartIThinkingWealthy

1AnybodyCanBeWealthy—YouJustNeedtoApplyYourself2DecideonYourDefinitionofWealth3SetYourObjectives4KeepItUnderYourHat5MostPeopleAreTooLazytoBeWealthy6GetaRealityCheck7UnderstandYourMoneyBeliefsandWhereTheyComeFrom8UnderstandThatWealthIsaConsequence,NotaReward9DecideWhatYouWantMoneyFor10UnderstandThatMoneyBegetsMoney11CalculatetheNetReturn12IfYouSeeMoneyastheSolution,You’llFindItBecomestheProblem13YouCanMakeLotsofMoney,YouCanEnjoyYourJob,andYouCanSleepNights14Don’tMakeMoneybyBeingBad15MoneyandHappiness—UnderstandTheirRelationship16KnowtheDifferenceBetweenPriceandValue17KnowHowtheWealthyThink18Don’tEnvyWhatOthersHave19It’sHardertoManageYourselfThanItIstoManageYourMoney

PartIIGettingWealthy

20You’veGottoKnowWhereYouAreBeforeYouStart

21You’veGottoHaveaPlan22GetYourFinancesUnderControl23InsurancePaysSomeone,andOddsAreIt’sNotYou24OnlybyLookingWealthyCanYouBecomeWealthy25SpeculatetoAccumulate(No,ThisIsn’tGambling)26DecideYourAttitudetoRisk27ThinkThroughtheAlternativestoTakingaRisk28IfYouDon’tTrustSomeone,Don’tDoBusinessWithThem29It’sNeverTooLatetoStartGettingWealthy30StartSavingYoung(orTeachYourKidsThisOneIfIt’sTooLateforYou)31UnderstandThatYourFinancialNeedsChangeatDifferentStagesofYourLife32YouHavetoWorkHardtoGetRichEnoughNottoHavetoWorkHard33LearntheArtofDealMaking34LearntheArtofNegotiating35SmallEconomiesWon’tMakeYouWealthybutTheyWillMakeYouMiserable36RealWealthComesfromDealsNotFees37UnderstandThatWorkingforOthersWon’tNecessarilyMakeYouRich—butItMight38Don’tWasteTimeProcrastinating—MakeMoneyDecisionsQuickly39WorkasIfYouDidn’tNeedtheMoney40SpendLessThanYouEarn41Don’tBorrowMoney—UnlessYouReally,ReallyHaveTo42ConsiderConsolidatingDebts43CultivateaSkillandIt’llRepayYouOverandOverAgain44PayOffYourLoansandDebtsasaPriority45Don’tBeTooBusyEarningaLivingtoMakeSomeMoney46SaveinBigChunks—orShouldYou?47Don’tRent;Buy

48UnderstandWhatInvestingReallyMeans49BuildaBitofCapital,ThenInvestItWisely50UnderstandThatProperty,intheLongRun,WillNotOutpaceShares51MastertheArtofSelling52SeeYourselfasOthersDo53Don’tBelieveYouCanAlwaysWin54Don’tPickStocksYourselfIfYouDon’tKnowWhatYou’reDoing55UnderstandHowtheStockMarketReallyWorks56OnlyBuyShares(orAnything)YouCanUnderstand57UseYourHead58ByAllMeans,UsetheInvestmentProfessionals(butDon’tBeUsedbyThem)59IfYouAreGoingtoGetFinancialAdvice,PayforIt60Don’tFiddle61ThinkLongTerm62HaveaSetTimeofDaytoWorkonYourWealthStrategy63PayAttentiontoDetail64CreateNewIncomeStreams65LearntoPlay“WhatIf?”66ControlSpendingImpulses67Don’tAnswerAdsThatPromiseGet-Rich-QuickSchemes—ItWon’tBeYouWhoGetsRichQuick68ThereAreNoSecrets69Don’tJustReadThis—DoSomething

PartIIIGetEvenWealthier

70CarryOutaFinanceHealthCheckRegularly71GetSomeMoneyMentors72PlayYourHunches

73Don’tSitBack74GetSomeonetoDotheStuffYouCan’t75KnowYourself—Solo,Duo,orTeamPlayer76LookfortheHiddenAsset/Opportunity77Don’tTrytoGetRichTooQuickly78AlwaysAskWhat’sInItforThem79MakeYourMoneyWorkforYou80KnowWhentoLetGoofInvestments81KnowYourOwnStyle82KnowWhyYouShouldBeAbletoReadaBalanceSheet—andHow83BeOneStepAheadofYourTaxCollector84LearnHowtoMakeYourAssetsWorkforYou85Don’tEverBelieveYou’reOnlyWorthWhatYouAreBeingPaid86Don’tFollowtheSameRouteasEveryoneElse

PartIVStayingWealthy

87ShopforQuality88ChecktheSmallPrint89Don’tSpendItBeforeYou’veGotIt90PutSomethingAsideforYourOldAge—No,MoreThanThat!91PutSomethingAsideforEmergencies/RainyDays—theContingencyFund92YouPaidWhatforIt?HowtoShopAround93NeverBorrowMoneyfromFriendsorFamily(butYouCanAllowThemtoInvest)94Don’tSurrenderEquity95KnowWhentoStop

PartVSharingYourWealth

96UseYourWealthWisely

97NeverLendMoneytoFriendsorFamilyUnlessYouArePreparedtoWriteItOff98Don’tLend,TakeEquities99YouReally,ReallyCan’tTakeItwithYou100KnowWhen/HowtoSayNo—andYes101FindWaystoGivePeopleMoneyWithoutThemFeelingTheyAreinYourDebt102Don’tOver-ProtectYourChildrenfromtheValuableExperienceofPoverty103KnowHowtoChooseCharities/GoodCauses104SpendYourOwnMoneyBecauseNoOneWillSpendItasWiselyasYou105TakeResponsibilityBeforeYouTakeAdvice106OnceYou’veGotIt,Don’tFlauntIt107What’sNext?PactswiththeDevil?

Acknowledgments

IwouldliketothankDanClayden,directorofClaydenAssociates—IndependentFinancialAdvisers(www.claydenassociates.co.uk)whowassokindastogothroughadraftofthisbookintheearlystagesandputmerightonafewthingsandisoneofthebestfinancialadvisersIhaveevermetprofessionally.Iwouldalsoliketodedicatethisbooktomydelightfulfather-in-lawwhomanageshismoneyinakind,generous,honestandmoralwayandstillmanagestomakeitworkforhimefficientlyandexpertly.Heisanexampletoallofus.HeisaRulesPlayerparexcellence.

Introduction

There’sanoldsaying“Money,money,money—it’salltheycanthinkabout.”Unlikelytobetrueofcourse,giventhathardlyanybodythinksaboutmoneyitself(unlesstheyhappentobeacoincollector).Thereasonweallpursueanddesireandfiercelyprotectmoneyisbecauseofwhatwecandowithit.Andno,ofcoursemoneycan’tbuyyouloveorhappiness.Althoughitcanbuyagooddealofpleasure—andremovealotofunhappiness.Butitcanbuyyouplentyofotherthings.OvertheyearsI’veidentifiedthetenthingswhichpeoplemostseemtowanttospendtheirmoneyon:1Security:Ahomeofyourownandenoughmoneyinthebanktosupportyouinthewayyouwant,plusabitinhandforemergencies,andabigenoughpensiontoensureacomfortableretirement.2Comfort:Awarmandspacioushouse,abigcar,someonetocleanormowthelawnsordothelaundryormindthekids,andgoodqualitymedicalcarewheneveryouwantit.3Luxuries:Exoticvacationss,finewines,mealsattop-classrestaurants,expensiveclothes,thebestseatsatsportseventsoroperaorwhateveryouenjoy.4Mobility:First-classtrainseatsandplanetickets,tripsoncruiseships,chauffeur-drivencarswhereveryouareintheworld.5Status:Prestigiousinvitations,accesstoimportantpeopleandexclusiveclubs,andperhapsevengratifyingdeferencefromothers.6Influence:Asagenerousdonorofsubstantialsums,youcanmakesurethatyourviewsandwishesarelistenedtoandtakenseriously.7Freedom:Notbeingdependentonemployers,bosses,creditors,clients,customers.Notbeingaslavetothecalendar,diary,orclock.Knowingyouwon’thavetobeaburdenonyourchildren.8Leisure:Timetodothethingsyouwant,gowhereyouwant,meetwhoyouwant,whenyouwant.9Popularity:Beingabletoentertainfriends,acquaintances,andcontactsfrequentlyandgenerouslydoeswondersforyoursociallife.

10Philanthropy:Beingabletomakeregularandsubstantialdonationsgivesyouthesatisfactionofhelpingpeople,supportingorganizations,andfurtheringcausesyoubelievein.

Seemsareasonableenoughlisttome.Andwhetherit’ssomeorallthosethingsthatyou’dlikemoreof,youneedtoknowhowtogoaboutgeneratinggreaterwealth—whichmeansyouneedtoknowwhatitisthatseparatesthewealthyfromthenot-so-wealthy.So,whatyouneedtoknowiswhatprinciples,andwhatbehaviorstherichhave,thatyoudon’t(yet).Someofthemyouwillrealizethatyouknow,butdon’tdo.Noneofthisisactuallyrocketscience;it’saboutunderstandingandthendoing.I’vestudiedalotofwealthypeople,andit’scleartomethattherearesomefundamentalcommonprinciplesfollowedbyalmostall.ThebulkoftheRulesinthisbookfallintothatcategory.Thentherearealsosomeprincipleswhichsomerichpeopleswearby,butnotall.I’veincludedsomeofthosetooforgoodmeasure,justincaseyoutooareoneofthepeopletheydothetrickfor.Security,comfort,luxuries,mobility,status,influence,freedom,leisure,popularity,philanthropy—that’sallsomepeoplethinkabout.Theymaynotbeeverything;theymaynotevenguaranteeahappylife,butthey’reaprettygoodbasistobuildhappinesson.I’vetriedtosetoutinthisbookthemostimportantRulesthatcanhelpyouachievethesetenthings.Allofthempurporttobeaboutaccumulatingmoney,andofcourseinasensetheyare,butatheartthey’reaboutmoneyonlyasameanstoanend.Ameanstoachievethosetenends.OfcourseIdon’tclaimthatthesehundredorsoRulesaretheonlymeanstotheseparticularends.Youmayencounterothersalongthewaythatyoufindhelpful.Ifso,pleasedofeelfreetosharethem.YoucanemailmeatRichard.Templar@richardtemplar.co.uk.RichardTemplar

PartI.ThinkingWealthyMoneyisaconcept.Youcan’treallyseeortouchit(unlessyouareholdingagoldbarinyourhand).Youcanonlydothatwithsomephysicalsymbolofitlikestockcertificatesoracheck.Bitsofpaper,yes,butbitsofpaperwithenormouspower.Theconceptofmoneycomeswithalotofbaggagetomostofus.Wehaveaninherentbeliefthatitisgoodorbadandthatwantingitisgoodorbad.Thatlovingitisgoodorbad.Thatspendingitisgoodorbad.WhatIamgoingtosuggestinthefirstfewRulesisthatmaybe,justmaybe,howwethinkaboutwealthmightbeholdingusbackfromhavingwealth.If,inourheart,webelieve(evensubconsciously)thatmoneyisabadthingandhavinglotsandlotsofitisareallybadthing,thenchancesarewemightbeunderminingourownefforts,unwittingly,togetlotsofit.Iamalsogoingtogetyoutolookathowmucheffortyouarepreparedtoputintomakingmoney.It’sabitlikeasport—themoreyoupractice,thebetteryoubecome.Likewiseyoucan’tmakemoneywhilebeinglazy.You’vegottoputinsomeworkhere,youknow.You’vealsogottoknowprettyintimatelywhatyouwant,whyyouwantit,howyouthinkyouaregoingtogetit,whatyouaregoingtodowithitafteryou’vegotit—stufflikethat.Noonesaidthiswasgoingtobeeasy....

Rule1.AnybodyCanBeWealthy—YouJustNeedtoApplyYourself

Thelovelythingaboutmoneyisthatitreallydoesn’tdiscriminate.Itdoesn’tcarewhatcolororraceyouare,whatclassyouare,whatyourparentsdid,orevenwhoyouthinkyouare.Eachandeverydaystartswithacleanslatesothatnomatterwhatyoudidyesterday,todaybeginsanew,andyouhavethesamerightsandopportunitiesaseveryoneelsetotakeasmuchasyouwant.Theonlythingthatcanholdyoubackisyourselfandyourownmoneymyths(seeRule7).Ofthewealthoftheworld,eachhasasmuchastheytake.Whatelsecouldmakesense?Thereisnowaymoneycanknowwhoishandlingit,whattheirqualificationsare,whatambitionstheyhave,orwhatclasstheybelongto.Moneyhasnoearsoreyesorsenses.Itisinert,inanimate,impassive.Ithasn’taclue.Itistheretobeusedandspent,savedandinvested,foughtover,seducedwith,andworkedfor.Ithasnodiscriminatoryapparatussoitcan’tjudgewhetheryouare“worthy.”Ihavewatchedalotofextremelywealthypeople,andtheonethingtheyallhaveincommonisthattheyhavenothingincommon—apartfromallbeingRulesPlayers,ofcourse.Thewealthyareadiversebandofpeople—theleastlikelycanbeloaded.Theyvaryfromthegenteeltotheuncouth,thesavvytotheplainstupid,thedeservingtotheundeserving.Buteachandeveryoneofthemhassteppedupandsaid,“Yesplease,Iwantsomeofthat.”Andthepooraretheonessaying,“Nothankyou,notforme,Iamnotworthy.Iamnotdeservingenough.Icouldn’t.Ishouldn’t.”That’swhatthisbookisabout,challengingyourperceptionsofmoneyandthewealthy.Weallassumethepoorarepoorbecauseofcircumstances,theirbackground,theirupbringing,theirnurture.Butifyouhavethemeanstobuyabooksuchasthisandliveincomparativesecurityandcomfortintheworld,thenyoutoohavethepowertobewealthy.Itmaybehard.Itmaybetoughbutitisdoable.AndthatisRule1—anyonecanbewealthy,youjusthavetoapplyyourself.AlltheotherRulesareaboutthatapplication.

YOUHAVETHESAMERIGHTSANDOPPORTUNITIESASEVERYONEELSETOTAKEASMUCHASYOUWANT.

Rule2.DecideonYourDefinitionofWealth

So,what,toyou,iswealth?Thisisoneyouhavetositdownandworkoutinadvanceifyouaregoingtogetwealthy.Myobservationisthatwealthypeopleinvariablyhaveworkedthisoneout.Theyknowexactlywhat,tothem,wealthmeans.Ihaveawealthyandextremelygenerousfriendwhosaysthatheknewlongagowhenhewasstartingoutinbusinessthathewouldconsiderhehadmadeenoughwhenhewasn’tlivingoffthemoneyhehadamassed(whichwewillcallhiscapital).Norwouldhebelivingofftheinterestonhiscapital.No,hewouldconsiderhimselfwealthywhenhewaslivingontheinterestontheinterestonhiscapital.Soundsgoodtome.Now,thisfriendknowshowmuchhisinterestontheinterestismakinghim,prettymuchbythehour.Thusifweallgooutforamealintheeveningheknows(a)howmuchthemealhascostand(b)howmuchhehasmadewhileeatingthemeal.Hesaysthataslongas(b)ismorethan(a),thenheishappy.Thisissettingthedefinitionofwealthprettyhighyoumightthink.Maybeyouwouldn’twanttosetitthishigh.Andthat’sfineofcourse.Thenagain,maybeyou’dwanttoputsomekindoffigureonit.Intheolddayseveryonewantedtobeamillionaire.Thatwasaneasyonetojudgeifyou’dgotthereornot.Todaytherearealotofpeoplewhohavehousesworthmorethanthatandtheywouldn’tconsiderthemselveswealthyatallandyethaven’tquitegotaroundtouppingtheantetowishingthemselvesbillionaires.**Sorry,buttomeabillionisamillionmillionandIwon’tbepersuadedotherwise.

Myowndefinition,forcomparison,ishavingenoughsothatIdon’thavetoworryabouthavingenough.Howmuchisthat?Ineverknow.Therealwaysseemstobemoretoworryabout—andlesscomingin.Butseriously,IfeelthatIhavebeen“comfortable”sinceIstartedcountinginthousandsratherthanindollars.IknowtothenearestthousandhowmuchI’vegot,howmuchIneedandhowmuchIcanspend.Forsomepeople,notworryingmightmeanhavingenoughtopayforanyemergencythatmightariseinyourfamilyorhome.Sohowwillyoudefineit?Bythenumberofcarsyouown?Servants?Cashinthebank?Valueofyourhouse?Portfolioofinvestments?Thereare,ofcourse,norightorwronganswers,butIdofeelthatuntilyou’veworkedthisoneoutyoushouldn’treadon.Ifwedon’thaveatarget,wecan’ttakeaim.Ifwedon’thaveadestination,wecan’tleavehomeorwe’llbedrivingaroundincirclesforhours.Ifwedon’t

wecan’tleavehomeorwe’llbedrivingaroundincirclesforhours.Ifwedon’thaveadefinition,howcanwemonitororjudgesuccess?Ifwedon’tdothis,howwillyouknowifthisbookhasbeenhelpfultoyou?

IFWEDON’THAVEADEFINITION,HOWCANWEMONITORORJUDGESUCCESS?IFWEDON’TDOTHIS,HOWWILLYOUKNOWIFTHISBOOKHASBEENHELPFULTOYOU?

Rule3.SetYourObjectives

Bydefiningwhatyoumeanbywealth,younowhaveadestination.Settingyourobjectivesisestablishingatimetabletoreachthatdestination.It’squitesimple.Ifyouknowyouaregoingtodrivetoacertainplace,itmakessensetoknow

•Whattimeyouareleavinghome•Whattimeyouexpecttoarrive•Whatrouteyouaregoingtotake•Whatyouwillbedoingwhenyougetthere

Gettingrichisexactlythesame.Youwillwanttoknowinadvancewhatrichmeanstoyou,howyouintendgettingthere,howlongyouexpectittotake,andwhatyouaregoingtobeabletodoorwanttodowithyourmoneywhenyougetit.So,havingdefinedwhatwealthmeanstoyou,canyounowseetheimportanceofsettingyourobjective?Thinkabouthowyouintendgettingrichandhowlongitisgoingtotakeyou,andthensetyourobjective.Itmightbesimple:“Iamgoingtobeamillionairebymyfortiethbirthday,andIshallmakemymoneybyrunningmyownpropertydevelopmentcompany.”Thatwaseasy.WellitwasformebecauseI’monlymakingupanexampleforyou.ForyouIwagerit’sgoingtobeprettyhard.Thisisbecauseyouwon’thavethoughtaboutthisbefore.Oh,Idaresayyoumighthavehadacasualdream—Iwanttobevery,veryrichand/orfamousand/orsuccessful.Butfewpeople—onlytherich,famous,andsuccessfulonesinmyobservation—actuallydecidewhatandwhenandhow.Youhavetoifyoutoowanttobewealthy.AndIassumeyoudooryouwouldn’tbereadingthisfar.Goodforyou.Nowsetyourobjective.Icanwait.Backalready?Howdiditgo?Yourobjectivehastoberealistic,honest,andachievable.ByrealisticImeanthatsettinganobjectiveofbeingtherichestpersonintheworldmighthappen,butitisn’tgoingto,itisn’trealistic.Honestmeansyouhavetobetruetoyourselfandsetanobjectivethatyoucanlivewithandworkwith.Lyingtoyourselfmeansitwillfail.Lyingtoothersmeansitwillfail.Achievable?Yes—that,too.Ifyouknownothingaboutpropertyandaren’tinterestedinlearning,havenocapitalandcan’tgetamortgage,thensettinganobjectivetobeapropertydeveloperisn’trealistic,honest,orachievable.

objectivetobeapropertydeveloperisn’trealistic,honest,orachievable.Happywithwhatyou’vegot?Good.Ifnot,tryagainandlet’sgetamoveon;wewanttogetyouupandrunningassoonaspossible.

YOUWILLWANTTOKNOWINADVANCEWHATRICHMEANSTOYOU,HOWYOUINTENDGETTINGTHERE,ANDHOWLONGYOUEXPECTITTOTAKE.

Rule4.KeepItUnderYourHat

Nowthatyouhaveembarkedonanewjourney,anewdirection,itmightbeworthkeepingitunderyourhat.Theremaycomeatimewhenyouwillneedtodiscusswhatyouaredoingwithmoneymentors(seeRule71)butforthemomentdon’tbroadcastwhatyouaredoing.Thereareseveralreasonsforthis:

•Otherpeople’sopinionscanoftenbenegative,andthiscandiscourageyou.•Ifeveryoneisdoingit,theremaybelessroomforyou.•There’snoneedtogiveawayallyourbestideas.•Havingotherpeoplediscussingyourbusinessamongthemselvesisnevergoodforyou.•Youdon’twanttobeseenaspreachingortryingtoconvertpeopletoyourwayofthinking.•Nooneelsereallywantstoknowwhatyou’reupto—iftheyaskhowyouare,replywithasimple“Fine”ratherthanalengthyexplanationofwhatyouaredoing.•It’snicehavingasecret—givesyouawarm,smug,glowingfeeling.

Ifyougoroundbroadcastingwhatyou’redoing,therewillbepeoplearoundyouwhowillgetjealousandwilldoprettywellanythingtodiscourageyou.Afterall,youaresayinggoodbyetotheminaway.Youareproclaimingthattheoldyou,theoldlifestyle,isn’tgoodenoughanymoreandyouareofftogreenerpastures.Ofcourse,theyaregoingtobeunhappyaboutthat.Sokeepitunderyourhat.Thatdoesn’tcostanythingorrequireyoutodoanything.Letthisbeourlittlesecret.CarryonlearningandpracticingtheRules,butjustdon’tgotellingeveryone—nomatterhowmuchyouthinktheymightbenefitfromreadingthisbook.Leaveacopyaroundbyallmeans,ofcourse.Theinterestingbitisthatevenifyoudidgotellingeveryone,they’reunlikelytodoanythingaboutit.Mostpeoplewouldratherwatchtelevisionthandragthemselvesoutoftheirpitofpoverty.IamonlythinkingofyouwhenIsaykeepitunderyourhat.Anyonewhogetsreligionofanysortneedstokeepatightliponit.Peoplereallyhatebeingpreachedat,lecturedat,encouragedtothinkabouttheirlifestyle,ortoldthatwhattheyaredoingisn’tgoodenough.Gainingprosperityisoneofthosethingsyoudoprivately,clandestinely,surreptitiously.Notthatthereisanythingwrong,justthatit’sbestdonealone.

NOWYOUHAVEEMBARKEDONANEWJOURNEY,ANEWDIRECTION,ITMIGHTBE

NOWYOUHAVEEMBARKEDONANEWJOURNEY,ANEWDIRECTION,ITMIGHTBEWORTHKEEPINGITUNDERYOURHAT.

Rule5.MostPeopleAreTooLazytoBeWealthy

Youhavetogetupearly,workhardallday,andgotobedstillworkingonyourobjective.Yes,moneydoessometimesgrowontrees—orsoitseems.Yes,peopledowinthelottery,thejackpot,thebigprize.Peopledogetsuddeninheritancesfromlong-lostrelatives.Yes,peopledosuddenlyfindfameandfortunewheretheysoughtfornone.Butitisn’tgoingtohappentoyou.Well,theoddsarethatitwon’t.IfyousetyourobjectiveasWinthelotteryandliveinthelapofluxuryforever,thenreadnofurther.Putthisbookdownandgoandbuylotterytickets.Ifyourobjectiveisalittlemorerealisticthenreadon.Mostpeoplearetoolazytoberich.Theymaysaytheywanttobe,buttheydon’t.Theymaybuyalotteryticketasasortofhalf-heartedgestureofwantingtoberich,buttheyaren’tpreparedtoputinthework.Theyaren’tpreparedtomakesacrifices,study,learn,worktheirsocksoff,putintheeffort,andmakeitadeterminedandconcentratedfocusoftheirlife.Andforalotofthem—notyou—itisbecausetheybelievethatifyoudosoyouaresomehowtaintedwithevil(seeRule7).ButisitOKtoworkhardtomakemoney?Isitaworthwhilethingtowant?ItdependsonwhyandwhatyouaregoingtodowithitIguess.Mostpeopledon’twanttodothework.Yes,theywantthemoneybutonlyifitcomestothembyaccident,byluck,bychance.Thenit’sOK.Thenit’snottaintedwithsweatandworkandpassionandfocus.Ithinkifyoulookatanyonerichenoughtobearolemodel—BillGates,RichardBranson,WarrenBuffett,SimonCowell,JamesDyson,PetrKellner*—you’llnoticeonlyonethingincommon...theyworktheirsocksoff.Theymightmaketheirmoneyfromcomputers,sales,business,thefilmindustry,vacuumcleaners,popmusic,radiostations,whatever.Buttheonethingtheyallshareistheabilitytodomoreinadaythanmostofusdoinamonth.*Ididhaveabetwithmyselfthatyouwouldn’thaveheardofhim—theCzechRepublic’sfirstbillionaire.

Andthat’sthewonderfulthingaboutwealth—it’slyingaroundwaitingtobeclaimed(rememberRule1).Andthosewhoclaimitaretheoneswhogetupearly,workhard,andputinthehours.Andyouaregoingtohavetoaswell.Idon’thaveslackersorfreeloadersonmyteam.Iwanthard-working,dedicated,focused,ambitious,drivenmoneymakers.Withasenseoffunofcourse.

MOSTPEOPLEARETOOLAZYTOBERICH.THEYMAYSAYTHEYWANTTOBE,BUT

MOSTPEOPLEARETOOLAZYTOBERICH.THEYMAYSAYTHEYWANTTOBE,BUTTHEYDON’T.

Rule6.GetaRealityCheck

It’samazinghowmanypeoplejustignoretheobvious.Especiallypoorpeople.No,I’mnotbeingprejudiced;I’msayingthatthisispartofthereasonthey’repoor.*Somepeoplemoanalotaboutnothavingenough,theymakeloadsofexcuses,theymaywork,butnothardenoughornotintherightways,andtheyhopethattheirproblemswillsimplygoaway.*I’mnottalkingaboutpeoplestarvinginthird-worldcountrieshere—I’mtalkingaboutpeoplewithfriendsandneighborswhohavemorethanthem.

Wellguesswhat?Theywon’tgoaway.They’remorelikelytogetworse.Ifyou’restrugglingfinanciallyandwonderinghowtomakemoremoney—alotorjustalittle—forthosethingsthatmattertoyou,youneedtotakepositiveaction.BecauseIpromiseyouthatshortofwinningthelottery,nothing’sgoingtochangeunlessyoudo.****Andyoucanstartbysavingthecostofthatlotteryticketeveryweek.Howmuchhaveyouspentinyourlifeonlotterytickets?Goon—workitout.Andwhathaveyouwon?Thatbalanceisn’tgoingtochange,youknow—you’rejustthrowingmoneydownthedrain.Takeitfromme,youwon’twinthejackpot.

Sositdownandthinkconstructivelyaboutwhatyoucandotoincreaseyourwealth.Andthendoit.Nothingelsewilldigyououtofthefinancialmorass.Berealistic—aboutwhereyou’regoing,whatyou’respending,whatyou’resaving,andwhatyoucandotosetyourselfonanewandmoreprosperouspath.Thisappliestosavingmoneyaswell.Ifyouwant$50,000infiveyears’time,it’snogoodputtingawayatwentyamonth.You’llbeluckytosaveathousandatthatrate.Ifyouwanttosaveaspecificamountofmoney,youneedtoworkoutexactlyhowmuchyouneedtosaveperweekormonthtodoit.Ifit’snotgoingtoaddup,don’tburyyourheadinthesand.Workouthowtosavemore,orextendyourdeadline.Ifyouknowyouhavemoneyvices,thenfacethem.Ifyoualwaysspend$100amonthonbeer,gadgets,shoes,whatever,thenit’snogoodpretendingthatyoudon’twhenyoumakethosefinancialplans.Andifyouknowyoustruggletosaveanything,there’snopointpretendingthatyoucansuddenlyputaway$100amonth,everymonth.Iknowit’stemptingtoavoidlookingatproblemsanddisappointments,butifyoudothatyou’llnevergetwealthy.Ifyou’reseriousaboutmakingmoney,youhavetostartbyfindingthecouragetoconfrontthefinancialtemptationsinyourlifeanddosomethingaboutthem.

NOTHING’SGOINGTOCHANGEUNLESSYOUDO.

Rule7.UnderstandYourMoneyBeliefsandWhereTheyComeFrom

Weallgrowupwithmoneymyths.Wegetalotofthemfromourparentsandthewaytheybringusup.Icanstillhearmymothersaying,“Apennysavedisapennyearned,”andtothisdayIstillhavenoideawhatitmeans.MaybeI’mlucky.Mymoneymythsarebasedonalotofnonsenselikethat.Butmostofushavethefollowingingrainedbeliefs:•Moneyistherootofallevil.**Itisactuallytheloveofmoneythatissupposedtobetherootofallevilbutisitabeliefofyours?

•Moneyisdirty.•Idon’tdeservetoberich.•Moneyisonlymadebythegreedyanddishonest.•Moneycorrupts.•Youmustnotbragaboutmoney—neversayhowmuchyouearn,areworth,orpaidforsomething(unlessitisabargain).•Youcan’thavemoneyandbe“spirituallypure.”**

**Whateverthatmeans.

•Youloseyourfriendsifyougetrich.•Youhavetoworktoohardtogetrich(seeRule5).•Happinessandmoneymakepoorbedfellows.•Themoreyouhave,themoreyou’llwant.•Itissomehowbettertobepoor.•Iwasn’tmeanttoberich—ifIwereIwouldhavebeenbynow.•I’mnottherighttypetoberich.

Haveaquicklookthrough.Checkwhichonesyoubelieve.Checkwhichonesstrikeachordwithyou.Nowyouhavetodoabitofthatold-fashionedhardwork.Writedownonesthatmeansomethingtoyou.AddonesI’vemissed—therewillbeafew.Nowworkoutwhyyouholdthesebeliefs.Isitsomethingyouhaveactivelythoughtabout,reasonedout,dedicatedsomeresearchto?Oraretheyinherited,leftover,pickedupalongtheway?Getridofanythatyoucanquestionandacceptarenonsense.Discardanythatsimplyaren’ttrue.Andchuckoutanythatstandintheway,holdyouback,stopyoumakingsomemoney.Whatyoushouldbeleftwithisnoneatall,nothing,ablanksheet.Nowyoucan

Whatyoushouldbeleftwithisnoneatall,nothing,ablanksheet.Nowyoucanwritenewbeliefssuchas•MoneyisOK.

•WantingmoneyisOK.•Iamgoingtobewealthy.•Iampreparedtoputinthework.

Wealthypeoplehavenoneofthetroublesomemoneymythswepoorerpeoplehave.Theyhavepurgedthemorneverhadthem.Ifwetoopurgethem,westandabetterchanceofgettingthere.

GETRIDOFANYBELIEFSTHATYOUCANQUESTIONANDACCEPTARENONSENSE.

Rule8.UnderstandThatWealthIsaConsequence,NotaReward*

*Iusetheword“reward”inthesenseofaprizeorbonus,notasapaymentorrenumeration.

Ifyouworkhardatmakingmoney,youstandabetterchanceofbecomingrich.Youhavetoacceptthatmoneyisapaymentgiventoyouforcleverthinkingandhardwork.Theharderandsmarteryouwork,themoreyouwillearn.Youaren’tgiventhemoneybyacommitteewhoexaminewhetheryoudeserveit,whetheryouhavebeengoodenough.Itisadirectconsequence.Weoftenlookatsomeonewhohasmoneyandmakesallsortsofvaluejudgmentsaboutwhethertheydeserveit.Wealldoit.IwasreadingaboutCalvinAyre—theInternetbookie—whohasgrownveryrichindeedrunningonlinegambling.Hehassomethinglike16millioncustomersintheU.S.TheU.S.DepartmentofJusticeisn’tveryhappyaboutthisandwanttoshuthimdown.Ayreisn’taU.S.citizenanddoesn’tresidethere.Youcanreadallabouthimonthewww.Forbes.comwebsite(homeofthereallywealthyfolk).Ifitisn’tyourhomepage,itoughttobe.Youareinthistobewealthy,whichmeansunderstandingwherewealthcomesfrom.BacktoAyre.HehasgrownrichexploitinganallegedU.S.lawloopholewherebywhathedoesisallegedtobeillegalbutheisn’tinthecountrytocommitanycrime.Dowejudgehim?Idon’t.IstudythisinformationtoseeifIcouldmakeuseofit.Whatmightbewrongisthegambling.ButIamawarethathisconsequenceofhardworkhasbeenlotsofmoney.IwaswatchingaTVprogramtheotherdayaboutadudewhowashescarsforrichcelebs.Hecharges$2,000forcarwashing.Mindyou,thisdoesincludepolishing.Nowishismoneyarewardoraconsequence?Idon’tthinkhewouldseeitasareward.It’sthepricehesets,andcustomerspayhimbecauseheisthebestcarcleanerintheworld.Theconsequenceofhisbusinessidea,skillandeffortistobeverywellpaid.

YOUAREN’TGIVENTHEMONEYBYACOMMITTEEWHOEXAMINEWHETHERYOUDESERVEIT.

Rule9.DecideWhatYouWantMoneyFor

Thisispartofyourdefining,settinganobjectiveprocess.Therearenorightorwronganswers.Forexample,makingafortuneandspendingitalloncocaineseems,tome,likeafoolishthingtodo.Butthat’spersonal.YoumightfindaproblemwithmespendingmineonadecentChâteauneufduPape.Weallspendonwhatwethinkwillsatisfyus,makeushappy.Weallchooseourownpleasures,andit’snotformetositinjudgmentonanyoneelse.Sowhydoyouwanttobewealthy?Theanswersyougivewilltellyouawholelotaboutyourhiddenmoneymythsandhowyoureallyseemoney.Sometimesit’sverysimple:Wehaveadreamandneedthemoneytofulfillit.Thedreamcomesfirst.What’syourdream?Itmightnotbethatsimple,however.Iaskedacloseacquaintancewhyshewantedtobewealthiertheotherday,andtheresultswerequiterevealing.Shesaidshewantedtobe“betteroff”sothatshecouldgiveherchildrenmore.Andingivingthemmore,theywouldstayathomelonger.Andiftheystayedathomelonger,shewouldn’thavetofaceapossibleoldagealone.Sobasicallyshewantstobewealthytostaveoffloneliness.Anotheracquaintancesaidhewantedtogetwealthysothathecouldhaveadventures.Whenpressedfurtheritseemedhisadventureswerethe“runningaway”sortwherehecouldbeyoung,free,andsingleagain.Ismoneyreallytheanswerforeitherofthesepeople?Isitforyou?Whenyouknowwhatyouwantgreaterwealthfor,thinkalsoaboutalternativewaystomeetyourneeds:IsaidearlierIwantedtobewealthysothatIcouldpayformedicalcareforanyclosefamilymemberthatmightneedit.Icouldinvestinsomesimplemedicalinsurancetocoverthatinstead.Consideralsowhatyoudon’tneedmoremoneyfor.Ilikemytoys—carsandboats—buthavefoundthatmyinvestmentsinsuchthingshasn’tincreasedasmyincomehasgoneup.Istilllikeoldcheapsportscarsandoldboatsthatneedplentyofmaintenance.Doyoureallyneedasmuchasyouthink?Ifso,fine,youjustneedtobesureandbeclearaboutit.Sowhat’syourexcuse?Whatdoyouwantmoneyfor?Itmightbetofreeyoufromhavingajob,oritmightnotevenbeforyourselfbuttosupportcausesyoubelievein.Setyourownagenda,myfriend,andkeepittoyourself.Andwhateveryouwritedown—andIdorecommendyouwriteitdown;itmakesitsomuchmorereal.Itisausefulexercisetolookbackononedaytoseeifyour

somuchmorereal.Itisausefulexercisetolookbackononedaytoseeifyourdreamandachievementsmatch.

WEALLSPENDONWHATWETHINKWILLSATISFYUS,MAKEUSHAPPY.

Rule10.UnderstandThatMoneyBegetsMoney

Thereisnogreatertruththanthis—moneymakesmoney.Itlikesclusteringtogether.Itbreedsquietlyandquicklylikerabbits.Itpreferstohangoutinbiggroups.Moneymakesmoney.Therichgetricher;thepoorgetpoorer.That’slife.Yes,itissad.Butitdoesseemtobeafact.Nowwecanworkhardourselvesanddosomethingaboutit,orwecansitaroundmoaningandbecomepartoftheproblem.Thechoice,asalways,isentirelyyours.Ifyoudowanttodosomethingaboutit,thenitseemstomakesensetometomakeatidysumanduseyourmoneywiselytohelpthelessfortunatethanyou.Ordowhateverwithityousochoose.Whenyouhavesomemoneyyou’llbeastonishedathowquicklyitcangrow.Irecommendyouunderstandandlearntheconceptofcompoundinterestasquicklyaspossible.Andno,Iamnotgoingtotellyouanythingaboutitexceptit’svitallyimportantthatyouknowaboutitandmakeitacornerstoneinyourbuildingofwealth.ThereasonI’mnotgoingtotellyouanythingaboutitis,firstly,thisisn’tthatsortofabook*and,secondly,I’mnotgoingtodoalltheworkforyou.Thatwouldbetooeasyandyou’dlearnnothing.Myobservationisthatwealthypeoplegettheideaofcompoundinterest,andtherestofusdon’t.*GoandreadTheFinancialTimesGuidetoInvestingbyGlenArnold.

Ifyouspendallyouget,thenthisRulewillneverworkforyou;it’llnevergetyourmoneyworkingforyou.Youhavetosetasidemoneyforbreedingpurposes.Ifyouranarabbitfarmandkilledandateallyourrabbits,youwouldn’thaveanylefttokeepgoing.Forgettherabbitfarm—you’regoingtostartamoneyfarm.Yourmoneywillbreed.Youcanthenreinvestsomeandspendsome—butyoucan’tspenditall,oryou’llhavenomorerabbits.Look,thisstuffisn’trocketscience,butitisamazinghowmanypeoplesimplydon’tgetit.Butyoudonow.YouhavebeengiventhebesttipIcangiveyou.

•Putsomemoneyasideforbreedingpurposes.•Skimalittleoffforspending.•Reinvestthebulktobuildupagoodandhealthystock.•Keepittoyourself.

MONEYMAKESMONEY.THERICHGETRICHER.

Rule11.CalculatetheNetReturn

Nowdoesn’tthatsoundboring:“Calculatethenetreturn.”Well,itshouldn’tbeboring.Remember,thisisaboutdecidingifandwhenyou’regoingtobuythathouseortakethatvacation,whenyoucanaffordtogiveupwork,howmuchyoucanleavetoyourkidsorgivetogoodcauses,whatkindofcaryou’regoingtodrive.That’snotboring.Andtheanswertowhenit’sallgoingtohappenwillbeaffectedbywhetheryoucalculatethenetreturn.Youunderstandwhat“net”means,ofcourse.Butdoyouremembertofactorinthecosts,expenses,charges,andtaxbeforedecidingwhethertomakeaninvestment?Ofcoursecalculationsmaynotdeteryou,andthat’sfine,solongasyoubaseyourinvestmentdecisiononthereal,net,returnanddon’tfallintothetrapofjustseeingtheheadlinefigure.Here’sanexample.Supposeyoubuyapropertytorentitout.Ifitcostsyou,say,$100,000andyouleaseitoutat$10,000ayear,youmightthinkthatlooksprettygood.Buthangon—whathaveyougottofactorinbeforeyoumakeyourdecision?Well,there’sthecostofthemortgage,ofcourse.Andtheinsurance.Theleasingagent’sfees.Maybeperiodswhenthepropertyisemptybetweentenants.Oh,andtaxontherentalincome.See?I’mnotsayingbuy-to-leaseisneverworthit,butyou’vegottocalculatethenetreturnbeforeyoucandecideifthisisagoodmoveforyou.Obviouslythere’salsothepotentialcapitalgrowthinapropertytoconsider,butthat’snotguaranteedexceptperhapsovertheverylongterm.Certainlyifyouneedtosellthepropertyinfiveoreventenyears”time,youcan’tassumesignificantgrowth,andthevaluemayevenhavedropped.Sodoyourmath.They’renotcomplicated,buttheydorequireyoutothinkitthroughandmakesureyouhaven’tforgottenanything—especiallythetaxyoumayeventuallyhavetopayonanythingyoumake.

THISISABOUTDECIDINGIFANDWHENYOU’REGOINGTOBUYTHATHOUSEORTAKETHATVACATION.

Rule12.IfYouSeeMoneyastheSolution,You’llFindItBecomestheProblem

Havingmoneydoesn’tmakeallyourrelationshipsflowsmoothly—notbyalongshot.Itdoesn’tprotectyoufromdisease—itmaybuyyoubettermedicalcareaftertheevent,butitdoesn’tprotectyou.Itmightbuyabetterdiet,buttherichhalfoftheworldhasaprettypoorhealthrecorddespitehavingallthemoneytofeeditselfextremelywellsothatdoesn’tnecessarilygohandinhand.Themoreyouseemoneyasasolution,thegreaterthechancethatyouaremissingthepointentirely.Moneydoesn’tdoanything.Iknow,Iknow.You’llbethinking,“IfonlyIhadXamount,Icouldfixthisprobleminmylife.”Ithinkyou’llfindmoneywouldthrowupalotmoreproblemsinitswake.Moneywillnotmakeyouhappier,thinner,ormorepopularwithdecentpeople.Moneydoesnotdeliverlasting,meaningfulpeaceofmind.Thereareplentyofrich,fat,unhappypeoplewithnorealfriends.Ithinkweneedtofindthecuretoourproblemsfirstandthenfindawayoffundingthatcure.Moneyisn’t,andneverwillbe,thecure.Itistheoilthatgreasesthewheels.Itisn’ttheengine.

ITMAYBUYYOUBETTERMEDICALCAREAFTERTHEEVENT,BUTITDOESN’TPROTECTYOU.

Rule13.YouCanMakeLotsofMoney,YouCanEnjoyYourJob,andYouCanSleepNights

Alotofpeopleholdoneorother—orall—ofthesenotions:•Makingmoneygoeshandinhandwithbeingaruthless,manipulative,amoral,greedylizard.•Tomakeabitofcashyouhavetosellyoursoul,grandmother,andprinciples.•Beingwealthymeansyouendupwithaheartproblem,insomnia,andotherstress-relateddisorders.•Tomakemoneyyouhavetoturnintoaslimeballwhosacrificestheirfamily,morals,andhappinessandallonthealtarofwealth.

Well,itcanbelikethat,butitdoesn’thavetobe.Infact,itshouldn’tbe.That’sthebeautyofit.Ifitislikethat,thenyou’redoingitwrong.Yousee,moneyissofreelyavailable—andtoanyone(aswelookedatinRule1)—thatyoureallydon’tneedtotrythathard,orchangethatmuch.Anawfullotofprettyordinary,nicepeoplemakemoney—andlotsofit.Youcanmakemoney,enjoyyourjob,andsleepatnight.Youjusthavetodecidethatiswhatyou’regoingtodo—nomatterwhat.Andthensticktoit.Remember,ifyouarestartingtolosesleeporhavestoppedenjoyingwhatyoudo,thenyouneedtohaveaserioustalkwithyourself.Gobacktothebeginningofthebook,andrememberwhatitisthatwealthisallabouttoyou.Irememberacartoonofaboardroomwithfat-catexecutives.Asmallgirlpokesherheadroundthedoorandsays,“Moneycan’tbuyakindsmile.”Thebusinessmenalllook,momentarily,shamed.Thenthechairmangrowls,“Getouttahere,kid,whothehellwantsakindsmile?”andtheothersalllookrelievedandgobacktotheirmeeting.Well,IforonewouldlikethekindsmileevenifitdoesmeanIlosealittlemoney.Iwanttosleepnightsandtoenjoymyjobandtomakemoney.ButIwon’tcompromisemyprinciples,spendtoolittletimewithmyfamilyorchildren,neglecttositinthesunshineoccasionally,takeadayoff.Iwon’tworryaboutworkormoneyonceI’vegonetobed,bedrivensomuchbymoneythatIlosemysenseofhumororneedtohavefun.TheseIswearby.Anditispossible—believeme,I’veknownandobservedenoughwealthypeopletoknowthisistrue—tomakemoneyandhavealife,tobeethicalandrich,toearnalotandbe

athoroughlyniceperson.Itispossible.Itjustsometimesseemsitisn’t.Allpartofdebunkingourmoneymyths.

IFYOUARESTARTINGTOLOSESLEEPORHAVESTOPPEDENJOYINGIT,THENYOUNEEDTOHAVEATALKWITHYOURSELF.

Rule14.Don’tMakeMoneybyBeingBad

IlikeGoogle’smissionstatement—Don’tbeevil.It’sprobablyananagramofsomethingbutIstilllikeit.Ifyouhavetolie,cheat,steal,defraud,losesleep,hide,breakthelawinanyway,bendtherulesorgenerallybehavebadlytomakeyourmoney,thendon’tdoit,itisn’tworthit.Ifearningmoneyorbeingwealthystopsbeingfun—andbybeingbaditreallywillstopbeingfun—thenthere’snopointdoingit.Ifyoudon’tenjoythechallengeofearningmoneyinadecentway,thenbestgoanddosomethingdifferent.Iknewamajorcriminalonce.Hetoldmeitwasnofunbeingcrookedas,infact,hehadtobealotmorelaw-abidingthantherestofus.Hecouldn’triskgettingpulledoverbythepoliceforspeedingoranyminormotoringoffense;nolatenightpartiesincasethepolicegotcalledout;noflashycartodrawattentiontohimself;nolavishlifestyleincaseitputhiminthespotlight.Butthereismoretolivingacleanlifethanbeingabletospeedorhaveparties.Livingalifewhereyoumakeyourmoneyfrombeinggoodletsyousleepnights.Yougettolookyourkidsintheeye—andyourselfinthemirror—withtheaddedbonusofafeel-goodfactor.Noamountofmoneycanbuythat.Ifyouhavetoresorttobeingwicked,itmeansyou’vefailed;you’velosttheplot.Itmeansyouhaven’tbeenabletodoitproperly.Itmeansyou’rescrapingthebarrel.Itmeansyouhaven’tbeenabletothinkofaproperidea.Itmeansyou’vebeenlazy,desperate,noncreative,boring.Icancomeupwithlotsofexamplesoffamouswealthypeoplewho’vemadetheirmoneyoutofbeingbad.Yep,they’rewealthyit’strue,butlookintheireyesandwhatdoyouseethere?Doyouwanttohavethatstay-awake-at-night-worryinglook?Doyouwantthatflinch-when-the-doorbell-ringskindoflife?Youwant“nobodytrustsyou”sortofrelationships?Orwouldyouratherrelaxandknowthatyoudiditlegit,honest,fairly?It’sano-brainerreally,isn’tit?Aslongasyoucanearnyourwealthwithoutrippingpeopleoff,beingcruelorunjust,breakingthelaworbendingtherules,you’llbedoingfine.Allitrequiresisaquickcheck,stayingconsciousofwhatyou—andyourmoney—aredoing.

IFYOUDON’TENJOYTHECHALLENGEOFEARNINGMONEYLEGITIMATELY,THENGOANDDOSOMETHINGDIFFERENT.

Rule15.MoneyandHappiness—UnderstandTheirRelationship

Therearelotsofthingsthatwillmakeusmiserable—losingapartner,beingmaderedundant,gettingsick.Andloadsmore.Therearequiteafewrelatedtomoneyandgainingorspending.Remember:

•Toolittlemoneycanmakeyoumiserable.•Toomuchmoneycanmakeyoumiserable.•Toomuchstuffcanmakeyoumiserable.•Nothavingenoughcanmakeyoumiserable.

IthinkwhatwehavetograspprettywellfromDay1isthatmoneyandhappinessarenotnecessarilythesamething.Moneydoesn’tbuyhappiness.Thisisacommonmistakepeoplemake.Itisn’tgoingtobeoneyoumake.Youcanbepoorandhappy.Youcanberichandhappy.Youcanalsobeeitherpoororrichandmiserable.Ifyouarelookingtowealthtomakeyouhappy,you’llbedisappointed.Ifyouarelookingtomoneytomakeyoupowerful/younger/sexier/morevital/moreinteresting/betterlooking/whatever,you’regoingtobedisappointed.Sorrybutmoneydoesn’tdoanyofthat.Inyourheaditmight.Inotherpeople’sheadsitmight.Butitdoesn’tinreality.Youcanbeallthosethingswithmoneyitistrue.Itisn’tmoneythatdoesit.Theswitchisthrowninyourheadfirst.Moneyisaplacebo,notacure.We’veallseenthelotterywinnerswhobuythebighouseandfeelmiserablebecausethey’veleftalltheirfriendsbehind.Butwewon’tmakeanyofthesemistakesbecausewewillpracticethisRulediligentlyandunderstandtherelationshipbetweenmoneyandhappiness.Ah,butIhearyouask,whatexactlyisthisRule?WhatdoIhavetodo?Answer:Nothingexceptnotexpecttoomuchfrommoneyanddon’tbuystuffinthehopeitwillmakeyouhappy—itwon’t.WhentheybuildthatbrandnewBMWorwhateveritisyoucovet,theydon’tbuildinanyhappiness.Sowhenyoufirstsitinitorbuyitandyoufeelfantastic—andI’mnotdenyingpeopledofeelgreatbuyingstuff—thatfeelingisn’tinthethingyoubuy.Thatfeelingwasinsideyouanyway.Allthissaid,whatmoneycandoisbuyawayalotofunhappiness.Itjustcan’tgoanyfurtherthanthat.

MONEYISAPLACEBO,NOTACURE.

Rule16.KnowtheDifferenceBetweenPriceandValue

Ionceaskedmydelightfulfather-in-lawtoexplainthatthingaboutwinetome.Youknow,canabottlethatcosts$100inatoprestaurantreallybetwentytimesasgoodasabottlethatyoucangetfor$15atthelocalshop?Hisanswerwasinteresting.Hesaidthatyouaren’tpayingforthewinealone.Whatyouarepayingforistheambience,theservice,thelocation,thewinewaiter’sexpertise,thegoodcompany,thefinetablecloths,theprivacyanddiscretion,thestyleandclass,thetradition,thefoodandthetrust,thehumidityandstorage,thetoneandthesurroundings,thefellowdiningguestsandthegreatconversation.Thewineisalmostirrelevantandthat’sthepoint.Wethinkweknowthepriceofsomething.Butthevaluecanspreadoutfarbeyondallofthat.IhaveanoldMercedes.(IlikeMercsbutamfartoomeantobuyanewoneandloseallthatdepreciation.)Ididn’tpaymuchforit.Youneverdo,aspeoplearescaredofthemincasetheygowrong,andfairenoughtheydocostafortunetoputright,butyouneedtorememberthatbecausetheyarebettermade,theyrarelydogowrong.Iwasvisitedbyafriendwhowasdrivingabrandnewcarhe’djustbought.Amoderncar,asmallhatchbackthingthatlookedlikeaminispaceship.Helookedatmyold,battered,mud-streakedMercandexclaimed,“Youmustbedoingwell!”Itriedtoexplainthatwasn’tthecaseandthathe’dprobablypaidatleastfivetimesforhiswhatI’dpaidforminebuthewouldn’thaveit.HesawtheMercandhaddecideditsvaluewasalotmorethantheprice—thatis,whatwasactuallypaidforit.Ilearnedthatdayaboutpricenotnecessarilyequatingtoperceivedvalue.Remembertoothatsomethingisonlyworthwhatothersarewillingtopayforit.Acataloguemaysaythevalueofapaintingis$1,000butthat’sonlytrueifsomebodyiswillingtopaythatamountforit.Animportantlessontolearn.Thepriceofsomethingcanbefarlessthanitsactualvalue,eithertoyouortosomebodyelse.Oralotmore.Ifyouaregoingtobewealthy—andIsincerelyhopeyouare,ifyouputintoplaytheRulesinthisbookandworkdiligentlyatit—thenit’sworthstudyingthedifferencebetweenpriceandvalue.

WETHINKWEKNOWTHEPRICEOFSOMETHING.BUTTHEVALUECANSPREADOUTFARBEYONDALLOFTHAT.

FARBEYONDALLOFTHAT.

Rule17.KnowHowtheWealthyThink

Thereisasimpletesttodeterminewhethersomeonewillendupwealthy—oriftheyalreadyare.Allyouhavetodoiswatchsomeonereadtheirfavoritenewspaper,especiallyifit’soneofthebigSundays:•Noticewhichpapertheychoose.

•Noticewhichsectionstheychoosetoread.•Noticewhichsectionstheydiscard.•Noticeinwhichordertheyreadtheirchosensections.

Thisisatestforyou,too.Havealookattheaboveandmakeamentalnoteofwhatyoudo.Thewealthy—thosewhohavedeliberatelychosentobewealthyratherthanthosewhohavewonthelotteryorinherited(God’slotteryasIthinkofit)ormarriedintoit—invariably•Choosethemoreseriousofthepapers.

•Choosethemoreserioussections.•Discardthe“frivolous”sections.•Readthemoney/businesssectionsfirst.

Ifyouareseriousaboutbeingwealthy,youwillhavetolearnhowthewealthythink.Thismeansstudyingthe“opposition”—althoughveryshortlyyouwillbeapartofthem.Youneedtoknowthelingoandthelanguage,wheretheyeatandlive,howtheyworkandrelax,howtheyinvestandsave.Inshort,youneedtostudymoneyifyouaretoincreaseyourprosperity.Trytogettotalktowealthypeople.Askquestions.Developathirstforunderstandingandknowledge.Readaboutwealthypeople—interviewsandautobiographiescanbefullofinsight.Youmayalsobenefitfromafewwell-chosenbusinessandfinancebooks.I’mnotgoingtorecommendanytoyouasIdon’tknowyourreadingstyle—findonesthatsuityou.Also,whynotlogontotheFTsiteorthefinancepagesofotheronlinepaperstokeepupwiththelatestdevelopmentsinthemoneymarket?Getinformed.Butwhatifthisallfeelsabittooheavy?If,likeme,youlikethegossipcolumnsaswellasfinancialpages,thenyou,likeme,willprobablyneverbeextremely,mind-bogglinglyover-the-topwealthy.Wecanstillbewealthy—andwemighthavemorefun,too.Prosperousandfun—soundsgoodtome.Ithinkwehavetobereallypassionateaboutmoneyifwewantlots.Wehavetoliveandbreatheandsleep(yes,bearinginmindRule13)money.WehavetostudyhardattheUniversityofWealthifwewanttograduate.

YOUMAYHAVETOCHOOSE—MONEYORFRIVOLITY?

Rule18.Don’tEnvyWhatOthersHave

Weallsetourownobjectives.Weallhaveindividualambitions.Weallworkouthowmuchworkwearepreparedtoputintothisbusinessofbecomingwealthy.Weallsetourownlimitsandknowwhatwearepreparedtodoornotdo.Sowhatisthepointofenvyingwhatanyoneelsehas?Notunlessyouknowwhattheiragendawasandis.Notunlessyouknowhowmuchworktheywerepreparedtoputin.Notunlessyouknowwhattheywerepreparedtosacrifice.Ofcourse,youcancastanenviousglanceattheeasythree—lottery,inherited,married(ordivorced!)into—wealldo.Butmoneyearnedisentirelythebusinessofthepersonearningit.Theydidthework.Theyhadtheideaorentrepreneurialspirit.Theygotupearlierthanus.Theyweredrivenorfiredupbywhattheywantedtoachieve.Envyingthemispointless;learningfromthemisinvaluable.Andlearningfromthemisthegreatestgifttheycangiveus.Ideallyyouneedamoneymentor.Someoneyoulookuptowhohasmadealotofmoneyandintherightway—legally,enjoyablyandnicely—whowillgiveyoutheoddtip,tuckyouundertheirwing,setyouontherightpath.Andrefusetolendyouanymoneyofcourse.Notthatyou’dask.IfIcomeacrosssomeoneextremelyrich,Iimmediatelytrytoworkouthowtheydiditandifthatroutewouldsuitme.WhatbitsofinformationcouldIgleantohelpmegettothatposition,bearinginmindIonlywanttodoitright—legallyandenjoyably?Ithink90percentofgettingtheseRulesrightistoapproachgettingwealthyassympatheticmagic—doastheydoandyou’llendupasthem.IhavemymoneymentorandIhangontohiseverywordwhenitcomestomoneyashe’slivingontheinterestontheinterestonhismoney—andthat’stheplaceI’mheadingfor.Useotherpeopleasasourceofinspiration.Besides,envyisnotacharacteristicofaRulesPlayer—that’syounow,bytheway.

ENVYINGTHEMISPOINTLESS;LEARNINGFROMTHEMISINVALUABLE.

Rule19.It’sHardertoManageYourselfThanItIsToManageYourMoney

Sohowwelldoyouknowyourself?Prettywell?Notatall?Vaguely?Wethinkweknowourselvesuntilwecometogiveupsmoking,loseweight,getfit,getrich.Andthenwerealizewearelazier,havelesswillpower,lessdetermination,makelesseffort,gettooeasilydissuaded,fallbythewaysidetooreadily.IfIwantedtotuckyouundermywingandmakeyouwealthy,thefirstthingIwouldneedtoknowis:“Doyouhavewhatittakestobewealthy?Areyoudeterminedenough?Willyouworkhardenough?Willyoustickatit?Doyouhavebackbone?Stamina?Guts?Relentlessfocus?”Yousee,ifyoudon’t,thechancesareyouwon’tsucceed.I’mnottryingtoputyouoff.Iamtryingtomakeyouseethatmakingmoneyisaskillthatcanbetaught—aslongasthepersonisreadyandwillingtolearnandapplythemselvesdiligently.IfyoudecidedyouwantedtowinWimbledon,youwouldhaveneededtostartplayingtenniswhenyouwereaboutfiveandhavebeenwinningjuniorchampionshipsbythetimeyouwerefourteen.It’sthesamewithmoney.Youcan’texpectanover-weight,middle-agedpersontosuddenlybeinthefinal.WhenIwasayoungstrugglingstudent,IoncesoldavaluablebooksoIcouldeat.Imadeadirectchoicebetweenowningsomethingthatwasgoingtoincreaseinvalue,andthuspotentiallymakemewealthy,andhavingamealforone.YouseewhatImean?I,inessence,chose—atthattimeanyway—tobepoorratherthanwealthy.Isawthesamebookrecentlyinabookshopand,believeme,Imadeabadcallthatday.AndwhatIhavenoticedisthatthewealthy—whentheyarestartingoutanyway—haveenormousdriveandarepreparedtomakeenormoussacrifices.Theymanagethemselvesandforegoinstantrewardsforbiggerpaybackinthelongerterm.Self-controlanddelayedgratificationareusefulartstolearn.

THEFIRSTTHINGIWOULDNEEDTOKNOWIS“DOYOUHAVEWHATITTAKESTOBEWEALTHY?”

PartII.GettingWealthyWe’veenteredthedarkunchartedwatersofPartII.Thisiswherewegetserious.Thisiswherewestarttherealpracticalstuff.Thisiswhereyouhavetostarttakingagoodhardlookatyoursituation,doingsomeplanningandtakingsomeaction.Gettingwealthymeansbeingveryhonestwithyourselfandbeingwillingtoinvestyourtimeandeffortsintothequestforgreaterprosperity.ManyoftheRulesarebehavioralandchangingyourbehaviorisnevereasy.SomeRuleswillseemstunninglysimple,butforeveryRuleyouhavetoaskyourself:“Imayalreadyknowthis—butdoIdoit?”Thewillingnesstoputinthetimeanddosomething,makethingshappen,isvital.

Rule20.You’veGottoKnowWhereYouAreBeforeYouStart

Beforewecangoforwardwehavetoknowwherewearenow.Orratheryouhaveto.WhenRobinsonCrusoeswamashorefromhisshipwreckedboat,thefirstthinghedidwascheckoutwhatstoresandgunsandammunitionhehad.Whenheknewthat,hecouldassessthesituationandmoveforward.Soyouaregoingtoswimashoreandbeginyournewlife.Thefirstthingyouhavetodoistotakestock.Findoutwhatyou’vealreadygot,whatcanbeused,whatcanbediscardedordiscounted,whatyouowe,whatyouareowed,whatbasicallyisyournetworth.We’regoingtodoafullfinancialauditonyouandyourlife.Ifyoudon’tknowwhereyouarebeforeyoustart,youcan’treallyworkefficientlytowardbecomingwealthy.It’sawisemanwholaysouthistoolsbeforehebeginsthejob.

WEHAVETOKNOWWHEREWEARENOW.

Here’syourchecklist.Itmayneedadaptingtosuityourindividualcircumstances.Startwiththebigfigurestogetapictureofwhereyouareright

nowoverall:Nowthatyouhaveanoverallfigure,youneedtolookatyourtypicalinflowand

Nowthatyouhaveanoverallfigure,youneedtolookatyourtypicalinflowandoutflowofcashonamonthlyorannualbasis—youcanchoosewhichyouassess,butallfigureshavetobemadeeithermonthlyorannual.

ThismaynotbeidealforyourcircumstancesbutI’msureyougettheidea.Don’tbetemptedtoskipthisexercise.Evenifyourfinancialsituationisnonetoorosy,it’sgoodtofaceuptorealitysothatyoucantakepositiveactiontoaddressthesituation.

Rule21.You’veGottoHaveaPlan

Whyareafoolandhismoneysoeasilyparted?Becausethefooldoesn’thaveaplan.Ifyoudon’thaveaplanyou’llbetemptedtofritteryourcashaway,spenditinsteadofinvesting,orforgetthenewbusinessideaorcareermove.Ifyouhaveaplanyouknowexactlywhatdoesandwhatdoesn’tfitintoit.ThelastRulehelpedyouworkoutwhereyouarenow,andyoualreadyknowwhereyou’regoing(yourobjective).Theplangivesyoutheimportantbit—howyouaregoingtogetthere.BacktotheRobinsonCrusoeanalogy.Oncehehadbeenshipwreckedandtakenstock,hemadeaplan.“I’llneedasheltertokeepwarm,somefood,andsomethingtodo.”Andhesetaboutbuildingathatchedshelteronthebeach,whichofcoursegotblownoverinthefirstgaleandhehadtoretreatinlandtoacave.Yousee,eventhebestplanshavetobeopentoadjustment.Firstthingsfirst.Ifyouhaveajobyouloveandarehappy,thenyou’llprobablywanttostickwithit.Ifitdoesn’tmakeyouenoughmoney,youneedaplantogenerateincomeanotherway.Ifyourjobismakingyoumiserableandwhat’sworse,keepingyouinapovertytrap,thenyoumustprioritizegettingoutofitinyourplan.Yourplanshouldinvolvetakingfinancialcontrolofyourlife.Ifyouhavedebts,itwilldefinitelyincludetacklingtheseasapriority,dittospendingexcesses.Theplanmightinvolveacareerchange,investigatingabusinessidea,investingmoneyorgeneratingsomecapitalsothatyoucanenterthebuy-to-leasemarket.Itmaywellincludesellingthings.Alotofmoneyisgeneratedthroughsellingthings—whetherit’saproduct,aservice,oryourtimeandskill.That’swhyIlikewritingbooks—evenwhileIsleepthereisabookshopsomewherethatissellingbooksforme.Infact,oneofthefundamentaltruthsaboutgettngrichisthatwealth—realwealth—comesfromdoingdeals,notfromearningwages,salaries,orfees.AsGeneralPattonsaid,“Agoodplantodayisbetterthanaperfectplantomorrow.”Whatevertheplanincludes,justmakesureyouhaveone,andthatyousticktoit.Don’tworry,therestofthisbookwillgiveyoulotsofideasastowhatyourplancouldcontain.Justremember:Neversitbackandwaitforsomebodytogiveyoumoney—ever.

THEPLANGIVESYOUTHEIMPORTANTBIT—HOWYOUAREGOINGTOGETTHERE.

Rule22.GetYourFinancesUnderControl

Youmaywellhaveenoughmoneybutitleaksawaybeforeyougettospendit.Inawholevarietyofways—taxation,payinginterest,lackofuse(notinvestedproperly),toomuchbeingspentonthewrongthings.Beforeyoucancontrolyourfinances,youhavetostoptheleaks.IfyoucarriedouttheexerciseinRule20(ofcourseyoudid)you’llhavearecordofyourcreditcardbalances.Higherthanyoucaredtoadmit?Probably.Weareallencouragedtospendonplastic.Weareallseducedintorackingupdebtsmonthly.Ifyouwanttostoptheleaks,cutupallthecardsandpaythemoff.**Andspendwhat?Ihearyouask.Spendwhatyoucanaffordonwhatyouhavetoandabovethat,spendnothingforawhile.Makethechoice:wealthorspendingsprees.You’vetriedthespendingsprees.Weallhave.Nowtaketheprosperityrouteandseeifitisn’tbetter.Youareonlypostponingspending,notcancelingitforever.You’llalsobeabletospendmorelater.Lookforwardtothatasyoutightenyourbelt.Thinkofthebetterbeltyou’llbeabletobuy.

Doaquickcalculationandseewhatlevelsofinterestyouarepaying.It’sthesamewithyourmortgage.Makesureyou’renotpayingmorethanyouhavetothroughnegligence.Ifyourfixedratedealhascometoanend,itcouldbetimetocheckoutthebestdealsthatarenowavailable.Keeparecordofeverythingyouspend.Everything.Dothisforashortwhile—evenjustaweek—andseewheretheleakagesare.Ifyouaregoingtobewealthy,firstyouhavetoknowwhereyourmoneyisgoing.Sorryifyouthoughtthiswasgoingtobeeasyorthisbookwasgoingtobefullofget-rich-quickschemes.Butstickwithme,andyou’llbegladyoudid.Whenyoucarryoutyourfinancialstock-check,watchoutforthehiddenthingswhichcaneasilybeoverlooked.Forinstance,directdebitsandsubscriptionsthataretoohigh,wrong,oroutofdate.Therichareeagle-eyedandmissnothing.

BEFOREYOUCANCONTROLYOURFINANCES,YOUHAVETOSTOPTHELEAKS.

Rule23.InsurancePaysSomeone,andOddsAreIt’sNotYou

Justthinkthisonethroughwithme.Insurancecompaniessettheirpremiumssothatonbalance(ifnotoneverycontract)they’llmakemoney.Atwhoseexpense?Yoursofcourse.Supposeyoupay$100ayearover10years—that’llbe$1,000intotal.Theinsurerwillhavecalculatedthattheoddsarethey’llpayoutlessthan$1,000intotalforwhateveritisyou’reinsuring.Inwhichcaseitwouldhavecostyoulesstopaythecostsofrepairs/replacement/medicalcareorwhatever,thanitwastopayyourinsurancepremiums.Itdoesn’tmatterwhatyou’reinsuring,orwhowith.Thisisjustthewaythatinsurancecompaniesmaketheirmoney.Plustheyhaveadmincosts,overhead,marketingcosts,andalltheresttocover,andthey’llhavefactoredthoseintoyourpremiums,too.Infact,mostpeopledon’tgetbackmorethantwo-thirdsofthemoneytheypayininsurance,evenlongterm.Soitjustdoesn’tmakefinancialsensetotakeoutinsuranceonallyourpets,property,washingmachines,andsoon.Havingsaidthat,therearetwoinstanceswhereyouarebetterofftakingoutinsurance.Thefirstis,ofcourse,whereit’salegalnecessity,suchasautoinsurance.Youjusthavetoswallowthatone.Theotherinstanceisifyoudon’thaveenoughinyourbanktopayoutthelumpsumiftheworsthappens.Sayyoudon’tinsureyourpet,andthentheyneedanoperationcosting$1,000—willyoubeabletofindthemoneyallatonce?Ifnot,whatwouldyoudo?Maybeyou’llfeelyou’dratherpayoutmoreovertheyearsininsuranceforthepeaceofminditgivesyou.Then,ifFidogetsafishbonestuckinhisthroatwhenyou’rehavingaparticularlytightmonthfinancially,youcanstillaffordtheoperation.Thereareafewtrickyones,suchashealthinsurance;butwhereyou’reinsuringproperty,pets,orappliances,it’sprettystraightforward.Itdoesn’tmatterwhatgoeswrongwithyourwashingmachine,youknowthemostitcansetyoubackisthecostofanewmachine.Couldyouaffordthat?Ifso,you’rewastingyourmoneyoninsurance.Haveyouaddeduphowmuchyou’respendingeverymonthoninsurancepremiums?Well,whynot?Goanddoitnow.Nowthinkaboutwhatyoucoulddowiththatmoneyifyouweren’tpayingforallthatinsurance.Ifyoujustputitinasavingsaccount,itwouldatleastearninterest.

inasavingsaccount,itwouldatleastearninterest.Andthat’ssomethingthattheshrewdestwealth-buildersdo.Ifthey’reworriedaboutlosingthecashflowsafety-netofinsurance,theycanceltheircontractsandthensockthatamounteachmonthinasavingsaccount.IftheyhaveasuddenproblemwithFidoortheirwashingmachineoranythingelse,themoneyisthereforjustsuchemergencies.Meanwhileitstillbelongstothem,alongwiththeinterest,ratherthantotheinsurancecompany.Andthatextrathirdmostofuspayoutandnevergetback—well,that’sstilltheirs,too,tospendorsaveastheywant.

MOSTPEOPLEDON’TGETBACKMORETHANTWO-THIRDSOFTHEMONEYTHEYPAYININSURANCE,EVENLONGTERM.

Rule24.OnlybyLookingWealthyCanYouBecomeWealthy

Ioncewatchedamanlookingatajobvacancyboard.Hewasdressedinscruffysneakers,woreahoodie(up),wasunshavenandslouchedwithhishandsinhispockets.Youjustknewhewasgoingtogoforjobinterviewsdressedlikethat—andfailtogetthem.Andthenhe’dclaimitwasunfair,nobodywouldgivehimabreak,lifesucks,andsoon.I’veheldmanyjobinterviewsandhavealwaysbeenseriouslyunder-impressedwiththewaypeopleturnedup.Thelackofeffortisalwaysstaggering—asisthelackofresearchandinterest.“Whydoyouwanttoworkforthiscompany?”“Dunno.”“Whatdowedohere?”“Dunno.”I’mtryingnottobeanoldreactionaryhere.ButIcan’tfailtonoticethatthelackofeffortisdirectlyrelatedtothelackofresults.Thepoorlookpoor.Notbecausetheyhaveto.Theywearauniformthatmarksthemout.Iftheychangethatuniformtheychangetheircircumstancesbecausepeoplewillreactdifferentlytothem.Wearen’ttoofarremovedfromthegreatapes,andtheyrelatetoeachotherbasedalotonhowtheymoveandlook.Thosewholookweakandneedyaretreatedassuch.Thepowerfulwillstrutandlookconfident.WhatIamsuggestingisthatyouneedtolookpowerfulandconfident.Weshouldalllookpowerfulandconfident.Ah,buthowcanweaffordtodressasifwearemorewealthy?Comeon,comeon.Iexpectedbetterofyou.Thinklaterally.Thegreatapesdoitwithnoclothesatall.It’saboutthewayyouwalkratherthanwhatyouwear.It’sabouttheoverallimageyouproject.Butthisdoesn’tmeanyoucangetawaywithdressinginappropriatelyorbadly—anyonecandresssmartly.Borrowadecentoutfitorbuyagoodsuitcheaply.(No,no,don’tbuyfullpriceandjustputitonyourcreditcard.)Fortheinterviewformyfirstcasinojob,Iboughtafabulousjacketfromadiscountstore—doublebreasted,widesatinlapels—andproperbowtieyouhadtotieyourself(noneofthoseonesonelasticforme).IpracticedforhoursuntilIgotitrightandturnedupforthefirstnightlookingmoreJamesBondthantrainee.Imadeadramaticimpression.ObviouslyIhadgotitwrongandhadtogoandbuyasimpleblacksuitafterward,butIwasrememberedassomehowstandingout,stylish,notscruffy.AndIgotofferedtheplumtraineejobdespitenotbeinginanywayqualifiedforit.Thisstuffworksyouknow.Dresswealthyandpeople

willassumeyouareandtreatyouaccordingly.Learnstyle,class,howthewealthydress.Lookpoorandyou’llgetpoorservice.Andwhateveryoudo,nobling.Yes,richrapstarscangetawaywithit,butyoucan’t.NorcanI.Restrainedeleganceiswhatweshallaimfor.Oldmoney.Quality.Simplelines.Goodhaircut.Cleannails.YouknowthesortofstuffImean.

YOUNEEDTOLOOKPOWERFULANDCONFIDENT.

Rule25.SpeculatetoAccumulate(No,ThisIsn’tGambling)

Weallknowtheactor,whoachievesovernightfameafteronestarringroleandeveryonesayshowluckytheymusthavebeen.Luck?Theystarredineveryschoolproduction.Studiedatdramaschoolforthreeyears.Workedtheirsocksoffinsomedreadfulsoap.SlavedonthestageforthewholerunofMindYourMannersbyAgathaChristie.PlayedanextrainExtras.Andfinallylandedtheirplumjob,theirstarringrole,insomedeservedlysuccessfulfilm.Andeveryonesays,“Howluckyyouare!”Gettingwealthyisabitlikethat.Youtoilawayforyearsandsuddenlyyouarelucky.Youscrimpandsaveandsacrificeandgosh,howwonderfultobetouchedbyfate’sficklefinger!Well,thetruthisthatyouhavetospeclatetoaccumulate.Youhavetobeinittowinit.Ifyoudon’tbet,youdon’tget.No,no,no.Iamnotsuggestinggamblinginanysense.IfyouinvestintheStockMarket,afterwiselytakingadviceandstudyingthecompaniesandtheirperformance,thisisthesafestformofgambling.Ifyoustakeitallonred,thisishighriskgambling.Ifyouworkyoursocksofffor20yearsandfinallyitpaysoff,thisisnotgambling.Speculatehasinfactfourmeanings—todiscuss,tothinkdeeply,toinvest,andtobelieveinsomethingnotentirelycertain.Ithinkthataboutsumsupourpathwaytoprosperity.

•Discuss—Talktoallandsundryaboutwealthandseewhatothersthinkanddo.Studythemclosely.•Thinkdeeply—Understandyoursubject.•Invest—Speculatewithyourtimeandeffortandlife.•Believeinsomethingnotentirelycertain—Therearenoguarantees,butyoushouldbeabletoshortentheoddsconsiderablyifyoufollowtherulesothershaveforgedforyou.

IknowyoumighthavethoughtImeanyoutospeculatewithyourhard-earnedcash.Idon’t.Imeanyoutospeculatewithyourtimeandeffort,forethoughtandplanning,energyanddedication.Themoreyouputin,themoreyou’llgetout.Ontheotherhandyoucouldgoandblowitallonred.Onlyjoking.

YOUTOILAWAYFORYEARSANDSUDDENLYYOUARELUCKY.

Rule26.DecideYourAttitudetoRisk

AmIgoingtosuggestthatmoneycanonlybehardwonbyperilousinvestmentsandchancyventures?No,I’mnot.Inthatcase,amIsuggestingcautionandthatyoushouldcarefullyhangontoeverypenny?No,I’mnotadvocatingthateither.WhatIamsuggestingisthatit’sentirelyuptoyouwhatlevelofriskyoufeelhappywith—it’snogoodmetellingyouwhatthatlevelshouldbe.Youhavetodecideyourownattitudetoandappetiteforrisk.PersonallyIlovetheideaofsailingclosetothewindfinancially.However,myattitudeisdefinitelyvergingonthecautioussidesoIdon’ttaketherisk.IfindtheriskyschemeswhereyoucouldblowitallormakeafortuneholdsomeappealbutIdon’tindulgeinmywhims.Ihaveyoungchildrenandtheycomefirst.Afteryouhavedecidedyourattitudetorisk,itmakesyourplanningeasier.Itallowsyoutotailorhowyouintendtobecomeprosperous.Hareortortoise,Iguess.Obviouslyyourattitudewillvarydependingontheproject.Thingstotakeintoconsiderationare•Yourage:Wecopebetterwithrisktheyoungerweare.

•Familycommitments:If,likeme,youhaveyoungchildren,itdoesmakeyoumorecautious.Ifthey’vealllefthome,youmightbepreparedtopushitabitfurther.•Incomeand/orassets:Youneedtoworkoutthepercentageofyourwealthyouarepreparedtorisk.Themoreyou’vegot,thesmallertheriskmightbe—unlessyouarepreparedtoriskitall,ofcourse.

Ifyouaregoingtotakerisks,thendotrytooffsetthem.Takeoutinsuranceifyoulike:•Don’tputallyoureggsinonebasket(moreaboutthislater).

•Considerhowmuchstressandexcitementyoucanhandle.•Lookatthetiming—longtermagainstquickreturns.•Thinkabouthowmuchyoucanaffordtorisk.Worst-casescenariostuff.•Howmuchinformationhaveyou?Toolittleincreasesrisk.

Theotherthingtoponderishowyourespondtotherisksoflife.Lifeinitselfisriskyandnothingiscertain.Howdoyoucopewhenthingsgowrong?Areyoupositive,dynamic,enthusiastic,andup?Ordoyougetallgloomyanddepressedandfeeltheglassishalfempty?Knowyourselfandknowhowyoucopeandhowyourespondtochanges.Andrememberthatriskdoesn’tmeanbad.Itmeansyoudon’tknowhowitwillallturnout.

IT’SENTIRELYUPTOYOUWHATLEVELOFRISKYOUFEELHAPPYWITH.

Rule27.ThinkThroughtheAlternativestoTakingaRisk

Weallknowthatthegreatertherisk,thehigherthepotentialreward.Andofcoursethelowertherisk,thelessreturnyou’relikelytogetonyourinvestment.Butyoualsoneedtoconsiderwhatyouralternativeis.Whatifyoudon’ttakethisrisk?Isthereanalternativethatgivesyoualmostashighareturn,orwillthemoneybringyouinalmostnothingifyoudon’ttaketherisk?Letmegiveyouanexample.Supposeyou’reconsideringinvestinginavolatilemarketforachanceofhighreturns.Ifyoudon’tmaketheinvestment,youcouldputthemoneyinamoneymarketaccountwhereitoughttobesafe.(Ididsayoughtto....)Sowhatkindofinterestistheaccountpayingyou?Itcouldbeashighas4percent.Thenagain,sometimesitcandropto0.5percent.Ifit’satthetopend,yourhighriskinvestmentisbarelyworthtaking,whereaswheninterestratesareverylowitmightbeyourbestchanceofadecentreturn.Thisconcept—theoverallrewardyougetfortakingarisk,whenmeasuredagainstthealternatives,iscalled“riskpremium.”(Justforgetthatbitifyoudon’tlikejargon,Ionlyputitthereincaseyouwanttoknow.)It’sacalculationparticularlyworthmakingwhenitcomestoshort-terminvestments,asoverthelongtermitcanbehardertopredicthowthealternativestotheriskwillperform.Lookbacktolate2007.Then,saverscouldgetinterestratesofmorethan6percent.Atthesametime,theequitymarkets(stockprices)werefalling.Sotherewasnoreward,orpremium,fortakingtheriskofinvestinginequities.However,wheninterestratesdropped,thebalanceshiftedandequitieslookedlikeafarbetteroptionthantheyhad—andthathasnothingtodowiththeinvestmentsthemselves,butsimplyhowtheymeasuredupagainstthealternatives.

YOUNEEDTOCONSIDERWHATYOURALTERNATIVEIS.WHATIFYOUDON’TTAKETHISRISK?

Rule28.IfYouDon’tTrustSomeone,Don’tDoBusinessWithThem

It’ssuchasimplerule:Wedon’tdobusinesswithpeoplewedon’ttrust.Whatmoreistheretosay?Apartfromthatthisalsoincludescompanies,corporations,governments,younameit.Andwhydon’twetrustthem?Becausethereissomethingadrift,somethingthatringsthatlittlewarningbellinsideus.Theremaybeclearvisiblesignsbutasoftenasnottherewon’tbe.Mostlythisruleisaboutusingyourintuition,listeningtoyourinnervoice.Ifyoufeelsomething,anything,iswrong,thenwalkaway.Listentowhatisbeingsaidtoyou.Thereareunconsciouscluesyoursubconsciousispickingup.Ifyouignorethemyou’llinvariablyregretit.I’vedoneit.We’vealldoneit.Inearlydiditagaintheotherday.Inearlyboughtacarfromasketchydealer.IknewhewassketchybutIwantedthecar.Iknewthecarwouldbesketchy.Whatisitthatmakesusoverwriteallthewarningsigns?Ididtheonlysensiblething—Iphonedafriend.Andhetalkedmeoutofit.Goodman.Youcanextendthisruletocoverloadsofsituationssuchas“Ifyoudon’ttrustyourboss,don’tworkforhim.”“Ifyoudon’ttrustyourbabysitter,don’tleaveyourkidswiththem.”“Ifyoudon’tfeelcomfortablewithyourfinancialadviser,getanother.’Look,youcanchoosewhatyoudoandhowyoudoitbutifyouwanttobeaRulesPlayer,thenyouneedtobeassertive,standupforwhatyouknowisright,don’tacceptsecondbest—ever.Listentoyourintuition,bethebiggest,boldestandbravest.Ifthesituationfeelswrong,itprobablyis.Ifyoudon’tgettherightfeelingsaboutapersonyouaredealingwith,findawayout.Ifitwaddleslikeaduckandquackslikeaduck,chancesareit’saduck.Avoid.Walkaway.Holdontoyourwalletandrun.

LISTENTOYOURINTUITION,BETHEBIGGEST,BOLDEST,ANDBRAVEST.

Rule29.It’sNeverTooLatetoStartGettingWealthy

It’sveryeasysometimestobelievethatthehandwegotdealtinlifeisallwehavetoplaywith.Ortosay,“Ahwell,Ishouldhavestartedsavinginmyearlytwenties—it’stoolatenow.”Butwecanchangeanythingwewant—it’snevertoolatetostartbeingwealthy.LookatRule1again—anyonecanmakemoney.Andit’snotlimitedbyyourageoranyothertimefactor.Allitrequiresisthatyoushiftyourfocustobecomingwealthyandalreadythingswillhappenwithoutyouhavingtodoanythingmore.Obviouslyifyouwantmorethanthebasicthattheuniverseisgoingtogiveyou,youwillhavetodomore.Butbyshiftingyourfocusyouwillsetwheelsinmotionandprosperitywillcometoyou.Andno,thisisn’tmumbojumbo.It’sauniversalfact.Thefactyoudosomething—shiftyourfocus—isenough.Nomatterhowlongyouhavebeengoingalongaparticularpath—poverty,lackofsuccess,whatever—itdoesn’tneedmuchofashifttoaltercourse.Andalteringcoursecanhappennomatterhowlongyou’veleftit.Thereisnosuchthingastoolate.It’sabitlikebeinganoceanliner.Youmayneedalotofspacetostop,butitdoesn’ttakemuchtogetyoutochangedirection.Acoupleofdegreesonthewheel,andyou’llbeonacompletelydifferentcoursewithinafewmiles.Ingainingprosperity,asinmostthings,thereisatippingpoint.Afteryou’veaddedonthosecoupleofdegreestoportorstarboard,theresultingchangeintrajectorygetsbiggerandbiggerinasortofcompoundway.Itisalsonevertoolatetostartinvesting—instocks,inanIRA,instyle,inquality,inyourself,inlife.Bystayingalertandaliveweresistthatdeclineintoinactivityandapathythatissuchanagingattitude.Myfather-in-law(alwayssuchaninspiration)startedanotherbusinesswhenhewas75,andnotjustanyoldbusinesseither—itwasinanewtechnologythatmost50-year-oldswerehavingtroublegettingtheirheadround.However,ifyouthinkitistoolate,itprobablyis.Thesecretisnevertothinkthat.Ifyouthinkthatyoucangiveupeasily,thenyouprobablywill.Don’tthinkit.Look,wecameintothisbooktogethertomakemoney—someforyouandsomeforme.I’mgoingtodomybit,mydamndest,tohelpyouincreaseyourprosperity.Ifyouthinkthereareanybarriers—age,sex,race,ability—thenyouarealreadybettingonalosingteam.Dumpthepreconceptionsandtrustme.Itisnevertoolatetobegin.Startnow.

nevertoolatetobegin.Startnow.

ITISALSONEVERTOOLATETOSTARTINVESTING—INSTOCKS,INANIRA,INSTYLE,INQUALITY,INYOURSELF,INLIFE.

Rule30.StartSavingYoung(orTeachYourKidsThisOneifIt’sTooLateforYou)

OK,itmightbetoolateforyoutostartsavingyoung.Wecan’tgoback.Butyoucancertainlyteachyourkidstheimportanceoflearningthistrick.AndI’mnotsuggestingwescrimpandsavetobeabletosave.Savingshouldbesomethingwenaturallydo.Iguessit’satrickyoulearnquicklyifyouareself-employed—ornot,ifyougobust.Everytimeyouearnmoneyyouputsomeasideforsavingsandtaxes.Failuretodosomeansscramblingaroundwhenthereturnisdueandyouhavetofindit.Ifyouputasidemorethanyouneed,theleftoversbecomethesavings.Obviouslyyouonlyfailtodothisonceortwicebeforeitbecomesareallyeasythingtoremembertodo.Ifindthatitiseasiertohavea“figure”soyoudon’thavetothinktoomuch.Myownfigureis50percent.AnythingIearn,Iputhalfstraightintoasavingsaccount.Idon’thavetothinkaboutthis.Iknowthatsomeisfortaxesandtherestisforsavings.EverynowandagainItransferthebalanceofwhat’slefttoasecondsavingsaccount—asortofsupersavingsaccount.FromthesupersavingsaccountIcantransfermoneytoapensionfund,ISA(IndividualSavingsAccount)orwhatever.This,forme,isaneasywaytosave.Idon’thavetothinktoomuchaboutit.ItisamethodIpassontomychildren—spendhalfyourpocketmoneyandsavehalf.Ihopethey’llfindthisaneasymethodtopickup,asortofsavingsmusclememory,sothattheywillhaveabuckortwowhentheyneeditatcollegeorwhatever.IreallywishIhad(a)startedsavingyoungand(b)beentaughttodoso.Lotsofreallyprosperouspeoplehavesaidthattheyhadwealthmanagementdrummedintothemfromaveryearlyage.Itseemstobeanessentialpartofprosperitygaining.Iamfascinatedtowatchmyownchildrenlearningaboutmoney.Theredoesseemtobeageneticpredispositionforspendingorsaving.Wetreatallofthemidenticallywhenitcomestomoney,butonechildfindsiteasytosave;anotherisafanaticspenderandcouldn’tsaveanythingtosavehimself;andoneisoblivioustomoneyeitherway.I’magreatbelieverinmakingchangestocorrectbasicflawsinone’supbringing.It’snogoodsittingaroundblamingothers;youhavetochangeit.Ihavetotakeresponsibilityandtrainmyself.Obviouslythisdoesn’tapplyto

havetotakeresponsibilityandtrainmyself.Obviouslythisdoesn’tapplytobeingtidy.

IFYOUPUTASIDEMORETHANYOUNEED,THELEFTOVERSBECOMETHESAVINGS.

Rule31.UnderstandThatYourFinancialNeedsChangeatDifferentStagesofYourLife

Someculturesallowforadifferentfocus,adifferentstrategy,duringdifferentstagesofyourlife.Forinstance,upto20mightbeforbeingyoungandfoolishandgettinganeducation.Age20to35couldbeforgettingmarriedandraisingafamily.Age35to55mightbeforrunningyourbusinessandmakingyourfortune.Lifeafterthatisforspiritualcontemplationandretirementfromthecommercialworld.Essentially,yourfinancialneedschangeovertime,reflectingwhatisgoingoninyourlifeatanystage,andthechoicesyoumakeinyourlifestyleatthattime.Youmightneedmoremoneywhenraisingafamily,butmaybethisisatimewhenyoucanusuallycopebetterwithalittleadversity.Bythetimeyourkidsareincollege,youdefinitelyneedloadsmorecashorthepoordarlingswon’thaveenoughtosquanderinthestudentunionbarintheevenings,everyevening.Andonceyouhitretirementyoucandownsizeagain—unlessyouintendspendingitallonexpensiveworldcruises.Thisruleisaboutcheckingwhereyouareandwhatyouneed.Andaboutknowingthattheconditionsthatinfluenceyourneedsdoandwillchange.Youhavetomakeallowancesfordifferingcircumstances.Abitofforwardplanningwiththisinmindwillstandyouingoodstead.Forexample,ifyou’reabouttoinvestallyoursparecashinalong-terminvestmentscheme,rememberthatifyousuddenlyneedabitmoremoneyasyou’vetakenmaternityleaveoryouwanttogoonaworldtrip,yourmoneywillbetiedup.Thinkitthroughandanticipatepossiblefutureneedsandchanges.So,quickexercise.Whereareyouinyourlife?Howmuchdoyouneed?Whatisthenextstageforyou?Howmuchareyougoingtoneed?

ADIFFERENTFOCUS,ADIFFERENTSTRATEGY,DURINGDIFFERENTSTAGESOFYOURLIFE.

Rule32.YouHavetoWorkHardtoGetRichEnoughNottoHavetoWorkHard

IcannotemphasizehowstronglyIfeelaboutthisone.Iwatchandlearnfromtheseriouslywealthyandhavereachedtheconclusionthatinnearlyeverysinglecasetheysloggedtheirgutsouttogetwheretheyare.Theyoftenstartedearly.Theyworkedlateintothenight.Theysacrificedalot.Theydidn’ttakelonglunchbreaks;theydidn’twastetime.Theydidn’twatchtelevisionintheevenings.Theyworkedtheirsocksoff.Theyknowmoneydoesn’tgrowontrees.Ifyoutooareseriousaboutgettingrich,thenyoutoomustdoastheydo.Youaregoingtohavetoputinthehardworktogetrichenoughsothatyoudon’thavetoworkhard.Butyoumustdotheworkfirst.Sohowdedicatedareyou?Howseriousareyou?Thisisthepointwherewesortthewheatfromthechaff,themenfromtheboys,thegirlsfromthewomen,therunners-upfromthewinners.Stillhere?Good.Youareobviouslycommitted.Ifyouarepreparedtoputinthelonghoursandyouputtheminontherightthings,youshouldsucceed.Maybenotimmediately.Maybenotwithyourfirstidea.Butbysloggingawayyouwillgetthere.HowdoIknowthis?BecauseIhavedoneit.I’mnotpreachingfromthewilderness.(IhopeI’mnotpreachingatall.)Istartedoutpoor,andworkedlongandhardandchosewheretoputmyeffortscarefully.AndnowI’mrich.Itreallyisthatsimple.Onthesurfaceitlookslikeluck.Butthat’sbecauseImakeitlookso.InTheRulesofWorkIwroteaboutlookingcool,lookinglaidback,lookingeffortless.Ipracticethatalot.Ioftengobacktoworkverylateatnightaftereveryoneelsehasgonetobed—orgetupveryearlyinthemorning.Don’ttellanyonebecauseIliketheindolentimagewhereeveryoneassumesIamawork-shy,lotus-eating,decadentloafer.ButtherealityisIworkhard.Youhaveto.I’llletyouintothesecretofthewealthyclub—youneedtoworklikeyou’veneverworkedbefore.Worklikethereisnoonewatching.Worklikeyoudon’thaveaboss.Worklikeyourlifedependedonit.Thesecondsecretis,youhavetoenjoyit.Ifit’sachore,thenyouwon’tdoit.Letmemakeoneveryimportantpointhere.ThisRuledoesNOTmeanthatifyouworkhardatanythingyouwillbecomewealthy.Anofficecleaneronminimumwagewillnotbecomerichbyworkingallhoursasanofficecleaneror

bycleaningreallyhardandthoroughly.Theymight,however,becomerichbystartingtheirowncleaningcompanyandworkingveryhardatgettingitoffthegroundandfindingnewclientsandmakingsuretheirstaffweregreat,happy,andmotivated.WhatI’msayinghereisthatevenifyou’vegotagreatbusinessideaorhavesomemoneytoinvest,youwillonlymaximizeyourreturnifyouworkreallyhardatyourideaorinvestingthemoneywiselyandmanagingitcarefully.Youhavetoputtheeffortinbeforeyoucanreapthedividends.

THEYDIDN’TWATCHTELEVISIONINTHEEVENINGS.THEYWORKEDTHEIRSOCKSOFF.

Rule33.LearntheArtofDealMaking

Dealsaregreat.Dealsmakeyoumoney.Simpledealmakingskillswillserveyoutimeandtimeagain.Youneedtolearntobebold,toaskformore,totradewhatyouhaveforwhatyouwant.Hereisanexampleofsuccessfuldealmakinginaction.KyleMacDonaldfromMontreal,Canada,tradedhiswayfromonesingleredpapercliptoahouseinthespaceofninemonths.Youcanreadmoreathttp://oneredpaperclip.blogspot.com/,butessentiallythisishowhedidit:•Helaunchedhiswebsiteofferingtoswaphisoneredpaperclipforanything.

•Heswappeditforagreenpenintheshapeofafish.•Heswappedthisforasmileyfacedoorknob.•Heswappedthisforaportablebarbeque.•Heswappedthisforaportablegenerator.•Heswappedthisforaninstantpartypackandkegofbeer.•Heswappedthisforasnowmobile.•HeswappedthisforatriptoBritishColumbia.•Heswappedthisforatruck.•Heswappedthisforarecordingcontract.•AndfinallyheswappedthisforahouseinPhoenix,Colorado—admittedlyonlyayear’sleasebuthey...

Elevensteps.Elevenlittledeals.Notbad.Hesaysheisgoingtokeepgoinguntilheownsahouse.That’sdealmaking.So,lessonstobelearnedfromKyle:

•Neversayyouhaven’tgotanythingtostartwith.•Alwaysbeopentoopportunities.•Beadaptableandflexible.•Haveagoal.•Workdiligently.•Networklikemad.•Takeadvantageoffreepublicity.

InmybusinessIprefertotalkabout“mutuallyprofitablepartnerships.”Thesedeals,wherebothpartiesbenefit,arethebestdealsofall.Everybodyfeelshappy

deals,wherebothpartiesbenefit,arethebestdealsofall.Everybodyfeelshappywiththeoutcome.Whatdoyouhavethatothersmightwant?Thinkbroadlyhere—notjustpossessionslikeKyle,butalsoyourskillsandyourknowledge.Yourtimeandyourabilityandefforts.Whomightwantthese,andwhatmightyoubeabletoaskforinreturn?

WHATDOYOUHAVETHATOTHERSMIGHTWANT?

Rule34.LearntheArtofNegotiating

Ifyouaregoingtodealandtradeandswap,youhavetolearntheartofnegotiating.Basicallytheartrevolvesaroundmakingtheotherpersonfeeltheyaregettingasmuchasyouare.Iliketotalkaboutpartnerships.Thisismywayofmakingthishappen.I’mgenuinelynotouttomesswithanyoneelse’splansofgettingrich.Idon’tneedthemtofailtomakemesucceed.Ifigurewecanallgoforwardtogetherandnoonehastoloseout.IfIwantsomeonetobuysomethingfromme,Iexpectthemtobeabletomakeaprofitonitanddowelloutofit.Idon’twanttosellandrun.Iwantrepeatbusiness.Iwantadecentreputation.IwanttofeelgoodaboutwhatIdo.Iwantapartnership.Theartofnegotiatingwillstandyouingoodsteadinsomanydifferentsituations—fromnegotiatingasimplepayrisetonegotiatinginyourrelationshipwithyourpartnertonegotiatingwithyourkidsoverpocketmoney.Ifyoulearnthisart,everythingslipsalongeasilyandsmoothly,andyougetwhatyouwant—andtheygetwhattheywant,too.Win/win.Thereareanumberofrulesaboutnegotiatingyouneedtobearinmind.Herearejustafewofthemostimportantones:•Alwaysknowyourbottomline—thepointbeyondwhichyouwillnotgo.

•Alwaysknowwhatitisyouwant—thegoal,theendproduct,thetarget.There’snousenegotiatingifyoudon’tknowwhatyouarenegotiatingfor.•Alwaysaimforwin/win.•Alwaysbepreparedtogiveupthingstosecureotherthings—beflexibleandfluid.•Alwaysknowasmuchaspossiblebeforeyoustart—knowledgeispowerinthesesituations.•Goforthebestdealyoucanpossiblyjustify.Comingdownlateriseasy;goinguplaterisalmostimpossible.

Thosearejustafewofthekeypoints,butifyoudon’tknowthisstuffbackward,buyabook,takeacourse,talktofriendswhoreallyunderstandtheskillofnegotiating.Iamalwaysstunnedandhorrifiedbyhowoftenpeoplegointosituations—anythingfromajobtoarelationship—withoutfirstfindingoutwhattheyareembarkingon,whatisexpectedofthem,whattheyaregoingtogetoutofit,whattheyexpecttheirpartner(boss,businessbuddy,lover,offspring,whoever)

whattheyexpecttheirpartner(boss,businessbuddy,lover,offspring,whoever)togetoutofit,andwheretheyexpecttoendup.You’vegottodiscussthesethings—andthatreallyisthebasicart,discussion.Bringthingsoutintotheopensotherearenoassumptions.Assumptionsarebad.

IDON’TWANTTOSELLANDRUN.IWANTREPEATBUSINESS.IWANTADECENTREPUTATION.

Rule35.SmallEconomiesWon’tMakeYouWealthybutTheyWillMakeYouMiserable

Isitpennywise,poundfoolish?Idon’tthinkso.Ithinkthattryingtomakesmalleconomiestobecomeprosperousisdoomedtofailure.Itwon’tmakeyourichbutitwillmakeyoumiserable.Andbeingmiserableisn’tagoodplacetostartouteachday.Youneedadecentbreakfastandapositiveattitude.Cuttingoutyourdailycappuccinomighthelpyouloseweight,anditmightreduceyourcaffeineintake,butitisn’tgoingtomakeyourichanditmightwellmakeyoufeelmiserable.Sowhataboutallthatpenny-pinchingstuff?Itseemstohavebeeninventedbythepuritans—ifyouenjoyit,ithastobewrong.Somepeoplegetsatisfactionoutofbeingfrugal,butifthatisn’tyou,thendon’tdenyyourselfsmallpleasuresinthebeliefthatthat’sthewaytowealth.Hangonthough.Didn’tIsayinanearlierRulethattherichareeagle-eyedandthatyouhadtostopmoneyleaks?Indeed.Butthat’sdifferent.Whilegettingyourfinancesinorderisagoodthing,goingwithoutisn’t.Makesureyouaren’tgivingmoneyawaybybeingcareless(thosearetheleaks)butdon’tdenyyourselftheverysmallpleasuresthatenrichyourlife—justdon’tgomad.Ifyoucan’taffordwhatyouwant,buyless,butbuyquality.Saveupbyallmeansforthosebigpurchasesoraskifyoureallyneedthem,butdon’tstartthinkingthatgivinguplittleluxuries,littletreats,littlelifeenhancers,willsomehowincreaseyourwealth.Itwon’t.Itwillkeepyoutrappedinthepovertycycle.Escapingfromthepovertycycleandthepenurymindsetisyourkeytosuccess,yourpathtoprosperity.Wealthypeopledon’tscrimpandsave.Suresomeofthemarequitetightfistedandyou’dhavetocrowbartheirwalletsoffthem.Butwhiletheywatchtheirmoneycarefully,theydon’tcuttheoddcoffeeorbuycheappeanutbutterinthehopeitwillmakethemmorewealthy.Itobviouslywon’t.Likebeingonadiet,ifyoudenyyourselfeverysmallpleasure,you’llprobablyfail.Littleindulgencesarethewayforward.Nowwhoelseisgoingtotellyouthat?

CUTTINGOUTYOURDAILYCAPPUCCINOISN’TGOINGTOMAKEYOURICH.

Rule36.RealWealthComesfromDealsNotFees

I’mnotsayingthatit’simpossibletobecomewealthyworkingforsomeoneelse,becauseitcanhappen(seethenextRule).Andofcourseyouhavetodefinewealth,aswesawinRule2.ItmaybethatyouhavenoambitiontorivalBillGatesinthewealthstakes,butwouldbehappywithamortgage-freehouse,acoupleofluxuryholidaysayear,andagoodlumpsumsetasideforemergenciesortopassontothekids.Inthatcasesellingyourtime,whichiswhatyou’reeffectivelydoingasanemployeeorafreelancer,maymakeyouwealthyifyou’resoughtafterenough.Lookattheprofessionalclasses—they’reagoodexampleofwhatImean.Lawyersandtopdoctorsandsuccessfulfinancialadvisorsandsoon.Theyallhaveextremelycomfortablelivesthatmanyofuswouldaspireto.Butthey’renoneoftheminthesuper-richleague—notunlessthey’veeitherinheritedtheirmoney,orthey’redoingsomethingelseontheside.Tomakereal,big,seriousmoneyyouhavetododeals.Buyandsell.Iwasn’tkiddingwhenItoldyouinRule33tolearntheartofdealmaking.Becausethat’stheonlywaytomakemillions.Lookatthewealthiestpeopleintheworld—they’renoneofthememployees,orevenfreelancers.They’reallsellingstuff.Computers,aeroplaneseats,bankingservices,cars,newspapers.Nowhangon,don’tgiveupyourdayjobjustyet.I’mnotsayingyoucan’tworkforsomeoneelse,atleastfornow.Butrecognizethatifyourambitionistomakeafortune,you’regoingtohavetoleavethejobeventuallyandstrikeout.Maybeyoucanwheelanddealontheside,andleavethejobwhenyounolongerneedit.Ormaybeyouneedaplanforsettinguponyourown.Howeveryouchoosetoplayit,soonerorlateryou’llhavetostartbuyingandsellingifyou’regoingtobecomeamillionaire.

YOU’LLHAVETOSTARTBUYINGANDSELLINGIFYOU’REGOINGTOBECOMEAMILLIONAIRE.

Rule37.UnderstandThatWorkingforOthersWon’tNecessarilyMakeYouRich—butItMight

Mostofusassumethatwe’llnevermakeittogreaterprosperitywhileweareworkingforsomeoneelse;thatonlybybeingentrepreneurialwillwebecomewealthy.Andforalotofusthismaywellbetrue—thereisalimitastohowmuchyoucanearnperhourinreturnforyourlabor.However,therearesomewhodomakeitgoodthisway.Weshouldn’toverlookthefactthatbeingemployedmaybethebestrouteforusandthatwedon’thavetorunourownbusiness.Therearewholecategoriesofemployeesthataredoingquitenicelythankyou—forexample,afriendofmineworksincorporateinsuranceandhe’sextremelywealthythankstolargecommissionpayments.Hesayshewouldn’tbeanybetteroffworkingforhimself.Manypeopleworkinginthecomputerbusinessoptedtobecomecontractorsbecausetheyassumedtheywouldearnalotmore.Somedid,butatthecostofstability.Whenthecontractsdriedupsomewereworseoffthanwhenemployed.Butforsomethiswasindeedthebestwaytogoandtheyhavemadehandsomesumsbybecomingself-employed.Iguessyouhavetokeepanopenmindaboutthisoneandnotbedrivenbyassumptions.Youcanmakeyourselfprettyunhappybyforcingyourselfintoself-employmentifthisisn’ttherightwayforyou.Perhapsthestabilityofemploymentisagreaterpriorityandyoushouldstickwithitandnotfeelcompelledtostartyourownbusiness.Theconverseistrueaswell:Understandthatworkingforyourselfmightmakeyourich,butitmightnot.Nearlytwo-thirdsofbusinessstart-upsendinfailurewithinthreeyears.Lookaroundyouandyouwillseemanyexamplesofthesmallbusinessownerstrugglingdesperately.There’snocertaintythere.Workingforyourselfgenerallyhashigherearningpotential,butnotineverycase.Youhavetolookintoitveryclosely—rightbusiness,rightdemandforyourservices,righttime,enougheffort,andsoon.Thereisn’tthespaceortimeheretogointoalltheprosandconsofworkingforyourself.Excepttosayit’sonehellofaloteasierandmuchmorefunworkinghardforyourselfthanforsomeoneelse.Butwhatweareaimingforisn’tfreedomfromemploymentbutprosperity.Hencewehavetobeopentowhichevermeanswillhastenourachievementofthatgoal.Employmentor

whichevermeanswillhastenourachievementofthatgoal.Employmentorgoingitalone?Itentirelydependsonwhichonewillgetusricheasiest,fastest,slickest.Andyourdayjobdoesn’thavetobeyourroutetowealthatall...Thesecretisnottocloseyourmindtoanyopportunitytogetrich.Andstayingemployeddoesn’tmeannothavingalittleeBaybusinessonthesideorabuy-to-leasepropertytocreateanewincomestream.

PERHAPSTHESTABILITYOFEMPLOYMENTISAGREATERPRIORITYANDYOUSHOULDSTICKWITHIT.

Rule38.Don’tWasteTimeProcrastinating—MakeMoneyDecisionsQuickly

Ifyouareoutatseaanditcutsuprough,youmakeforasafeharbor.Anyportinastorm.Youdon’tspendtimeprocrastinatingoverwhethertheharborhasshowerfacilitiesoryourfavoriterestaurantchainorcheapermoorings.No,youjustgetthehelloutofthestorm,whilethere’sstillspaceintheharbor,andbegratefulitprovidestheonethingyoureallyneed—safety.Makingmoneyisabitlikethat.Sometimesyoujustneedtoact.Aslongasyougetsomereturnonyouraction,it’sbetterthandoingnothing.Thisisn’tcomplicatedbutyou’dbeamazedhowmanypeopleoverlookthisandthink“I’lldecidehowtoinvestthatlittlelumpsumI’vesaveduplater—Ican’tdecidewhethertobuysharesorputitinasavingsaccount.”Sotheydonothingandthemoneysitsinacurrentaccountearningnointerestor,worsestill,getsfritteredawaybydefaultandinflation.Youdon’thavetothinktoodeeplyaboutthisstuff.Youdon’thavetothinktoohard.Youdon’tevenhavetoreallythinkatall.Thesamurailivedbyasimplecreed—nohesitation,nodoubt,nosurprise,nofear.Itissimplythemostbrilliantstrategyfordoinganything.Itbasicallysaysthatonceyouhavedecidedonacourseofaction(orbattleorcombat)thenbecommitted;knoweverythingyouneedtoknowaboutit,don’tbeafraidandgetonwithitasquicklyaspossible.Ifyou’veeverseenasamuraiswordfightyou’llnoticetheycircleeachotherandthenthereisadramaticburstofactivity,aflurryofintenseviolenceandit’sallover.Oneorotherorfrequentlybothopponentsaredead.Thecirclingisnotpreparation—thatwasdoneoveryearsandyearsoftraining.Thecirclingischeckingoutyouropponent—takingtheirmind.Whentheygointoattackitisadirect,swift,nohesitationattack.Andyourfinancialplansmusthavethesamerazor-sharpincisivenessaboutthem.Doingsomethingisinvariablybetterthandoingnothing—evenifit’safirmdecisiontostayput.Andsometimesactingfastcanbealotbetterthanholdingoutonapossibility.Supposeyoubuyandsellantiquesandcollectablesasamoney-spinninghobby.Ifyoubuyaplatefor$10andthinkyoucansellitfor$30,butsomebodyoffersyou$20withinanhour,thenyoutakethe$20andgoandbuytwomoreplatesat$10toselloninthesameway.I’mnotsayingyoushouldactblindly—farfromit.Likethesamurai,we’retalkingaboutstuffyoualreadyknow.Nowyouhavetoactonit.Makeyourdecisionwiseandsensible

andconsideredandthoughtful.Butmakeitnow.Quicklyweighuptheodds,considertheprosandconsandthengetonwithit.

THESAMURAILIVEDBYASIMPLECREED—NOHESITATION,NODOUBT,NOSURPRISE,NOFEAR.

Rule39.WorkasifYouDidn’tNeedtheMoney

Mostofusworkbecausewedoneedthemoney.Butsomeofusletitshowandsomeofusdon’t.Ifsomebodylooksasthoughtheydon’tneedthemoney,it’sforoneoftworeasons.Either(a)theyputonagoodactor(b)theygenuinelyenjoytheirworkanddoitbecausetheyloveit—theywoulddoiteveniftheydidn’tneedthemoney.Clearly(b)isafantasticplacetobeandoneweshouldallstrivetogetto.Butevenifthat’snotthecaseforyouyet,there’saverygoodreasontoactasifyouwouldworkirrespectiveofthefinancialreturn.Ifpeoplethink(orindeedknow)thatyouneedthemoney,itgivesthempoweroveryouandthatputsyouinavulnerableposition;itmakesyouinsecure.Ifyouworkasifyoudon’tneedthemoney,theyhavenopowerandyouhaveitinstead.ManyyearsagoIworkedinajobIhatedandIwasunhappy.LateronIstartedabusinessthatmyheartwasn’treallyinanditfailed.ButIhavealwayswritten.AmIawriter?Notreally.Idon’twritehighbrowfiction.IwishIcouldbutIknowmylimitationsandsticktowritingaboutwhatIseeotherpeopledoing.ButwritingissomethingIhavealwaysdone—whetherIgetpaidforitornot.Whetheritgetspublishedornot.Andthat’smysecret;IdoitbecauseIpassionatelycareaboutit.Itismyheartandsoulandbeliefanddriveandambition.Itissomuchapartofmethatnoonecantouchitorhavepoweroveritortakeitaway.Doyouknowhowhappythatmakesme?Doyouknowhowrichthatismakingme?*Doyouknowhowmuchpowerthatgivesme?*AndforonceIdon’tmeanfinanciallyhappy,althoughthattooispartofitinabigway.

Sowhat’syoursecret?Whatmakesyourheartturncartwheels?Wheredoesyourdreamlie?You’vegottobedriven.Beingprosperoushasnoroomfor“Idon’tknow”or“I’mnotsure.”You’vegottoknow,you’vegottobesure.Why?Becausethatiswhatwealthypeopledo.Theyknowwheretheyaregoingandwhattheyaregoingtodowhentheygetthere.Theyhavepassionanddriveandambitionanddetermination.Theyworkbecausetheywantto.Ah,butIhearyousay,thepassionanddeterminationissomethingtheyarebornwith;it’sintheirpersonality.Perhapsitis.Butit’salsosomethingyoucanemulate,copy,mirror.Dolikethemtobecomelikethem.Workasifyoudidn’tneedthemoney.Aimforthepointwhereyoudon’tdoanythingunlessyourheartisinit.****Obviously,evenifyouarefollowingyourdream,therewillbemoments,days,whenyou’vehadenoughandyou’resickofeverything...We’retalkingaboutwhatyouoverallenjoy,onthewholefindpleasurable,mostlygloryin.

IFPEOPLETHINKTHATYOUNEEDTHEMONEY,ITGIVESTHEMPOWEROVERYOUANDTHATMAKESYOUINSECURE.

Rule40.SpendLessThanYouEarn

I’mamazedhowmanypeoplefloutthissimplebutmostgoldenofallgoldenrules.Youhavetolivewithinyourmeans.Controlyourspending.Allowyourselftocreatealittlebitofsavings,withwhichtogeneratemoreincome.(Remembertherabbitfarm?Youcan’tbreedmorerabbitsifyousellthemall.)ThisRuledoesn’tcontradictRule35aboutsmalleconomiesnotmakingyourich,bytheway.Youshouldlivewithinyourmeansbutlivewellenoughtobehappy.Ifyoudon’tearnenoughtohavechampagneeveryweek,thenhaveitonlyonceamonth.Butdohaveitifitmakesyouhappy.Thisisaboutbeinginformedandincontrol.Youneedtoknowwhatyourincomeisandwhatyourexpensesare.We’lltalklaterabouthowtocurbspendingandsaveandhowtocutupyourcreditcardsifthey’veletyoudown—theydothatsometimes,evillittlethings.Youalsoneedtoknow

•Anyexpenditurethatislikelytocomeup.•Anyprovisionyou’vemadeforcontingencyplans.•Anyfutureincomeyoumaybeentitledtointhewayofinterestorinvestmentscomingtofruition.

Andthatreallyisaboutit.Wherepeoplegowrongisnotwhethertheyearnenoughorspendtoomuch—bothofthosearefairlyeasytoovercome.No,thebiggestmistakeisnotknowingwhatyouaredoing,whereyouarefinancially,andwhatisupahead.Iknowitcanbetoughtolivewithinyourmeans,butifyouareconstantlyindebt,alltheprosperitythatisrightfullyyoursisgoingtosomefacelessbank.Ibetthey’reenjoyingspendingit.Ibetthey’rehavingchampagnemorethanonceaweek.Whyencouragethem?Iwantyoutoknowtotheveryweek,theveryhour,whatyouearn.AndIwantyoutomonitorwhatyouspend,whatitcostsyoutolive—whereyouwastemoney,whereyousavemoney,andwhereyouspendmoneywisely.Aslongasmoreiscominginthanisgoingout,you’regettingthebasicsright.Ifmoreisgoingoutthancomingin,youneedtotakeswiftandeffectiveactiontoredressthesituation.

THEBIGGESTMISTAKEISNOTKNOWINGWHATYOUAREDOING,WHEREYOUAREFINANCIALLY,ANDWHATISUPAHEAD.

FINANCIALLY,ANDWHATISUPAHEAD.

Rule41.Don’tBorrowMoney—UnlessYouReally,ReallyHaveTo

It’ssoimportantthatIwillrepeatit:Don’tborrowmoneyunlessyoureally,reallyhaveto.Andeventhendon’t.Notunlessyouareborrowingoffsomeonewhoislendingitinterestfree,nostrings,notsecuredagainstyourhouse,nopotentialformessingupfriendships.Ha,thereisnosuchthingasfreemoney(orafreelunch).**Thereissuchathingactually—tryputting“freebies”intoyoursearchengineandyoushouldfindafreelunchsomewhere.

Ifsomeonelendsit,they’llwantitback—plus.Andthatplusiswhatkillsmostofus,stopsusfrombecomingprosperous.Ithastobenippedinthebud.Andifit’stoolateforthat,thenitneedstobeseverelypruned.Wehavetogetridofthatplus.Theplusisusuallyfinancial(thatis,interestontheloan)andthisiswhatusuallycripplespeople.However,thepluscanbeemotionalalso—ifyouborrowfromfriendsandfamilyitcancauseallkindsofothercomplications—it’snevereversimple.Payoffyourloansanddebtsbeforeyoudoanythingelse.It’stheonlywaytogetridoftheplus.Iknow,Iknow,lotsofpeopleborrowmoneytostarttheirownbusinessandthengoontomakemillionsandwhatamItalkingabout—weallhavetoborrow,don’twe?Dowe?Ihaveafriendwhostartedhisownbusinesswiththreefriends.Theyallputin$500andranthebusinessfor15years.Thentheysolditfor$43million.Yep,andnotapennyborrowed.Theupshotwastheyhadtosharewithnoone—andattimeslikethisyoudon’twanttoshare,nomatterwhatyourparentssaidabouthowweallshouldlearntoshare.Ihaveanotherfriendwhoborrowedheavilytolaunchhisbusiness,whichhesuccessfullysoldfor$8million.Butnearlyeverypennyofthatwentintoloanrepaymentsandinterest.Hewasleftwithverylittleand,havingnotlearnedhislesson,proceededtostartanotherbusinesswithcapitalraisedbymoneyloanedfromthegovernment.Buthesayshehaslearnedalotbecausethistimeheonlyborrowed$3million.Hoho.Whenyouarestartingabusiness,advisersoftensayit’sOKtoborrowfrompeopleyouknowbecausetheyarewillingtosupportyou,andsoon.ButthenovelistJillyCoopersayssheiswaryoflendingmoneytofriendsasitisterriblydifficulttoseesomeoneatChristmasandgivethemahugknowingtheyoweyou$10,000.PersonallyIwouldfindithardtohugsomeonewhoowedmealot

you$10,000.PersonallyIwouldfindithardtohugsomeonewhoowedmealotlessthanthat!Trynottoborrowfrom

•Yourparents•Yourchildren•Otherpeople’schildren•Friends•Lovers•Passingstrangers•Loansharks•Thegovernment•Thebanks•Thecreditcardcompanies•Offshoreinvestmentbankersofanysort•Me

IFSOMEONELENDSIT,THEY’LLWANTITBACK—PLUS.

Rule42.ConsiderConsolidatingDebts

Obviouslythebestadviceisdon’tgetintodebtinthefirstplace.Ifit’sabitlateforthatnuggetofwisdom,thenyouneedtopayaslittleinterestasyoucanwhileyouarepayingoffyourdebts(whichclearlyyouwillbedoingasquicklyaspossible).Consolidatingdebtsisonewayofdoingthisthatmightberightforyou.WhatIamtalkingabouthereisstoppingusingthreeorfourcreditcardsplusanoverdraftplusabankloanplusotherborrowings.Itispossibletoconsolidateallofthemintooneloan,tearupthecards(asif—youneedindustrialstrengthscissors,andherespeaksamanwhohascutupmanyacreditcard)andpayofftheoverdraft.AndyesIdounderstandtheeaseandusefulnessofacreditcardbutdon’tforgetthatgoodoldstand-by—cash.Awordofwarning,however,ifyoudoconsolidateyourdebts,makesureyouaren’tturningshort-termdebtsintolong-termdebts.Theideaisstrictlytopayoffdebtquickly.Ifyoudodecidetoconsolidateyourdebts,herearesomeusefultips:

•Ihaveafriendwhowrotetoallhiscreditorsandofferedthemanimmediatepaymentof50percentiftheywouldwritethedebtoff—thisincludedallhiscreditcardpeople.Surprisinglyeverysingleoneofthemsaidyes,andhetookoutabankloanandpaidthemalloffwithouthavingtodeclarehimselfbankrupt.Hethusconsolidatedhisdebtsandreducedthembyhalf.Brilliant.•Nevereverrespondtoanyadsfromcompaniesofferingtoconsolidateyourdebtsforyou—thoseadsareforpeoplewithmoremoneythansense.•Shoparoundforanypay-offloans—don’tacceptyourbank’sjustbecauseitisyourbank;theymaynotbethecheapestbyalongway.•Don’tsecureanythingagainstyourhome,ever,underanycircumstances.Ifyoudo,youcouldloseyourhomeifyoudon’tkeepuprepayments.Isanythingworththisrisk?Idon’tthinkso.•Checkthesmallprintregardingearlysettlements,andmakesureyouaren’tgoingtobepenalizedifyousettleearly.•Onlyevertakeoutoneloantoconsolidateandonlydothisonce—learnyourlessonandmoveon.•Payoffasquicklyasyoucanafford—thelongertheterm,themoreyou’llhavetopayininterest.•Ifyoumustborrow,borrowagainstanassetyoucanresell,andtrynottoborrowmorethantheresalevalue.

borrowmorethantheresalevalue.•Buyingoncreditisabitdifferent.WhenJackCohenstartedTesco,henegotiatedtherentforhisshoptobepaidthreemonthsinbehind,hepaidforhisstockthreemonthsbehind,andstartedtakingmoneyoverthecounteronday1.Byday90hetookinalotmorethanheowed.

DON’TFORGETTHATGOODOLDSTAND-BY—CASH.

Rule43.CultivateaSkillandIt’llRepayYouOverandOverAgain

There’sasayingthathewhopaysthepipercallsthetune.Andthat’strue.Butthepipercandecidehowmuchhewillchargeforplayingthattuneifwhatheplaysis•Indemand

•Rare•Particularlydifficult(orinsomewayunique)toplay.

Getyourselfadecentinstrument,adecentsetoftunes,anunusualorquirkyPRapproach,aUSP,*andcreateanameforyourselfandtheworldwillbeatapathtoyourdoor.Andpayyouhandsomely.*UniqueSellingProposition.

Whenyoucandosomethingnooneelsecando—orasfewpeopleasispossible—youcanprettywellnameyourprice.Andbelievemeitdoesn’thavetobeaparticularlydifficultskill,justonethatsomebodyelsewantsandwillpayfor.Remembertheguywhopolishestheverybestcarsatapremiumprice?(SeeRule8.)Youcouldtraintobeabrainsurgeon**butittakesmorethantenyearsandaptitudeanddedicationandsteadyhands.Soputtingthataside,thinkaboutwhatyou’vegottooffer.Whatareyourskills,yourtalents,yourstrengthsandweaknesses?Whoneedsthoseskills?Howcouldyouputthemtobestuse?Howdoyoutellthepeoplewhoneedtheseskillsthatyouhavethem?Whatskillmightyoumastertomeetaneedthat’souttherewaitingtobemet?**Neurosurgeonastheyareproperlytitled.

Forthisexerciseyouarenotallowedtosay•Don’tknow•Notsure•Nothingreally•Notalot•Whatdoyoumean?Talent?Skills?Me?

Comeon,weallhavesomethingwecandoorcoulddothatisspecialtous,thatwefeelwecouldmakeafortunefromifonlysomeonewouldgiveusabreak.*Weallhaveadreamwecouldfollow,aplanwedarecarryout.Perhapsallweneedisashove,apushintherightdirection,awake-upcalltogetupoffourbacksideandactuallydosomething.Well,thisisit.WAKEUP.GETONWITHIT.*Noonegivesyouabreak—youcreatebreaks,yougooutthereandwrestlebreakstothegroundandbeatthemintosubmission,youlurethemoutoftheircaveswithsweetsonastick,youtrackthemdownandhuntthemwithanopportunitygun,youstayintheirfaceuntiltheygivein—butnoonegivesthemaway.

WHENYOUCANDOSOMETHINGNOONEELSECANDO—ORASFEWPEOPLEASISPOSSIBLE—YOUCANPRETTYWELLNAMEYOURPRICE.

Rule44.PayOffYourLoansandDebtsasaPriority

Doyouclearyourcreditcardbalanceeverymonth?Ifyoudo,andyoudon’thaveanyotheroutstandingloans/debts,thenwelldone.You’renotwastingmoneypayinginterestandyou’realreadyinastrongpositiontogoforward.SkiptherestofthisRuleandcarryon.Ifyoudohaveacreditcardbalance(orfive),anoverdraftand/orotherloansordebts,*thenyoucertainlyaren’talone.Weliveina“haveitnow,paylater”society.Troubleis,debtbogsusdownandholdsusback.We’resimplythrowingmoneyawaypayingofftheinterest.(Youborrow,say,$20,000andcanenduppayingseveralthousanddollarsextrabackininterest—theactualamountyouenduppayingdependsonhowlongyouborrowfor,aswellastheinterestrateyou’rebeingcharged.)Debtisaweightroundtheneck—itmakesyoufeelbad,it’salwaystherenaggingawayatthebackofyourmind,anditcaneasilybecomeamajorproblemthataffectsyourhealthaswellasyourwealth.*Wedon’tincludemortgagesinthiscategorybytheway—althoughstrictlyspeakingitisaloan,it’saninvestment(wehope)andthereforeisaspecialcase.

There’snodoubtaboutit.Theveryfirstthingyouneedtodoonyourwealthquestistogetloans/debtspaidoffassoonaspossibleanddonothingelseuntilthat’sdone.There’snopointatallstartingtoputmoneyintoasavingsaccount,earningsay5percentinterest,ifyouareatthesametimepaying10percentinterestonmoneyyouowetothebankorsomebodyelse.Itdoesn’tmakeanysense.Thesimpletruthisthatthosewhoborrowalmostalwayspayahigherrateofinterestthantheratereceivedbythosewhosave.Iacknowledgethatyoumayinfacthavefoundaspecialsituationwhereyoucanborrowmoneyataverylowrateofinterestandbelieveyoucaninvestthatmoneyforabiggerreturn,butIsaybevery,very,verycarefulindeed.Youareplayingwithfirehereandunlesstheinvestmentisabsolutelyriskfree(whichIdoubt),paythedebt/loanoffasfastasyoupossiblycan.IshouldstressherethatthereareafewpossiblespecialexemptionstothisRule;forexample,ifyou’veborrowedtoinvestin,say,abusinessandyoureallyknowwhatyou’redoing.We’rereallytalkingmainlyaboutpersonaldebtinthisRule.I’mnotplayingdownhowdifficultitistobecomedebtfree,butithastobedone.Makeaplanastohowyou’regoingtogetridofyourdebt—startbypayingoffthehighestinterestdebtfirstifyou’vemorethanone.Motivationisvitalasthisisshort-termpainforlong-termgain.

vitalasthisisshort-termpainforlong-termgain.Andwhenyoufinallymakeittodebtfree,you’renevergoingthereagain,areyou?(SeeRule40.)Ofcourseyouaren’t.You’reaRulesPlayernow.

DEBTBOGSUSDOWNANDHOLDSUSBACK.

Rule45.Don’tBeTooBusyEarningaLivingtoMakeSomeMoney

It’seasilydone.Youneededajobbecausewealldo,tolive.Thenyougetintoworkingforalivingandittakesupsuchahugeamountofyourtimeandenergiesthatthere’snoneleftovertospendthinkingaboutwhatyoucouldbedoingdifferently,extraorsmartertomakemoremoney.Howmanyofusareguiltyoflettingourfinancialaffairsslidebecausequitefranklywefeeltherearebetterthingstodowithourpreciousfreetimethangettogripswithourfinancesorplanalongoverduelife/careerchange?Sometimeswe’resobusydoingourjobs,weforgettheendgoal—makingsomerealmoney.Well,tobecomewealthy,youabsolutelyhavetoremembertoliftyourheadabovetheroutineofyour9to5(or8to8orwhateverhoursyouwork)andgiveyourselfachancetothinkaboutthebiggerpicture—andtakeaction.Lotsandlotsofpeopleworktolive—andwithoutthemtherichcouldn’tgetricher.Andthisdoesn’tmeantheworkersarebeingexploitedorused.Justthatifpeoplechoosetobedrudgesandinvestalltheirtimeandenergyinworkingforwages,thentherewillalwaysbeotherpeoplewhowillbequicktoseeanopportunityandbecomeprosperous,simplybecausetheyhadtheirheadsupandcouldseefurther.Ifyoudoworkforalivinganddon’tconfidentlyexpectthatjobtomakeyourich,thenyoumustbedoingitforlove,mustn’tyou?No,thisisn’tatrickquestion.Itisaboutprioritizingourambitions.Ifwegotoworksolelyformoney,itmakessensetoearnasmuchaswecan,aswewant.Ifyoulovewhatyoudo,thenifthemoneydoesn’tcomewithit,youneedtocreateastrategyforwealthcreationthatdoesn’trelyonthe“dayjob”income.It’sgreatthatyoulovewhatyoudo,butifyoualsowantwealth,youneedtomakesureyouaren’tsobusydoingitthatyouforgettoworkouthowyou’regoingtogetwealthydoingit,orwhatotheractionsorstrategiesyouneedtocreateasecondincomeoralternativerevenuegenerator.Ifyouareunhappywithyourpayand/orhateyourjob,thenyouhavetoquestionwhyyou’restilldoingitandwhatelseyoucoulddo.Theworstpossiblescenarioisthatyoudon’tfeelfulfilledorrewardedinyourjobbutyouaresobusydoingitthatyoudon’thavetimetocreateaplanthatwillbringyougreaterprosperityandhappiness.Whileyou’vegotyourheaddownearningaliving,amillionand

andhappiness.Whileyou’vegotyourheaddownearningaliving,amillionandoneopportunitiestobecomeprosperoushavejustpassedoveryourheadandyoudidn’tseethem.Imaginewakingupintenyears”timeandrealizingthat’swhatyou’ddone.Ifthisisyoursituation,thendosomethingnow.Changeyourperspectiveandseizetheday.

IFWEGOTOWORKSOLELYFORMONEY,ITMAKESSENSETOEARNASMUCHASWECAN.

Rule46.SaveinBigChunks—orShouldYou?

IalwaysthoughtthatifIcouldgetmyhandsonabigchunkIwouldputloadsofitawayandthatwouldbeabrilliantwayofsaving.Ihaveafriendwhosaysthatisanonsenseandthatthedrip-by-dripeffectisthebestwaytosave.Whoisrightandwhoiswrong?ObviouslyImustberight.It’smybook,afterall.Letusconsideritabitmorelogically.SupposeIsaveabigchunk.Let’ssayIget$20,000forsomeworkIdoorsomethingIsell.Ispendhalfandsavehalf.AndIdothiswhenIam50.HowmuchdoIhaveatretirement?Myfriendsavesameasly,miserly$10amonth—smallpotatoesIsay.Buthedoesstartearly—at20andnevermissesamonth.Whoisgoingtoretirebigtimeandwhoisgoingtobereusingteabags?Comeon,comeon,youcanworkthisstuffoutinyourhead,can’tyou?No?OKthere’sthefollowingchart(assumingamodest5percentinterestperannum).See,ItoldyouIwasright...butnotbymuch.Hopeyouhavelearnedavaluablelessonhere.It’sgoodtobeprudentandsaveregularly,butinthelongrunabigchunksavedlaterinlifewillbringhomethebaconjustaseasily.*Iknow,Iknow,hewon’tget5percentonthewholelotbecausehewon’thavethefull$120untiltheendofyear1butthisisjustanexample.

**I’massumingIinvestatthebeginningoftheyear.

Rule47.Don’tRent;Buy

Weallneedsomewheretolive.Wethereforehavethechoiceastowhethertorenttheroofoverourheads,orbuyit.Mostofuscan’taffordtobuyoutright(Idoubtyou’dbereadingthisbookifyouwereinthiscategory),sotobuyweneedtoborrowalumpsumofmoneytobuywith.Buthangon.Haven’twesaidthatborrowingisbad,bad,badandweshouldn’tdoit?Haven’twesaidthatthiswaymadnessliesbecauseyoupaysomuchinterestonwhatyouborrowandsoon?Indeedwehave.Sohowcanyouownandnotborrow,buyandnothaveamortgage?Theansweristhatamortgagecanactuallybeviewedasaninvestmentratherthanaborrowing.Ifyoubuyapropertywithamortgage,youmakeamonthlyinvestment.Thefactyoupaythattoamortgagecompanywecanglossover.Yousee,inthelongerterm(andifyou’relucky,theshorterterm,too)youcanreasonablyexpectthattheinterestyoupayonyourmortgagewillbelessthantheincreaseinthevalueofyourproperty.Whatyouarebankingonisthatthevalueofyourhomewill,inthelongerterm,goupandthereforeyouhaveinvestedwhateverdeposityouputdown,andyourmortgagemoney.Rentingontheotherhandisnotaninvestment.Youwillneverseethatmoneyagain.Ofthatthereisnodoubt.Withamortgage,youstandagoodchanceinthelongtermofseeingyourmortgagepaymentsleadtoanincreaseinthevalueofyourhouse.Whenyousell,yougetthatincreaseinvalue.Bearinmind,however,thatbuyingpropertyisalong-terminvestmentandyoumaynotgainintheshortterm.Ifpropertypricesplummet,you’llstruggletoturnanyofyourassetintocash.Someexpertsadvisethatyourhouseshouldrepresentonlyhalfofyourtotalassets.Thatmightseemoptimistictosomeofus,butit’sagoodtargettoaimfor.Therearethosewhobelievethatbuyingyourhomeinsteadofrentingbringswithithugestresses,andmeansyouhavelessfun.Thelessonistothinkcarefullyabouthowmuchyourmortgagerepaymentswillbeandthatyouareableandwillingtopaythem.Ideallybuycheapandsellforalotmore.Youthenhaveachoice:Investtheprofitsinthenextpropertywithoutborrowinganymoreandindoingsoyoudecreasethemortgageeachtime.Eventuallyyouownoutrightandwithoutmortgagepayments,youhavesomewheretolive,anddon’thavetopayforitatallanymore.

Alternatively,youcandowhatmostpeopledoandbuyabigger,better,moreexpensivehouse.Thisisn’tawealthcreationstrategy,butitcanbewhatyouwantedyourwealthfor,whichmakesitfinebyme.

SOHOWCANYOUOWNANDNOTBORROW,BUYANDNOTHAVEAMORTGAGE?

Rule48.UnderstandWhatInvestingReallyMeans

Manyinvestmentshaveatwofoldpurpose.Theygenerateincomeandtheyincreaseinvalue.Inotherwords,ifyouinvestalumpsum(thisisknownascapital)yougetregularsmallpaymentsofsomekindandtheactualvalueofthecapitalitselfincreases,thatisthelumpsumgetsbigger.Let’ssupposeyouinvestinproperty.Inanidealworldyoushouldbeabletorentitout,thusprovidingtheregularsmallpaymentsintheformofrentalincome,andthevalueofthepropertyshouldgoupalso,soyourcapitalincreasesinvalueovertime.Likewisesharesshouldpayoutdividends(generateincome)andshouldbeworthmorethanyouboughtthemforwhenyousellsometimelater(increaseinvalue).Yougettheidea.AndnoticeIsay“should”ratherthan“will”—nothingiscertaininthisgame.Youcanofcourseinvestinprettywellanythingyouwant:

•Companyshares•Yourbrother’sharebrainedbuy-an-old-boat-and-do-it-up-and-sell-it-for-a-fortunescheme•Finewines,paintings,gold,classiccars,rarebooks,Georgianglass•Pensionfundsandsuchincludingsavingsanddepositaccounts•Inventionsandnewproductdevelopment•Ideasandpeople•Theatershows,films,TVprogramdevelopment

Anditdoesn’thavetobejustplainoldinvestment.Thereisalso•Sponsorshipsuchasracecars,footballteams,andsoontoraisebrandawareness(hopefullyyoursandnotjusttheracecarorfootballteam)•Angeliccapital—youinvestinpeopleandideasinanaltruisticwayratherthanpurelyasamoney-makingventure(asopposedtoventurecapital,whereyouinvestinpeopleandideaspurelyasamoney-makingventure).

Rememberthatinvestmentsofanysortareaformofgamblingnomatterwhichwayyoulookatit.Andthatyoucanlose.AskLloydsofLondonifyoudon’tbelieveme.Ontheotherhand,investinginabroadrangeoflowriskinvestmentscanstillnetreturnsworthhaving.

REMEMBERTHATINVESTMENTSOFANYSORTAREAFORMOFGAMBLINGNOMATTERWHICHWAYYOULOOKATIT.

Rule49.BuildaBitofCapital;ThenInvestItWisely

Lotsofpeopledon’tgetprosperousbecause,aswesawearlier,theyaretoolazy.Butalotfailbecausetheydon’tknowwhattodoaftertheystarttoearnsomemoney.It’seasytothink,onceyou’vegotyourhandsonabit,thatyouhaveearnedit,youdeserveit,you’regoingtospendit.Youhaveearnedit—assumingyouhaven’trobbedanyonetogetit—andyesyouprobablydodeserveit.Butno,don’tspenditallnow,nomatterhowmuchyouwantthatnewcar,vacation,cottagebythesea,whatever.I’vedoneit.Iguessweallhave.Ioncegotamassivetaxrebate.Idon’trememberwhyIwasbeingtaxedsohighlybutIwasforseveralyearsandwhentheyrepaidmeitwasquiteahandsomesum.AndofcourseIblewit,onafantasticvacation.Butthat’sthedifferencebetweentherichandthenotsowell-off.Therichseeasuddenwindfalllikethatasanopportunitytomakesomemoremoneyoutofit.Thenotsowell-offremainnotsowell-offastheyseeitasanopportunitytohavesomefun.Nothingwrongwiththatifthat’swhatyouwantinlife—instantpleasure.Butifyouwantgreaterwealthandpleasure(albeitdelayed)thenyoumustlearnasIdidthatonceyougetyourhandsonalumpsum,orbuildsomeup,youmustimmediatelyputittogooduse.Andfranklytheonlygooduseisasastarterkitforprosperity.Anditisn’tlost,merelyputtoonesidetoworkforyou.Whenithasgrownandattractedlotsmorelovelymoney,youcanhaveallthevacationsyouwant.Butyouhavetowaitandyouhavetousethatstarterkitwellandwisely.Seeitasa“loader.”Thisisatermguideswhoreceivetipsuseforstartingthetipcollectionoff.Youhavetoputaloaderintheplateornooneelsewilltip.Buskersdothesamething,putacoinortwointothehattogetthecrowdgoing.Noonewillputanythingintoanemptyhat.Whatyouaregoingtodoisloadyourprosperityhat.Ah,butIhearyousay,I’mnevergoingtogetmyhandsonalumpsum.Nottrue.Yougetyourhandsonalumpsumeveryweekofyourlifeintheformofwages—I’massumingyoudohaveajobhere.Youchoosewhatyouspendthatmoneyon—mortgage,food,car,entertainment,andsoon.Butifyouwantawayoutofthatparticularlifestyleandintoanother,youhavetobeproactiveaboutit.Andthewayyoustartitistoputsomethingasideeachweektobuildupthatlumpsum.Whenyouhavesomethingbuiltup,thinkaboutwherethatmoneyisgoingtogenerateyoumoremoney,andgetitinvested.Ideallyyouneedtoturnthatmoneyintoanassetthatwillgeneratemorerevenueforyou—beitshares,apropertyyoucanrentout,orsomethingelse.Wealthhappensslowlyovera

propertyyoucanrentout,orsomethingelse.Wealthhappensslowlyoveraperiodoftimewhenyouturnsurpluscashintosomethingthatwillworkforyou.

NOONEWILLPUTANYTHINGINTOANEMPTYHAT.

Rule50.UnderstandThatProperty,intheLongRun,WillNotOutpaceStocks

So,you’vebuiltupabitofmoneytoinvest—wheretoputit?Propertyandstocksaretwopopularchoices,butwhichtochoose?Intheaftermathofthedotcomcrashof2000whenstockpricesstartedtoplummet,manypeopleturnedfrominvestinginstockstoinvestinginproperty.It’snotsurprisingreally—manypeoplewhoinvestedheavilyinstocksinthelate1990ssawthevalueofmanyofthosestocksdropsomuchitreallyhurt—andsomecompaniesfoldedcompletelymeaninginvestorslostalltheirmoney.Withpeopleturninginhugenumbersfromstockstoproperty,thebuy-to-leasemarketboomedandwithgreaterdemandfrominvestorbuyers,housepricesrose.Eventuallywereachedapointwhereinsomeareastherewasaglutofpropertyavailabletorentandincomefromrentalpropertiesfailedtomatchexpectations(supplyoutstrippingdemand).However,thoseearlyintothebuy-to-leaseboomwhoboughtintherightareasdidwell.Intheyearssince2000,however,stockpriceshaverecoveredandthosewhocouldholdontotheirstocksonthewholehaveseentheirvalueclimbagain.Sowhat’stherightthingtodo?Propertyorstocks?Well,shorter-termblipsnotwithstanding,inthelongerrun,stockswilloutperformproperty.Don’tgetmewrong—there’salwaysaplaceforproperty—it’saboutgettingyourselfagoodspreadofinvestments—aportfolioastheprofessionalsliketocallit.Anydecentinvestmentportfolioisgoingtoincludepropertyasamatterofcourse.Onebigadvantageofinvestinginpropertyisthatyoucanliveinit.(AswesaidinRule47,youhavetolivesomewhereandyoucan’tliveincocoafutures.)Alternatively,ifyou’rebuyingtolease,youwillgetincomefromtherentaloftheproperty.(Thoughyouhavetobeextremelycarefulthattherentisasmuchasyouhopeitwillbe,thatyouaresurethereisenoughdemandforrentalpropertiesinthatarea,andsoon.)Withstocks,youhopetogetregularincomeintheformofdividendspaidtoshareholders,butthegreatestreturnusuallycomesfromalong-termincreaseinshareprices.Andquitesimply,ascompanieshavegreaterpotentialforgrowththanproperty,thelonger-termpictureshouldseesharesgivingyouagreaterreturn.Istresspotentialhereasitdoesn’talwaysgetrealized—thevalueofyourstocks,oryourproperty,cangodownaswellasup.There’salwaysrisk.The

stocks,oryourproperty,cangodownaswellasup.There’salwaysrisk.Theotherreasontopreferstockstopropertyaloneisthatstocks—especiallyanicewell-balancedportfolio—willgiveyouadecentriskspread.Themorevarietythelesstherisk.Didyouknowthatinaslump,bakedbeansalesgoup?

ANYDECENTINVESTMENTPORTFOLIOISGOINGTOINCLUDEPROPERTYASAMATTEROFCOURSE.

Rule51.MastertheArtofSelling

Justasdealmakingisavitalskill,soisselling—andtheyaren’talwaysthesamething.Yousellstuffoutsideofdeals.Indeedoneofthemostimportantthingsyouhavetosellinlifetoincreaseyourprosperityisyourself.Sellingisthebedrockuponwhicheveryfortuneisbuilt.Whateveryoudotomakeyourselfprosperouswillinvolveselling:sellingyourskills,sellingthings,sellingideas.Youcan’tmakemoneywithoutselling.Sellingiswhereit’sat.Everyrichpersonknowsthissimplefact.Everypoorpersondoesn’t.Inanidealworldyoushouldaimtosell

•Yourselfandyourabilities,skillsandattributes(everyminuteofeveryday)•Somethingwhileyou’reasleep•Incountriesyou’venotonlyneverbeentobuthaveneverheardof•Viaotherpeople,sosomeoneelseissellingforyou•Thingsthatareincrediblycheaptoproduceandgiveyouareallyhealthyreturn•Thingsotherpeoplemakeandfinanceforyou•Thingsthathavea99percentpenetrationintoeveryhousehold•Thingsthatstore,transport,andstackeasily

Thelistisprobablyendless.Butwherepeoplegowrongiswhentheytrytosellthingsthatnoonereallywants.Anddon’tgothinkingsellingisforsalesrepsinshinysuitswithanicelineinpatter.EverytimeRichardBransonappearsontelevisionbusywithahotairballoon,heisselling;sellinghisentirebrand.Cleverman.Cleverselling.IliketheyoungmanAlexTewwhostartedincollegein2005.Hewantedtobecomeamillionaireandrealizedthatifhehadamillionthings,hecouldsellthemallfor$1andachievehisgoal.Andherealizedawebpagehas1millionpixels.Hethensetaboutsellingeachonefor$1toadvertisers.Youneedablockofaround400(thuscostingyou$400)tobeseen,buthesoldhalfbyChristmasandtherestwithinhisfirstyearatcollege.Headdown?Idon’tthinkso.Youcanseetheresultatwww.milliondollarhomepage.com—andyes,Isupportedhisventureandpaidhim$400foradvertisingmybusinessasIfiguredsuchanenterprisingyoungmanneededamonetaryroundofapplauseforingenuity,cleverness,andinnovation.

SELLINGISTHEBEDROCKUPONWHICHEVERYFORTUNEISBUILT.

Rule52.SeeYourselfasOthersDo

Ifyourplantowardwealthmeansyou’regoingtosellanything—yourtime,yourproducts,yourservicesoranythingelse—youneedtobethekindofpersonpeoplewanttobuyfrom.Ifyouwanttobeseriouslywealthy,you’llneedtothinkaboutyourselfandhowyoucomeacrossveryhardandveryhonestly.You’llneedtoknowhowotherpeopleseeyou,andifnecessaryadaptittosuityourlineofbusiness.Wouldyoubuyinsurancefromsomeonewearingtornjeans,ahoodie,andflip-flops,andchewinggum?Noindeed.Wouldyousignupforsurflessonsfromsomeoneinathree-piecesuitandacomb-over?Ofcoursenot.Butswapthesetwoaround...nowwe’retalking.Andit’snotjustaboutthewayyoudress,ofcourse.It’saboutyourpersonality,yourmanner,yourattitude,yourpunctuality,yourintegrity,yourcommunicationskills,yourleveloforganization,thecaryoudrive,whetheryouholdyourmeetingsoverbreakfastorwithadrinkdownthepub,howopenandhonestyouare,whetheryourpaperworkisefficient,scaryornonexistent,howfastyoureturnphonecalls,whetheryoumarketyourselfaggressivelyorsubtly,whetheryou’rearrogantorself-effacing,whatyoupromise,andwhetheryoumakepeoplelaugh.Andmore.Everyaspectofyour“brand”shouldbeconsciousandconsidered.Don’tleaveittochance.Askfriends(whoyoutrusttobehonest)totellyouhowyoucomeacross,andlistentofeedbackfromcolleaguesandworkcontacts,too—whetherit’sdirectorimplied.Theymightnotbetotallyhonestofcourse—getreadytoreadbetweenthelines.Andwhateveryoudoyoumustbesincere,too,becausethatwillshow.Noit’snotdifficultbecauseyoushouldn’tbeconstructinganentirelyartificialpersonality—you’rejustmakingsurethatyou’vegottherightskills(easytotalkto,goodwithnumbers,orwhatever)andthenyoumakesureyoushowthepartsofyourown,genuine,personalitythatpeoplewanttosee.Ifyou’rehavingtroublewiththis,whatonearthareyoudoinginthejob?Ihaveverydearfriends,acouple,whoareamongthefunniestpeopleIknow.Theyamusemeendlesslywiththeirsharp-witted,slightlysubversivehumor.Eveningsspentwiththemarealwayshilarious.Theirjob?They’refuneraldirectors.Whenthey’reatwork,theyhidethesenseofhumorunlesstheirclientsclearlyappreciateit.Butanotheraspectoftheirpersonalitiesshinesthrough—theircaring,thoughtful,compassionateside.That’sjustashonestandgenuinea

theircaring,thoughtful,compassionateside.That’sjustashonestandgenuineapartofthem.Itsimplyisn’tthewholestory.

MAKESUREYOUSHOWTHEPARTSOFYOUROWNPERSONALITYTHATPEOPLEWANTTOSEE.

Rule53.Don’tBelieveYouCanAlwaysWin

Thereisawholelistofthingsandpeopleyoucan’tbeat,soitmightbebesttobecautiousaroundthem.Theyincludethebookies(andanyoneelsetryingtotakemoneyoffyouforgambling—casinoowners,cardsharks,racetracks,onlinegamblingwebsites,andsoon),theIRS,speedcameras,thegovernment,yourmother,thepolice,yourkids,anddeath.DanBrown,authorofTheDaVinciCode,wassuedbytheauthorsofanotherbook,HolyBlood,HolyGrail,astheybelievedhehadplagiarizedtheirwork.Theylost.Theylostbigtime.Theylostsomewhereintheregionof$1.75million,includingcosts.Theyprobablybelievedquitesincerelyinthemeritsoftheircase,butdidanybodytellthemtheywereunlikelytowin?It’dbefascinatingtoknowwhetheranybodyadvisedthemnottoproceedastheywouldprobablylose....Thereasontobeverycautiousinyourdealingswithbookies,lawyers,accountantsandsuchisthattheyhaveknowledgeyoudon’t.Theyareholdersofsecretsthatcanenablethem(iftheysochoose)tomakemoneyoutofyoupurelybecauseofyourignorance.Anddon’tgogettingallmoralisticonmeandtryingtochangethesystem.Thesearefactsoflife.Livewiththem.Workthem.Youwon’tgetridofthem.Youcan’tbeatthebookies—ortheodds—sodon’tgotryingorattemptingtogetridofthemonthegroundsthattheyaremakingmoneyoutofthepoor,innocent,andgulliblepublic.Troubleis,thepoor,innocent,gulliblepublicwalkintherewiththeirwalletsopencrying,“Helpyourself.”Andthencomplaintheyarebroke,noonegivesthemachance,lifeisn’tfair,noonelikesme,it’snotmyfault,thereoughttobealawagainstit,andsoon.Rememberthattherearesharksoutthere.Sodon’tbleed.

REMEMBERTHATTHEREARESHARKSOUTTHERE.SODON’TBLEED.

Rule54.Don’tPickStocksYourselfifYouDon’tKnowWhatYou’reDoing

TheRuleafterthisoneisaboutinvestinginthestockmarket.Butbeforeyougothere,IshouldjustpointoutthatthenextRulemaynotapplytoyouatall.Youmightbebetteroffskippingitaltogether.Ifyoudon’treally,truly,knowwhatyou’redoing,youshouldn’tbeplayingthestockmarket.BasicallythisRuleisaboutwhetheryoushouldreadthenextRule.It’sallverywellsayingthatnooneshouldinvestinthestockmarketunlesstheyknowwhatthey’redoing.Howonearthcanyoudoitforthefirsttimethen?Isn’titlikehavingababyorsky-diving—youjusthavetolearnasyoudoit?Well,yesandno.Youseetherearepeoplewhoknowwhattheyaredoing,andIguesstheyweren’tbornknowingwhattodo,soitmustbepossibletolearnbeforedoingsoyouareaspreparedaspossible.So,youwanttolearnaboutstocks.Buthowareyougoingtodoitwithoutgettingyourfingersburned?It’sactuallyveryeasy.Ofcourse,youcandoalltheusualthingslikereadthefinancialpapers,talktopeoplewhoknowmoreaboutitthanyou,askadvice,watchrelevantTVprograms,buybooksonthesubject.Goahead—you’llfindallthesethingsinvaluable.Butevenso,howcanyoubecompletelycertainyou’vereallyunderstoodeverythingyou’vereadandheardandlearned?Dummyruns,that’show.Decideexactlywhereyou’regoingtoputyourmoney...andthendon’tdoit.Watchthemarkets.Seewhathappenstoyourimaginaryinvestments.Tracktheirprogress.Decidewhentosell—andthenseewhathappenstotheprice.Writeallthisdown—it’sfartooeasytotellyourselfyoupredictedsomethingwhenactuallyyoumerelynotedthepossibilityofithappeningbutweren’tsureifitwould.Writedownwhatyoubuyandwhenyousellandwhatyoupredictandhowmuchmoneyyourinitialimaginaryinvestmentwouldhavegained(orlost)you.Dothisalot.Notjustonedummyrunbutplenty.Followlotsofcompanies,andkeepdoingitformonthsoryears.Calculateyourhitrate,yourlosses,youraccuracy.Andthen,whenyournotescanproveonpaperthatyoureallydoknowwhatyou’redoing—that’swhenyoucanstartinvestingforreal.Andevenso,keepitsmalltobeginwith.It’snotthesamewhenyou’re“playing”withrealmoneyandyoumayunconsciouslymodifyyourstrategies,socarryonkeeping

moneyandyoumayunconsciouslymodifyyourstrategies,socarryonkeepingthosenotesandrecordsanddon’tletyourselfgetcarriedaway.

DECIDEEXACTLYWHEREYOU’REGOINGTOPUTYOURMONEY...ANDTHENDON’TDOIT.

Rule55.UnderstandHowtheStockMarketReallyWorks

It’ssimple.Peoplebuy,sellandtradeinvestments—calledstocks—thattheyhavemadeincompanies.So,howdoesitallwork?And,moreimportant,whatworks?Theeasyanswertothelastquestionis“Buylow;sellhigh,”butdon’tyoujustknowthatthere’smoretoitthanthat.Thequestionofdecidingwhattobuy,howmuchtopayforit,andwhentobuy(andthensell)ithasbeenthesubjectofentirelibrariesofbooks,mostofthembiggerthanthisone,andsoI’lllimitmycontributiontoafewchoicerules,andthefirstoftheseistounderstandtherealforcesatplay:valueandspeculation.Personally,Ithinkeconomistswereputonthisearthtomakeastrologerslookgood,butI’mnotaversetoquotingthem,andoneofthemostquotable—JohnMaynardKeynes—oncesaidthatthestockmarketisjustlikeabeautycontest.Nowwhenhesaidthat,hedidn’tmeanthatstockbrokersshouldabandontheirsuitsforswimwearandprofessadesireforworkingwithchildrenorworldpeace.HewasreferringtoatypeofBritishbeautycontestthatusedtoberunbyLondonnewspapers,inwhichreaderscouldwinaprizebypickingthebeautywhosephotographwasdeemedtobethemostbeautifulbythegreatestnumberofotherreaders.Thismeantthatwinningwasnotaboutpickingtheprettiest,norevenaboutpredictingwhichtheaveragereaderwouldthinktheprettiest,butinsteadwinningbecameagameofanticipatingwhattheaveragereaderwouldexpecttheaveragechoicetobe.Andthis,believedKeynes,washowthestockmarketworks.Investorstrytomakemoneybybuyingstocksthattheythinkotherinvestorswillwanttobuyinthefuture,andthepricethatthey’repreparedtopayforastockdependslessonthefundamentalvalueofthecompanythanontheirexpectationsofwhateverybodyelsewillbewillingtopayforit.That’stheessenceofspeculationinthestockmarket,andthat’swhythefundamentalvalueofastockanditspriceonanygivendaycanbesodifferent.Speculatingonstockmarketmovementsisgreatfunifyouwanttoobservemasspsychologyinaction,butinanuncertainworldit’snottheroadtowealth.Andit’sriskierthanyourealizeunlessyoureallyknowwhatyou’redoing.Sodon’tstartplayingthegameuntilyou’resureyouunderstandtherules.Butifyoureallywanttoaccumulatewealthinthestockmarket,thenhere’smyadvice.Getrichslowly,butsurely,withvalue.Ignoreallthenoise,theclamoraboutwhat

thispieceofnewsorthatpieceofgossipmeansforaprice;stayawayfromthe“proven”techniquesforpredictingwhatpriceswilldotomorrowbasedonwhattheydidyesterday(technicalanalysis!don’tbefooledbytherational-soundinglabel,it’sirrational)andresist,pleaseresist,thetemptationtodiveinandoutofstockschasingaquickbuck.Ifyou’regoingtoinvestinshares,lookforvalue.Lookforcompanieswhoseshare-pricedoesn’treflecttheirworth;lookforcompaniesthatmakeordosomethingthatpeoplewillfindmorevaluableinthefuture,andlookforcompanieswhosevalueisappreciatedbytheinvestmentfunds(we’llmeettheminRule56).Onceyou’vefoundthem,buythem,andunlessthefundamentalschange,buythemforthelongrun.Waitfortheirvaluetoappreciate,andwatchasyourwealthaccumulates.So,tobuytherightstocks,attherightpriceofcourse,don’tfollowthecrowd,findthevalue.Easiersaidthandone,youmightsay,andyou’dberight.Itcantakealotofresearch,butyoucanmakeiteasierifyoufollowthenextRule.

Rule56.OnlyBuyShares(orAnything)YouCanUnderstand

AnotherRuletoengraveonyourheart.Buyingshares—oranythingelsetosellontomakemoney—isjustanotherformofgambling.WhenIworkedasacasinomanager,itwaswellrecognizedthattherewasahierarchyofcasinos.Atthebottomweretheoneswiththeslotmachinesandnoisybrashatmosphere.Atthetopwerethegentlemen’sclubswhereitwasallsmokedglassanddiffusedlighting.Gamblersofcourserecognizedthehierarchyandfeltthatthelatterweresomehow“cleaner.”Similarlymostpeopleviewthestockmarketasinsomewaymorerefined,sophisticated—andthusfreeofriskoroddsordanger.Butitisallgambling.Nothingiscertain.Ifyouaregoingtogambleonstocks(oranythingelseyouwanttobuyandsell),thenreducetheoddsasmuchaspossibleandonlyinvestinorbuythingsyouknowandunderstand.Bydoingthisyoueliminatealotofthemystiquethatcanleadyoutostakemorethanyouintend,takerisksyouwouldn’tnormally,orbebamboozledbyslickmarketingspiel.IfyoushopatMacy’s,andyouseethatthenewproductrangesaregoodandthatthestoresarefullandyouhearpeopleravingabouthowMacy’shasimprovedthisyear,thenbuyMacy’sshares.Ifyoukeepstudyingthestoresandlisteningtopeopleshopping,youwillquicklynoticeifitcontinuestobeagoodinvestment.Justbecarefulyouareawareifyouarebuyingwithyourheadorheart.Ihaveafriendwhoinvestsonlyingreencompanies.Heswansaboutwithanairofmoralsuperiority.Hebelieveshehasboughtatickettoheavenbydoingthis.Heisagambler.Hedoesn’trealizethis.Ishebuyingwithhisheadaswellashisheart?Ifyoufindinvestmentsinsomethingyoulove,beclearifyouarebuyingasaninvestmentonbusinessprinciples,orsimplybecauseyouwantto.Ifyourrationalmarketanalysissaysthatwindfarmsarethefuture,andwillbeagrowingindustrywithbigreturns,thenfantastic,youcaninvestwithheadandheart.Ifyoudon’treallyunderstandaparticularsectorofbusiness,anddon’tintendtoputtheworkintogettoknowitwell,thenyou’llalmostcertainlybebetteroffinvestinginsomethingelse.Ifyouwanttoinvestinshares,butdon’twanttodoallthehomeworkandmakeallthedecisionsyourself,thenyoucanuseaninvestmentfund(seeRule58).

CUTTHEODDSDOWNASLOWASPOSSIBLEANDONLYINVESTINORBUYTHINGSYOUUNDERSTAND.

Rule57.UseYourHead

Thereasonyou’rereadingthisbookisbecauseyouwanttobecomewealthy,right?Allthefinancialdecisionsyoumakewillbegearedtowardgeneratingasmuchmoneyaspossible.Eachstepalongthewayisjustthat—onemoresteponyourwealthladder.Sodon’tallowyourselftogetdistractedintomakingdecisionsonanyotherbasisthantheirfinancialmerit.Makesureyourheadrulesyourheart.That’sprobablynotdifficultifyou’repickingsharestoinvestin,butitcanbehardwhenyou’rebuyingproperty,forexample,orifyouwanttobuyandselloldcarsorantiquesoranythingyouhaveapersonalaffectionfor.I’mnotsayingyoucan’tbuythingsyoulike—youhavetodecidehowmuchofyourwealthyouwanttoenjoyandhowmuchyou’llsaveforlater.Butwhereatransactionisintendedasaninvestment,whenyourprimarypurposeistomakemoney,don’tallowyourselftobeswayedbypersonaltaste.IfthatbeautifuloldSeries1LandRoverneedsmoreworkbeforeyoucansellitforthanthenewerDefender,andwillfetchnomoremoneyattheendofit,thenbuytheDefender.It’stoughIknow,butithastobedone.Similarlyifyou’rebuyinganinvestmentproperty,suchasabuy-to-lease,don’tchooseahousejustbecauseit’sinanareayou’dliketolivein.You’renottheonewho’llbelivingthere,soyouneedtobaseyourdecisiononhardfinancialfactors,notyourownpreference.Whichpropertywillgiveyouthebestreturn(aftercosts)?That’sallyouneedtoknow.Look,I’mnottellingyouwhatyoushouldandshouldn’tdoonapersonallevel.I’mjustexplaininghowtogetwealthy.That’swhatyouaskedme,ineffect,whenyouboughtthisbook,andthat’swhatI’mtellingyou.Thepeoplewhogetwealthiestarethepeoplewhobuywiththeirheadsandnottheirhearts.Soyoudowhatyoulike,butdon’tsayIdidn’ttellyou.

DON’TMAKEDECISIONSONANYOTHERBASISTHANTHEIRFINANCIALMERIT.

Rule58.ByAllMeans,UsetheInvestmentProfessionals(butDon’tBeUsedbyThem)

Asyou’veprobablyguessedfromRule55,mostofthosewhopicktheirownstocksliketothinkthattheycanseevaluewhereotherscan’t.Ofcourse,wedon’tliketolooktoooftentoseeifourtrackrecordbacksthatup,andI’msuremanyaRulesPlayerhasmadedumbinvestmentdecisions.Ifyoudon’ttrustyourselftomakecleverdecisionseverytime,orperhapssimplywanttosavetheoccasionalinvestmentdecisionforyourselfandletsomeonewhoknowsmorethanyoudotakecareoftherest,thenit’sOKtousetheprofessionals.Butmakesureyouusethemwisely.Now,payattentiontothisbit—it’sreally,reallyimportant.Firsttheywilltellyouthattheycantakeyourmoney,investitactively,andbeatthemarket.Thattheydobeatthemarketandthattheywillbeatthemarket.Theymayevenhavesomecolorfulchartstoshowyouhowtheybeatthemarket,everyyear.Justsignhere,sitback,andyou’llsoonbeworthmorethanWarrenBuffettonahotstreak.Soundstoogoodtobetrue?Yep,it’swishfulthinkingandflawedlogicinequalmeasures.Toputitsimply,forsomebodytobedoingbetterthanaverage,somebodyelsemustbedoingworse,andsincethebigfirmsinvestmostofthemoneyinthemarket,whoaretheybeating?Themselves?Right,andhere’stheuglylittletruthabouttheinvestmentindustry.Inanygivenyear,somewillcomeoutaheadandsomewilllose,butoverthelongtermthemarketbeatsmostofthem,mostofthetime.OhI’msuremanyofthemtryhard,theyreallydo,butintheendnearlyallofthemfailtogrowmoneyanyfasterthanthemarket.So,don’tpaythemfortrying.Askyourselfthis.If,likemostpeople,youreadthebrochure,listentotheadviser(who’sonacommission)andbuyintoafundaimingtobeatthemarket,what’stheonethingthatyoucanbesurewillbehigherthanaverage?Thereturns?Orthefees?Youknowtheanswertothatone,don’tyou?Ifyouwanthelptoputyourmoneyinthemarkets,withoutputtingmuchofitinsomeoneelse’spockets,keepitsimple.Ifyoudon’thavethetimeorknow-howtocarefullyresearchthebestactivefund,thenfollowtherulethatlessismore(andusuallycomescheaper).Putyourtrustinfundsthatdon’tchargeyoubigfeesfortakingbigriskswithasuccessionofcleverstrategiestobeatthehouse—pickindexfundsandtracker

successionofcleverstrategiestobeatthehouse—pickindexfundsandtrackerfunds.Pickfundsmanagedbypeoplewho’llinvestyourmoneywithminimumfussandminimumfees,inagoodrangeofstocksthatreplicatethemarket,andthengotolunch.Thenyoucansleepatnight(orgetbacktoreadingthisbook)safeintheknowledgethatyourmoneyisinthemarket,quietlyworkingawayonyourbehalf.

INTHEENDMOSTOFTHEMFAILTOGROWMONEYANYFASTERTHANTHEMARKET.SO,DON’TPAYTHEMFORTRYING.

Rule59.IfYouAreGoingtoGetFinancialAdvice,PayforIt

Boyaretherealotofpeopleouttherewaitingandwantingtogiveyoufinancialhelp,advice,information,tips,andguidance.Great—learnearlyontobeverycarefulwhoyoutakeadvicefromifyouwanttohangontoyourwealth.Therearetwogroupsofpeopletowhomyoumayturnintheeventofneedingsaidadvice,help,guidance,whatever.First,thereareskilledprofessionalswhocarryindemnityinsurance,soyoucansuethem—andexpecttogetapayout—intheunlikelyeventtheinformationtheygiveyouiserroneous,wrong,ordangerouslybad.Iftheystandbytheiradvice,youshouldmakesureprovisionistheresothatyougetpaidifitiswrong.Thatkeeps’emontheirtoes.Thesepeopleyoupayandtheirfeeentitlesthemtotalktoyouaboutyourmoney.Second,thereareveryrichpeople.Listentothemunlesstheywontheirmoneyonthelottery,inheritedit,robbedabanktogetit.Thosearetheonlytwocategoriesopentoyou.Theonesclosedtoyouincludefriendsandfamily,well-meaningacquaintances(eveniftheydohaveabuckortwooftheirown),TVprograms,theInternet,andinvestmentbanks.Youmustmakesureanyfinancialadvicecomesfromsomeonewhocarriesarecognizablequalificationormembershipofasuitableorganization—thatincludesthevery,veryrichclub.Makesureyouknowthattheyknowwhattheyaredoing.Therearetwotypesofadvisersinmyexperience:(a)thosewhostopyoumakinganassofyourselfand(b)thosewhotellyouyou’vemadeanassofyourselfafteryou’vedoneit.Youwantcategory(a).You’llgetloadsandloadsincategory(b).Whenitcomestoprofessionalfinancialadvisers,thereareanothertwocategories:(a)thosewhodealwithyourfinancesand(b)thosewhotrytosellyouproducts.Avoid(b)liketheplague.Anyfinancialadviseryouuseshouldbeindependent—thatis,theyshouldnotberestrictedtoprovidingadvicefromalimitedrangeofproductsofferedbythecompanytheyworkfor—it’sthedifferencebetweenbuyingasuitofftherack—abestfit—orbuyingsomethingtailor-madetofityourrequirementsprecisely.

MAKESUREANYFINANCIALADVICECOMESFROMSOMEONEWHOCARRIESMEMBERSHIPOFASUITABLEORGANIZATION—THATINCLUDESTHEVERY,VERYRICH

MEMBERSHIPOFASUITABLEORGANIZATION—THATINCLUDESTHEVERY,VERYRICHCLUB.

Rule60.Don’tFiddle

Afteryou’veworkedoutastrategy,leaveitalone.Thereisnopointfiddling,you’reunlikelytomakeitanybetter,andyoumightmakeitworse.Notonlythatbutyoucouldincurlotsofextrachargesorpenaltiesifyoustartchangingthingsafterashorttime.Youhavetoknowwhentoleavethingsalone.It’sliketheproverb“lookbeforeyouleap.”Look,looklongandhard.Thenmakeyourplanandmakeyourdecisions.Thenleaveitalone—don’tmesswithit.Lookingisweighinguptheodds,seekingadvice,consideringtheprosandcons.Leapingisactingonallthatinformation.Butwhenyouhavedecidedtoleap,getonwithit.Whenyouhaveformulatedyourplan,yourobjective,yourstrategy,yourgoalsandtargetsandambitionsanddestinations,thenbecommitted.Itissoeasytogetscaredorpanicky.Weallfearunemployment,poverty,financialtraps,fallingbehind,fallingbelow,fallingindebt.I’vebeenthere:HavingmadeaplanIwasparalyzedbyfearintostayinginajobforyearsbecauseIdidn’tbelieveIcouldsurviveoutsideit.WhenIsteppedoutside,Isurvivedjustfine.Wealwaysdo.Plansandsmallfishrequirethesameamountofcooking.Afterthey’reinthepan,leavethemaloneorthey’llfallapart.Don’tkeepstirringorthey’lldisintegrate.Don’tkeepfiddling,tinkering,changingyourmind,andchangingitbackagain.Ifyoudokeeponfiddlingyoumayendupachievingverylittleandworsestillyouwillhavewastedmoneyonearlyredemptionchargesandthelike.Manyinvestmentsarelongtermandfiddlingmeanspayingmoreornotreapingthefullbenefits.Sureyoushouldkeepyoureyeonthings,andonthemarketgenerally,butstickwithyourstrategyand,havingdoneyourhomework,leaveaswellaloneaspossible.Don’tpanicanddon’tfiddle.

BUTAFTERYOUHAVEDECIDEDTOLEAP,GETONWITHIT.

Rule61.ThinkLongTerm

Atthesametimeasnotfiddlingtoomuch(seeRule60),sotooyoushouldn’tplaytheshortgame.Youhavetothinklongterm,bothinyourplanning,andinyourexpectationsofareturn.Youalsohavetoinvestforthelongerterm.Ifyouexpectarapidandsuddencatapultintoprosperity,thengoplaythelotteryandgoodlucktoyou.(You’llneedit.)Gainingwealthisaslowprocessandrightlyso.Ifyougetitallquicklyyouhavenotimetoacquireexperienceandsense.Tooquicklyandit’llbeall“spend,spend,spend.”Thinkinglongtermisabitlikethinkinginveryfastmotionwhiletherestoftheworldmovesincrediblyslowlyaroundyou.Evertriedtoswatafly?Afly’seyesaredifferentfromoursandtheybasicallyseeinfastforward.Bythetimeyouraiseyourhand,theyhavealreadypredictedthemovementandflownaway.Youhavetodevelopthesameability.Youhavetoseewhat’shappeningbeforeithappens,andtheonlywaytodothatistothinklongterm.Thinkofgainingprosperityasstalkingareluctanttiger.It’llbewaryandcautious,andyouhavetostalkitskilfully,quietly,almostlovingly.It’snouserunningupandshoutingatit—itwilleitherturnroundandkillyouorrunoff.Bettertotakeyourtimeandcreepupslowlyandquietly.Anysuddenmovementswillstartlethecannybeast.InTheRulesofWorkItalkedabouthavingvariousplansinforce—shortterm,mediumterm,andlongterm.Thesameistrueforinvestments.Youneedshort-terminvestmentsformoneyyoumightneedaccesstointhenearfuture;medium-termonesthatyouexpecttodeliverreturnsinfiveortenyearssay;andthenyouneedlong-terminvestmentsthatwillreapgreaterrewardsbutthatdeliverinthemoredistantfuture.IknowinRule38Isaidtobedecisiveandactquickly,andthatisstilltrue.Butonlyafteryouhavetakenalong-termview;onlyafteryouhaveweighedandconsideredandponderedandevaluated.Thesamuraionlymakesonecutbutthatcutwasanentirelifetimeinthemaking.Whereareyougoingtobeinfiveyears”time,prosperity-wise?Ten?Fifteen?Twenty?Longer?

THINKOFGAININGPROSPERITYASSTALKINGARELUCTANTTIGER.

Rule62.HaveaSetTimeofDaytoWorkonYourWealthStrategy

Youhavetohavealifeaswellasgainingprosperity.Itismyobservationthathappy,wealthypeople’sfinancialplanningfollowsasimilarsetoffourprinciples:1Theysettargetsandthengetonwithit.2Theydon’ttinkertoomuch.3Theytendtoworkontheirfinancialplanningatthesametimeofday.(Idon’tmeaneveryoneworksatsay9a.m.butthateachpersontendstofavoraparticulartimeofdaywhetherit’s10:30inthemorningormidnight.)4Theyareabletotakeabreakfromtheirfinancialplanningandhavealifeoutsideit—itkeepsthemrefreshedandinteresting.

Thereasonyouneedasettimeofdayistwofold.Firstly,itmakessureyouactivelymanageyourwealthratherthanlookingatitonceayearandthinking“Ohdear”andconverselyitmeansyoudon’toverdoitandspendalldaytinkering(whichaswe’vesaidisabadidea).Andsecondly,itmeansyoucantakeadvantageofyournaturalbiorhythmsandputintheeffortwhenyouareatyourbrightest.Ifyouareamorningperson,you’llwanttogetyourplanninginearly.Ifyouaremoreofanightowl,thenaneveningslotwilltakeadvantageofyoursharpestmentalacuity.Theotherbigadvantageofhavingasettimeofdayisthatyoucanplanforit,workitintoyourschedule,andmaketimeforit.Ifyoudon’t,itcangetforgottenorthetimeusedforotherthings.If,forexample,youalwaysspendhalfanhouronyourplanfirstthingafterbreakfast,thenitgetstobearegularfunctionandoneyoufeeloddlyuncomfortablemissing—yes,evenonvacation.Workingonyourprosperityplanatthesametimeofday—andforthesameshortishlengthoftime—meansyoucanbreakthingsdownintomanageablechunksandnotgetoverwhelmed.Youcanworkforabitandthentakeabreak,putitbehindyouforthedayandgobacktoit,atthesametimeofcourse,thenextday.Bitbybit,thingswillimprove.Believeme,I’vebeenherebeforeyou.

YOUCANTAKEADVANTAGEOFYOURNATURALBIORHYTHMSANDPUTINTHEEFFORTWHENYOUAREATYOURBRIGHTEST.

Rule63.PayAttentiontoDetail

ThisismybiggestfailingI’mafraid.Mysolutioniseasy.Iemploysomeonetomanagemylifewhotakescareofthedetail—someonewhoisvery,verygoodatthedetail.Yes,it’sanexpensivewaytodoit.Bettertotrainyourselfrightfromthewordgotopayattentiontothedetailyourselfandsavetheexpense.Detailisnotkeepinganoteofeverytinypurchaseyoumakeandlookingatminuteeconomies—we’vealreadydiscovered(seeRule35)goingwithoutthatcappuccinoisn’tgoingtomakeyourichbeyondyourwildestdreams.Detailis•Checkingthesmallprint

•Checkingtheinterestrates•Checkingchargesandfees•Checkingyoupayforthingsontimesoyoudon’tincurpenalties•Checkingwhenyouwillbepaidandthatyouinvestpromptlytoavoidyourmoneylyingidle•Notforgettingpeople•Notforgettingdates,times,andappointments•Makinglistsandwritingeverythingdown•Rememberingtoaskforinformation•Rememberingtoaskquestionsingeneral•Rememberingtokeepgoodrecordsofalltransactionsandpurchasesandsales.

Thisisjustmuscletraining.Itakeityouknowallaboutmuscletraining?Whenyouareintrainingforanysport,ifyourepeatanactionoftenenoughyourmusclesretainthememoryofthataction.Themoreyourepeattheaction,theeasieritgetsandthelesseffortyouneedtoputin.It’sabitlikedrivingacar,toughatfirstbutitbecomesautomatic(excusepun!)afterawhile.IamwritingthisinFranceandIhavebeengettingusedto(a)drivingontherightand(b)drivingaleft-hand-drivecar.I’vehadtoconcentratehardandshoutatthechildreninthebackseat.It’sbeenabitlikelearningtodrivealloveragain.AddedtothefactthatallthesignsareinFrenchandit’sasteeplearningcurve.Butit’sgettingeasierandbecomingroutine.Idon’thavetothinkaboutitanymoreandcantakeinthepassingsceneryandenjoythejourney.

TRAINYOURSELFRIGHTFROMTHEWORDGOTOPAYATTENTIONTOTHEDETAILYOURSELF.

Rule64.CreateNewIncomeStreams

Whenitcomestowealth-creationstrategies,investingwiselyandmanagingyourmoneyactivelyareimportant,butnothingbeatshavingmorecomingininthefirstplace.Everybodybenefitsfromsomethoughtaboutwheretheirincomecomesfromandhowtheycouldcreateanothersourceofrevenue.It’sabitlikebeingasalespersonandhavingseveralpitches.Ifoneisprovingunprofitable,youcanpackitinandgosomewhereelse.Butinsteadofpackingitinwhatyouaregoingtodoisduplicateyourself—aclonedyouifyoulike—andnotonlycarryoninsalesbutalsobesellinginanewplaceatthesametime.Themorehatsyouhaveout,themoretheyarelikelytoreturnaprofit.Look,don’ttakemywordforthis.Checkitoutyourself.Lookatanyprosperouspersonyouadmiretoseeifdiversityisn’ttheirtoolforunlockinggreaterprosperity.Therichusuallyhaveseveralmoney-makingschemesgoingforthem.Thisisespeciallyimportantforanybodywholovestheirwork,butitdoesn’tpaywell.Whatyouneedisanotherincomestream.Thereareacoupleofwaysofdoingthis.Thefirstistoturnsurpluscashintoassetsthatwillworkforyouandbringinincome,evenwhenyouaren’tthere.Rentfromabuy-to-leasepropertywouldbeoneexample,orannualdividendsfromsharesyou’vebought.Theotherwaytocreatenewincomestreamsistofindwaysofusingyourskillsandexpertiseinmorethanonesetting,soyouaren’tjustswappingyourlaborforapaycheckinyourdayjob.Thisdoesn’tmeanpackinginyourdayjobnecessarily.Itmightmean,forexample,doingsomefreelanceworkeitherinthesameareaoracompletelyunrelatedareawhereyoualsohaveskillsandexpertise.(Maybeyouhaveahobbywhichmeansyouhaveotherskillsandexpertisethatcouldbeused?)Isthereanythingyoucouldteachorconsulton,orthatyoucouldsetupasabusiness?WhenIsay“create”newincomestreams,whatImeaniscreatethemforyou.Theycanbeoldonesinthemarketplace.Justmakesurethatyouaremaximizingallyourskillstobringinincome,andthatyouareactivelyinvestinginassetsthatwillearnmoneyforyouwithoutyouhavingtobethere.(Idorealizeyoucan’tphysicallycloneyourself.)

THERICHUSUALLYHAVESEVERALMONEY-MAKINGSCHEMESGOINGFORTHEM.

Rule65.LearntoPlay“WhatIf?”

Whendecidinghowtoearnyourmoneyandhowtoinvestyourmoney,youneedtoaskyourselfalotofquestionsstartingwith“Whatif...?”I’llstartyouoffhere:

•Whatifthereisanotherrecession?•WhatifthisbankgoesbustandIcan’tgetmymoneyout?•Whatifthesesharessuddenlytakeaturnfortheworse?•Whatifgoldpricesplummet?•Whatifallmycustomerswentelsewhereforacheaperservice/products?•WhatifIweremaderedundant?•Whatifpropertypricesbottomout?•Whatiftheoilrunsout?

TheWhatIfgameisonewecanallplay.Alltogethernow...WhatIf...?Icallit“lookingforloopholes,”onlyitisn’tloopholes,moreasortofgotchaclause.EverytimeIstartmakingsomeseriousmoney,Ifiguresomeonesomewhereisplayingagotchaclausewherebytheunexpectedhappensandthatparticularincomestreamdriesuprapidly.Partofthefunofbeingprosperousisinspottingthegotchaclauselongbeforeithappensandgettingyourmoneyoutandintoanotherinvestment.It’salsovitaltoconsiderwhenyouarethinkingaboutwheretofindextraincomefrom.That’swherehavinglotsofhatscomesin.Agoodexampleofthedangersofputtingallyoureggsinonebasketaretheathleteswhohavebeenforcedtoretirewhileintheirtwenties.Oneminutetheyareearningmillionsandseeminglyatthepeakoftheircareerandthentheyshattertheirankle,andtheirfinancialdreamstoo.Theyhaven’ttrainedforanythingelsebecauseitneveroccurredtothemthattheymightneedanotherstringtotheirbow.Diversificationisthenameofthegame—byhavingmorethanoneincomestream,andanicebroadspreadofinvestments,whateverhappensinthe“Whatif”scenarioyouwillbeinamuchmoresecurepositionthanifallyourproverbialeggsareintheonebasket.Byasking“Whatif...?”youareminimisingriskstoyourwealthandwealthcreation.

DIVERSIFICATIONISTHENAMEOFTHEGAME.

Rule66.ControlSpendingImpulses

Thesurestwaytomessupyourwealthcreationistogooutandspendeverythingyouearnorreceive(andabitmorejustforgoodmeasure).Thisparticularaddictionisverystronginme.Iblameitallongivingupsmoking.Ihavenothingtodonowwithmyhandssofiddlingwithacreditcardseemstosatisfysomedeeplyburiedaddictiveurge.Butyouhavetoresistifyouaregoingtoturnwhatlittleyouhaveintoabiggersomething.Forgetnotionsofnewcarsandholidaysinthesun.YouaregoingtoturnintoabitofaScroogeforawhile,hangingontowhatyou’vegottoprepareforthefuturewhenyouwillhavesomuchmore.Thismeansyouhavetocontrolyoururges.Look,I’mgoingtoletyouintoasecret.Prosperityisarace,aprize,awinningline.Weallsetoutwantingtoracetowardit,claimit.Somecan’tbebotheredtoevenmakeittothestartinglinebecausetheyaresoweigheddownwithunhelpfulbeliefsthatfloorthembeforetheystart.Andawholelotofpeoplefallbythewaysidefromlazinessearlyon.Andmanymorefailtomakethegradebecausetheygetdauntedbythehardworkneeded.Andstillmoreatthispoint,whereyou’reatnow,stumblebecausetheygiveintotemptationandspend,spend,spendlikethereisnotomorrow.Well,thereisatomorrowanditcomesquicklyenough.Andthatshinynewcarnowlookssadandrusty,theholidayisgonewithonlyafewpicturesofpeopleandplacesyoucan’tevenrememberandthenewclothesareoutgrownandunworn.Thesimpletruthistherichknowhowtocontroltheirspendingurges—that’swhythey’rerich.Whentheyneedtotightentheirbelts,theycandoit.Andyouneedtodoittoo,tightenyourbeltthatis.Infact,whatyouneedtodoisnotloosenitinthefirstplace.We’vetalkedaboutdelayedpleasuresinearlierRules,andIhopeyou’veabsorbedthatonebynow.Curbingthosespendingurgesisabsolutelyvital,andthebestwaytodoitistoneverbuyanythinginstantly.Ifyouseesomethingyoujusthavetohave,waitaweek.Doyoustillreallyneed/wantit?Chancesaretheurgewillpassifyougiveitachanceto.Makeitharderforyourselfbyputtingtimeanddistancebetweenyouandtemptation.

THERICHKNOWHOWTOCONTROLTHEIRSPENDINGURGES—THAT’SWHYTHEY’RERICH.

Rule67.Don’tAnswerAdsThatPromiseGet-Rich-QuickSchemes—ItWon’tBeYouWhoGetsRichQuick

Ifyoutypein“Opportunitiestomakemoney”intoGoogleyougetover258,000,000hits.That’snotquiteasmanyas“sex”*butstillaprettygoodindicatorofwhatwewant.Therearealotofget-rich-quickschemesoutthere.Now,believeme,theydowork.What?Ihearyoucry.Yesindeedtheydowork.Butnotforyou,notforthepoormugswhosignup.Theyworkfortheinstigators,thebeginners,theoneswholaunchsuchschemes.***2,860,000,000ifyouGoogle“sex”but“God”isuptherewith1,640,000,000and“work”isastaggering6,210,000,000,somaybethere’shopeforusyet.

**137,000,000ifyouGoogle“get-rich-quickschemes.”

Inthe1980stherewerealotofwaterpurifiersellingschemes.Iwasinvitedtoacoupleoftheirmeetingsandwentalongoutofinterest(strictlyresearchIpromise)andwasamazedathowquickpeopleweretojoinin,tosignsomething,anything,thatpromisedthemloadsofmoneywithminimumeffort.Afterall,whatdidtheyhavetodobutsellawaterfiltertoafewfriendsandrelations?Easypickingstheyallthought.Whereareallthepeoplenowwhosignedup,investedtheirsavings,werepromiseduntoldriches?Funny,Ican’tfindanyeither.Maybeafewdidindeedsellsomeandalienatedtheirlovedonesintheprocess.Maybetherewereafewatthebeginningwhodidmakequiteabitofmoney.Butanypyramidschemeisn’tsustainableandwillcollapsewhenitreachesacertainlevelbecausetherejustaren’tenoughpeopleontheplanettosustainthepromise.IlikewhatWoodyAllensaysaboutafoolandhismoney—howdidtheygettogetherinthefirstplace?**ItmaynothavebeenWoodyAllenofcourse—hedoesgetalotofquotesattributedtohim,especiallycynicalonesaboutmoneyandGod.Woodyalsosaid—anditwasdefinitelyhimthistime—thatmoneywasbetterthanpovertyifonlyforfinancialreasons.

WhenIwasakidIrememberreadingaboutacoupleofscamsthatsetmethinkingabouthowgulliblepeopleare.Thefirstwasapestkiller.Yousentofffivebuckstobuyapestkillerguaranteedtokillanyhouseholdpestincludingfleas,cockroaches,mice,andsoon.WhatyougotbackweretwosmallblocksofwoodwiththeinstructiontocatchandplacethepestonblockAandthenpressdownblockBwithgreatforce.Ikidyounot.Andtheperpetratorsmadealotofmoneybeforetheygotcaught.Mightbetimetotrythatoneagain.Thesecond

moneybeforetheygotcaught.Mightbetimetotrythatoneagain.Thesecondscamwassomeoneofferingayardofsilkduringasilkcrisisforasimilarsmallfee(noticehowtheamountisalwayssmallenoughtotemptyouin)andwhatyougotbackwasayardofsilkthread—theyhadneverspecifiedthewidth.Nowyoumightbethinkingyouaretooclevertobetakeninbysuchobvioushoaxes.Yes?Well,theyaren’tallasobviousandyoumightnotbelievetheschemesthatotherwiseverysmartpeoplesignupto.Therearenoget-rich-quickschemes.Repeatafterme:Thereareno....

AFOOLANDHISMONEY—HOWDIDTHEYGETTOGETHERINTHEFIRSTPLACE?

Rule68.ThereAreNoSecrets

Justastherearenoget-rich-quickschemes,sotherearenosecrets—sodon’tgobuyinganyofthemeither.Youwillbeofferedloads.Whenyourattentionisfocusedonbecomingprosperous,allsortsofoffersaregoingtocomeatyououtofthewoodwork.Andthey’llalloffertoletyouinonthesecretsonlythereallyrichknow.You’llgetofferedveryexpensivenewslettersthatwilltellyouthehiddensecretsofWallStreet,howtoplaythestockmarketandwin,howtoinvestandmakeafortune,howtomoveyourmoneyaroundinoffshoreaccountstoavoidpayingtaxes.Andit’llcostyousolittle!Allyou’vegottodoissignupfor12monthlyissues.Guesswhat?Theonlysecretbeingsoldistheonethatsaysthere’sasuckerborneveryminute.Andnowthatyouknowthatsecret,you,too,canjustsayno.Noonebutyouisgoingtomakeyouwealthy.Nooneinthewholewideworld.Theydon’tknowmorethanyou.Theydon’thaveaccesstoanymoreinformationthanyoudo.Thesecretofmakingmoneyisthattherearenosecrets.Youbuysomethingandifyousellitformorethanyoupaid,you’vedonewell.Andthatappliestoanythingandeverythinginthefinancialworld—stocksandsharesandinvestmentsandpropertyportfoliosandcommodityfuturesandgoldreservesandconchshells.Oneoftheearliestruleswehadtolearnwasthatonlyindustriouspeoplecanbeprosperous.Canyouseewhynow?Youhavetoputinabitofefforttolearnhowtodoitbystudyingthewealthy.Ifyouthinkthereareshortcuts,likebuyingget-rich-quickschemesorbuyingsecrets,notonlyareyougoingtobedisappointedbutyou’llbeworseoffthanifyouhadn’tinvestedinsuchnonsense.Lazypeoplenotonlydon’tgetrichbuttheyoftenenduppoorerbecausetheylookforsuchshortcuts.

NOONEBUTYOUISGOINGTOMAKEYOUWEALTHY.NOONEINTHEWHOLEWIDEWORLD.

Rule69.Don’tJustReadThis—DoSomething

TimetoshiftsomeweightoffthatbacksideI’mafraidandactuallydosomething.Readingthisbookisastartbutit’llcountfornothingunlessyouactuallytakeaction.You’veprobablythoughttoyourselfwhilereadingthisbook“OhIknowthat!”or“That’ssoobvious....”OK,youknowit,buthaveyouactuallydonesomethingaboutit?Sure,partsareobviousbutdoesthatmeanyou’vegotitsorted?Formostofusthereisahugegapbetweenwhatweknowandwhatwedo.There’snopointjustreadingthis;youhavetoactonwhateveritspursyoutothinkwouldbeagoodidea.Let’stakeitasslowlyasyouwant.Idoappreciatethatchangingdirectionisoftenhard;developingnewcharactertraitscanbepainful.Beginbychangingwhatyouwatchandwhatyouread.Beginbysimplyreading/watchingabitofbusinessnews.Beginbychangingyourawarenessofwhatmoneyisallaboutandhowourmoneymythsinfluenceeachandeveryinteractionwehavewithit.Thewaytochangeourmindsetistochangethewaywebehaveandthewayweconductourselves.

•Watchhowyoutalk,andthink,aboutmoney.Doyoupraiseitsmanyvirtuesordenigrateitassomethingevilandnegative?Ifyoubegintotalkitup,you’llbesurprisedhowquicklyitmaterializes.•Watchhowyouwalk.Doyouslouchandgiveoffanairofresignedacceptance?Orareyouuprightandconfidentandlookingasifyouarehungryforchange?(SeealsoRule24.)•Watchyouroverallimage,too.Pleadpovertyallthetimeandpeoplewillassumeyouarepoorandactaccordingly.Thebestthingtodoisto“actasif”youarealreadyrichandpeoplewilladjusttheirperceptionofyouandreactiontoyouaccordingly.

Manypeoplewillfallbythewayside,despiteclaimingtheywanttoberichorricher,buttheywilldosonotfromalackofdesire.Insteaditwillbefromalackofmotivation,alackofdoingsomething.Startnow,rightnow,today,immediately.

CHANGINGDIRECTIONISOFTENHARD;DEVELOPINGNEWCHARACTERTRAITSCANBEPAINFUL.

PartIII.GetEvenWealthierWhenyouhavegotabitofmoneybehindyou,thewholethinggetsabiteasier.Moneybegetsmoney.Youwon’tpickupalotofbargainsatanantiquesauctionfor$50.Butthere’sahellofalotmoreifyou’vegot$5000.It’sthatfirstmillionthatisdifficult—hoho.Butseriously,afteryouhavestartedtomovetowardprosperityitisn’tagoodideatositbackandstartcountingyourloot.It’lldisappearfasterthatwaythanbyanyothermeans.Insteadyou’vegottogetslickerandquicker,stayonyourtoes,beevenbusierandmorefocused,anddefinitelydon’ttakeyoureyeofftheball.Asyoustarttogetricher,youmightneedtostartgatheringafewadvisersaroundyou,peopleyoucantrustand,mostimportant,listento.Thereason?Becauseasyourinvestmentsandcapitalstarttogrow,youneedadviceandhelptomakethingsgrowevenmore.Obviouslyyoucanlisten,butyouneedtomakethefinaldecisionsaboutwhatyouaregoingtodo.Notsittingbackonyourlaurelsmeansyouhavetobeonthelookoutforhiddenopportunitiestotakeyourprosperityfurther.You’vegottostayabreastofcurrentdevelopments,playyourhunches,understandthemarket,knowwhatyou’vegotandwhatyoucanspend/invest/save.Nowisthetimetostartsteppinguphowopportunisticyoucanbe—thinkinglaterally,notfollowingtheherd,beingcreativeandinnovative—thatsortofthing.There’snopointindoingwhateveryoneelsedoesifyouwanttomakesomeseriousmoney....

Rule70.CarryOutaFinanceHealthCheckRegularly

Itisessentialifyouaregoingtoincreaseyourprosperitythatyoumaintainahealthyawarenessofyourbankbalance.Youshouldbecarryingoutafinancehealthcheckonaregularbasis.Ithink,personally,itshouldbeweekly.Ofcourse,youarefreetodoitasoftenasyouwant,andifthatmeansmonthlyorevenlonger,thenthatisentirelyuptoyou,butIwouldn’trecommendthatyouleaveittoolong.Myobservationisthatthetighteragripyouhaveonthepulseofyourfinanciallife•Thequickeryoucanreacttochanges•Themoreinformationyouhavetomakedecisions•Thelesschancethereisforthingstogodrasticallywrongwithoutyounoticing•Thebetterafocus—andthusinterest—you’llhaveinyourfinances.Sorry,butyoudohavetobedisciplinedaboutthis.Youhavetohavearegulartimewhenyousitdownand•Carryoutabankreconciliation

•Listyourcreditorsanddebtors•Checkcreditcardbalancesagainstreceipts•Checkoutstandingchecks—theonesthatyou’vewrittenthathaven’tyetarrivedinthebank•Checkwhatfutureincomeyouhaveandwhatmajorexpensesyoumighthaveloomingonthehorizon•Checkyourstandingorders•CheckIRAcontributions•Checkinvestments•Checkanyloans•Checkanyoverdraftsandsoon.(Iknow,Iknow,Ihavesaidnottohaveanybutyouarehuman.)Ifyoudon’tdothisstuff,moneywillleakaway.Forgettingadebtdoesn’tpayit.

You’vegottobedisciplinedandhavearoutine—everyMondaymorningwithoutfail.Yep,evenwhenit’ssunnyoutside,evenonvacations,evenwhenyou’refeelingabitill,evenwhentherearemoreexcitingthingsgoingon.Becauseifthisdoesn’texciteyou,thenyou’renotgoingtomakeit,I’mafraid.PersonallyIthinkyoushouldknowwhatyouareearningeverydaybytheday.Andyoushouldknowwhatbigoutgoingsyoumightfaceinthenext12monthsandthatdoesincludeamostoftenforgottenone—thetaxbill.Watchthatlittlebabylikeahawk,anddon’tevertakeyoureyesoffthatballbecauseitwillgetyoueverytime.

youeverytime.

FORGETTINGADEBTDOESN’TPAYIT.

Rule71.GetSomeMoneyMentors

Whennotwritingbooks,Idohaveaproperjob.Ihaveseveralinfact,whichallinvolverunningcompanies.I’mnofoolwhenitcomestoknowledge.IknowtherearethingsIshouldknowthatIdon’tknow.AndtheremustbemillionsofthingsIdon’tevenknowIdon’tknow.Mysolutionistouseotherpeople’sknowledgetosupplementmyowndeficits.Ihavemoneymentors.Infact,Ihavementorsforallsortsofsituations,butwe’llsticktothemoneyonesforthemoment.Nowwhyshouldyouusemoneymentors?

•Theybringawiderrangeofexperiencetothetable.•Theymakeyoupresentyourideasinaclearandconciseformat—whichmakesyouthinklongandhardaboutwhatyouaredoing.•Theywillmakeyoujustifywhatyouaredoing—thismakesitmuchharderforyoutogoofflikealoosecannon.•Theyareontaptoprovideanswers,advice,asasoundingplatform,areining-inserviceanda“Haveyouthoughtitthrough?”facility.•Theywillindividuallykeeptheireartothegroundsothatyoucanbenefitfromtheircollectiveknowledge(abitlikeanews-gatheringservice).•Theyareindependentandhavenovestedinterestinwhatyoudoascompetition.•Theyareindependentandthuswillbeloyal,supportive,andonyourteam.

Manysuccessfulentrepreneursusementorswhentheystartoutinbusiness.Theyfindsomebodywhohasbeensuccessfulinstartingandrunningtheirownbusinesses,andtheyaskiftheywouldbepreparedtoofferguidanceandadvice(andsometimescontactsandmore)tothenewentrepreneurastheystartout.Thevastmajorityofexperiencedbusinesspeopleapproachedwillsayyes—it’sfunforthemtopassontheirexpertise.Theyenjoyit.Yes,butIhavequestions,Ihearyousay.Fireaway.

•WhatsortofmentordoIneed?•WheredoIfindthem?•What’sitgoingtocostme?•CanIignorethemifIdon’tagreewiththeiradvice?

Foramoneymentoryouneedpeoplewhohaveprovedtheirfinancialacumen

Foramoneymentoryouneedpeoplewhohaveprovedtheirfinancialacumenbymakingabitofmoneythemselves—andnotbyinheritanceorlotterywinnings.Youfindthembylookingaroundyou.Anyoneyouadmirewhohasbeensuccessful—approachthem—theymaywellbeflattered.Itshouldn’tcostyoumorethanaboutfourdecentlunchesayear.Youtakethemouttolunch.Inreturntheygiveyouadvice,information,suggestions,restraint,support,andencouragement.Andcanyouignorewhattheysayifyoudon’tlikeit?Yes,ofcourseyoucan.Iignoredmineonce.Justonce.Itcostmealottoignorethem.Ipubliclyapologizedtothemandwouldn’teverignorethemagain.

MONEYMENTORSAREPEOPLEWHOHAVEPROVEDTHEIRFINANCIALACUMENBYMAKINGABITOFMONEYTHEMSELVES.

Rule72.PlayYourHunches

Haveahunch.Listentoyourheart.Followyourintuition.Listentoyourinnervoice.Haveagutfeeling.Haveaninkling.Theseareallsayingthesamething.Therearetimeswhen•Youknowsomethingstinks.

•Youknowwhensomethingisabsolutelyright.•Youneedtonodyourheadandbelieveinyourself.

Ofcoursehavingahunch,followingahunch,andgoingofflikealoosecannonarenotallthesamething.Thereisaformattothisintuitionlark,anditisalittlebitmoresensiblethanyou’dthink.

•Havethehunch.•Doyourresearchandseeifyourhunchisworthfollowing—itusuallyisbutbesttojustcheckfirst.•Prepareawell-workedproposaltopresenttoyourmoneymentors.•Present.•Listenandactontheiradvice.

Andthereisnopointwhining,“ButIhadthisreallybrillianthunch!”Ifyoucan’tbackupyourhunchwithfactsandfigures,thenitisjustastabinthedark.Ahunchisasuddenflashofinspiration,amomentofsublimeintuition,acleverandbrilliantrealisation.Andthesecanallbejustifiedwithfactsandfigures.Justbecausetheinspirationwasahunchdoesn’tmeanyoudon’thavetojustifyitandresearchit.Youstillneedtopreparesomefiguresanddevelopaplan.Havingahunchdoesn’tletyouoffbeingsensibleandpracticalandrealistic.Lotsofwealthypeoplegottherebyhavingthatonetrulybrilliantmomentofinspiration.Buttheythenturnedthatinspirationintoperspiration(sorry)andworkedtheirgutsouttomaketheirdreamcometrue.AndIbetloadsofpeoplesaidtothem,“Butyou’resolucky.”Bah.Nosuchthingasluck.Butthereisahunchfollowedbyhardwork.

OFCOURSEHAVINGAHUNCH,FOLLOWINGAHUNCH,ANDGOINGOFFLIKEALOOSECANNONARENOTALLTHESAMETHING.

Rule73.Don’tSitBack

There’sasayingthat“Nothingwiltsfasterthanlaurelsthathavebeenrestedupon.”It’sverytrue.Thereisatemptationafterwehavemadeabitofmoney,whenaninvestmenthasworkedout,oritseemstobeallpayingoff,tositbackandrelax.Yes,wecan.Butwedon’twantto.Nowisthetimetospeedupagearortwo,putmoreironsinthefire.Nowisthetimetolookaroundandworkoutournextplanofattack.Nowisthetimetostrike,capitalize,consolidate.Nowisnotthetimetotakeyoureyeofftheball.Wecanallstirfromtheswampandthensettlebackintothemud.Butthereallyprosperouskeepstrugglinguntiltheyarecompletelyfreeoftheslimeforever.Ifyoutakeadayoff,theslidebeginsandwill,inexorably,continue.Andthenexteffortwillbeevenharder.Iknow,I’vebeenthere.Soredoubleyourefforts.Rekindletheenthusiasm.Relightthefiresofdesire,andlet’sgetbacktowork.Youmustn’tsitback.Thewealthydon’ttakedaysoff,coffeebreaks,lunchbreaks,vacations.Theykeeptheirnosetothegrindstone,shouldertothewheel,eartotheground,backtothewall,fingeronthepulse,ironinthefire,fireintheirbelly,andhandonthetiller.Wow!Tallorder.Theyworkharderandenjoygreaterrewards—andgettoldhowluckytheyare.You’vegottokeepondoingwhateveritwasthatmadeyoumakeit.Ifit’sacashcow,ridethatbabyuntilitdiesunderyou.Ifitwasaone-offbrainwave,haveanother.Ifitwassheerhardwork,keepgoing.Ifyou’vefoundasuccessfulformula,makesomemore.Butwhateveryoudo,don’tturnoffthetapunlessit’srundry.Andeventhenkeepitturnedonjustincase.Remember,don’tgetclever.Don’tthinkyouknowitall.Keepusingthosemoneymentors.Keepworkingharderthananyonearoundyou.Keepitunderyourhatandkeepatit.Butdon’tforgethowyougottowhereyouare—location,method,plan,mission.Rememberthe“Don’tfiddle”ruleanddon’tchangeanythinguntilyouaresureitwillonlyimproveresultsandnotmaketheboatsink.

NOWISTHETIMETOSTRIKE,CAPITALIZE,CONSOLIDATE.

Rule74.GetSomeonetoDotheStuffYouCan’t

IhavemoneymentorsbecausethereisloadsofstufftodowithbusinessandmakingmoneythatIknownothingabout.TherearealsoloadsofthingswhichhavetobedonethatIdon’tknowhowtodo.Icouldlearn,butitisn’twheremytalentslie.Sowhygolearninghowtodothingswhenthereareeminentlymoresuitablepeopleouttherewhocandothem?Dowhatyouaregoodatandgetotherstodothethingsyoucan’t.Simple.Pickreallygoodpeople,andletthemgetonwiththejobofmakingyoureallyprosperous.Nowtherearetenrulestomakingsureyou(a)gettherightpeopleand(b)keeptherightpeople.1Knowexactlywhatitisyouwantdoneandwhoyouwanttodoit.2Beveryclearaboutwhatyouwantthemtodoforyouandhowmuchyouwillpayandwhatguidelinesyouwillgivethem.3Careaboutthem—theyarehumanandmustn’tbecomeameretool.4Keeptheminformedandmotivated—inspireloyalty.5Tellthemyourlong-termstrategy—theytoohaveastakeinyour/theirfuture.6Iftheymuckup—andtheywillfromtimetotime,wealldo(evenyou,MrTemplar?Well,maybenotme)—thencorrectitandmoveon.Forgivenessisagoodthing.7Praisethemconstantly—nothinginspiresmorethanpraise(oh,yes,andmoneyofcourse).8Setrealistictargetsbutdon’texpecttheimpossible.9Setagoodexample—besomeonetheycanrespectandlookupto(noonelikesworkingforajerk)—andsethighstandardsandliveuptothemyourself.

10Rememberyou’retheboss,nottheirfriend.Trytomaintaindignity,distance,andauthority.

Thatshoulddoit.Theremaybeotherthingsyouwilltry,adapt,implement,anduse.Allthisstuffisadaptableandentirelyuptoyou.Justmakesureyoutreatyourpeoplewellandhavefun.Don’tbeaninsensitivebossyboss!AtthemomentIhaveawonderfulaccountingperson.ShesighsalotasI’malwaystryingtofindwaystoensureI’mnotpayingmoretaxthanIneedto—don’tweall?ButallIdoisaskherquestions.TherestIleaveentirelyuptoher

don’tweall?ButallIdoisaskherquestions.TherestIleaveentirelyuptoherandtherelationshipworks.Apartfromthesighingthatis.

PICKREALLYGOODPEOPLEANDLETTHEMGETONWITHMAKINGYOUREALLYPROSPEROUS.

Rule75.KnowYourself—Solo,Duo,orTeamPlayer

Ifyouaregoingtochangedirection—inthiscasetoprosperityfromwhereveritisyouarenow—thenyouneedtoknow(a)Yourstrengthsandweaknesses(b)Whatyouaregoodat—andbadatobviously(andthisisn’tthesameasstrengthsandweaknesses)

Forexample,I’mgoodatbroadstrokes,bigpicturestuffbutI’mnotthegreatestwhenitcomestodetail.GetwhatI’mtalkingabout?Youjusthavetoknowyourselfprettywellandthenyouwillbeconfidentintheareasyouaregoodat,canbrushupinareasyouareweak,cantradeonyourstrengths,andgetsomeoneelsetodoallthestuffyouarebadat(orhaven’tyetlearnedorresearchedorstudied).Andthenyou’vegottoknowifyouareatyourbestworkingaspartofapartnership,ateam,orgoingitalone.PersonallyIalwaysneedthesteadyinghandofapartnertocurbsomeofmybusinessexcesses—anoverwhelmingtendencytoshootfromthehip,beabitundiplomaticattimes,torushheadlongintothings,tospendmoneywastefullyonadvertisingandnottoattendtothedetail.Iam,however,reallybadinateamofmorethantwo.Soifabusinessopportunitycomesupthatrequiresteamwork,IknowIcanturnitdownortailoritinsomewaybecauseIknowifIsayyes,Iwillmakeamessofit.If,however,itrequiresapartnership,I’mmuchmorelikelytobeinterested.Iamalsogoodworkingalone.Imakedecisionseasily(notalwaystherightonesbutatleastIdon’tprevaricate),Iamhappyinmyowncompanyforlongperiodsanddon’tneedtobounceideasoffanyonetomakethemseemreal.Icantravelwellaloneandcanspeakupformyself.SeewhatImeanaboutknowingyourself?Youhavetodothisexerciseifyouaretoforgeaheadwiththerestofthemoneymakers.Questionstoask:

•AmIgoodonmyownordoIneedotherpeoplearoundme?•DoIhavearoletoplayinateamandfeelhappierinthatrole?•CanIworkwellwithjustonetrustedpartner?•DoIknowwheremystrengthsandweaknessesare,anddoIknowthedifference?•DoIknowwhatIamgoodandbadat?

•DoIknowwhatIamgoodandbadat?Mybusinesspartnersaysweworkwelltogetherbecausewearethe“brainsandbrawn.”Theonlytroubleiswebothseeourselvesasthebrainsandtheotherasthebrawn.Ohwell.

IALWAYSNEEDTHESTEADYINGHANDOFAPARTNERTOCURBSOMEOFMYBUSINESSEXCESSES.

Rule76.LookfortheHiddenAsset/Opportunity

You’vegottobeavigilant,never-sleeping,never-taking-time-offmachine.Alwaysalert,alwaysonthelookoutforthatopportunity.AnoldSenegaleseproverbsaysthattheopportunitiesthatGodsendsdonotwakeupthosewhoareasleep.Wakeup!Sleepisforthelazy,theindolent,thepoor.Wideawake,restless,prowlingisforthehungry,thelean,theopportunitytaker,therich.Allaroundusallofthetimethereareopportunitiestomakeafortune.Allwehavetodoisbeopentothepossibilities,tothemagicofsuchevents.Thereareonlyfivethingsyouneedtotakeonboardifyouaregoingtobeatreasureseeker:1Timingiscrucial.Reacttooslowlyandtheopportunityisgone.Toofastandyoumightstartleit.Marketsshift,fashionschange,andproductsfade.2Youhavetobeserious.Thereisnopointinbeingontheballeveryotherdayoronlyinthemornings.Hiddenopportunitiesrevealthemselvesonlywhentheyfeeltheywantto.Ialwaysimaginethemassmall,shybeastscomingdowntothewaterholeforadrink.Ifyouwanttocatchone,youhavetocreepupreallyquietly,reallyskilfully.3Youhavetobequirky.Ifthereareonlyafewhiddenopportunities,thenyouneedtostandout.Quirky,unique,special,creative,unusual—nameithoweveryouwill,butyouhavetostandoutfromtheherd(tocompletetheanimalanalogy).4You’vegottoknowwhatyou’redoing.Wealth,likeanyotherskill,needstobelearned.Tospotopportunitiesandtakeadvantageofthem,youneedtogiveyourselfthebestchance.Youcan’tpickupafinancialpaperandsayyouaregoingtounderstanditfromDay1.Ittakestime,dedication,andcommitment.Knowyourstuffandyou’llseetheopportunitiesmuchmoreclearly.There’samanagementtechniquecalled“SWOTanalysis”—anacronymforstrengths,weaknesses,opportunities,andthreats—keeplookingatallfour.5Beattractive.Ifyousmellhorrid,thatshybeastisgoingtobolt.Youhavetodresssmartly,smellfresh,lookgood,bewell-groomed,andradiateattractiveness.

Allaroundusallthetimethereareopportunitiestomakeafortune.Allwehavetodoisbeopentothepossibilities,tothemagicofsuchevents.Haveyouevernoticedthatwhenyouarethinkingofchangingcarstoanother

Haveyouevernoticedthatwhenyouarethinkingofchangingcarstoanothermakeormodelyouimmediatelystartnoticinghundredsofthatmakeontheroads?Weretheytherebefore?Ofcourse.It’sjustthatyounevernoticedthem.Butonceyourattentionisfocusedlikeanarrowbeamofintenselight,itthrowsthemintosharpfocus.Opportunitiesareabitlikethat.Whenwestartnoticingthemtheyareallaroundus.Wejustneedthatkick-start,thatbeginningofthesearch.Justlikechangingcars,wechangeourfocus.Itisessentialthatwewakeupouropportunitydetector.Whenwedo,theywillappearasifbymagicallaroundus.

THEOPPORTUNITIESGODSENDSDONOTWAKEUPTHOSEWHOAREASLEEP.

Rule77.Don’tTrytoGetRichTooQuickly

We’vealreadysaidyouneedtothinklongterm.Tryingtogetrichquickleadsonlytodisappointmentandover-anxioushustling.Andyoudoneedtobuildagoodbaseoryourfinancialcastlecantoppleatthefirstgustofwind.Thelongeryoutaketomakeyourmoney,themorediverseyou’llbewithinvestmentsandincomestreams.Thequickeryoumakeyourmoney,themorelikelyit’llbeasinglestrandandthuseasytobreak.Gettingrichovertimeusuallymeansyou’ll

•Buildlong-termincomestreams•Beinsuredagainstrecessionorsuddenandnegativemarketdownturns•Havetimetohavealifeaswell—thatoldwork/homerelationshipislesslikelytobefractured•Bebetteratmakingmoneyhonestlyanddecently•Havetimetomaketherelevantadjustmentsandthusnotsolikelytorushoutandspendinappropriately•Gaintheexperiencenecessaryforlong-termfinancialsecurityasyougoalong.

Ifyoumakeyourmoneytooquickly,thereisatendencyto•Spenditinappropriately•Nothavetimetolearntohandleitwell•RisklosingitbyhavingyourincomecomingfromoneareaonlyIfyoureallydowanttoearnalotquickly,youmightliketotakealeafoutof81-year-oldStellaLiebeck’sbook.ShesuedMcDonald’sbecausesheburnedherselfwithspilthotcoffeeandwasawardedinitially$2.9million—laterknockeddowntoamere$640,000.

Thismaynothavebeenadeliberategameplan,butitdidpayoff—andquickly.PersonallyIwouldrathermakemymoneyslowlyandenjoyablyandnothavetosueanyonetogetit—orwinthelottery,orhaveacloserelativedie,orhavetomarrysomeoneinappropriatemerelybecausetheyhadadollarortwo.Makeyourmoneyslowlyandyou’llenjoyitmore.Itwilllastlongerandyou’llsleepnights.

THELONGERYOUTAKETOMAKEYOURMONEY,THEMOREDIVERSEYOU’LLBEWITHINVESTMENTSANDINCOMESTREAMS.

Rule78.AlwaysAskWhat’sinItforThem

Idon’twantyoutobeparanoidgenerallybutitisOKtobeparanoidwhenitcomestoyourmoney.Therearealotofsharksouttherelookingforeasypickingsfromthelessawakeamongus.Watchout.JeremyPaxman,theUKbroadcaster,alwaysinterviewspoliticianswithabasicunderlyingassumptionthattheyarehidingsomethingandhehastofindoutwhatandwhy.Obviouslywedon’twanttogoaroundbelievingeverybodyisouttogetus,butthereisagoodtechniqueherethatwecanadopttoquestionanyone•Offeringusamoney-makingproposition

•Offeringto“lookafter”ourmoney•Lookingtoinvestinourfutureorschemes•Offeringusanyfinancialadvice•Offeringtoworkforus•Offeringusapartnership•Offeringusproductsorservices

AndIdomean“offering.”Iftheycomelookingforyou,ratherthanwaitingforyoutoapproachthemforadvice,youshouldbeextremelywary.Youhavetobesuspiciousofanyoneandanythingthatcouldmakeinroadsintoyourwealth.Beverywaryofanybodywho•Promisestohelpyougetrichquick,byshortcuts,usingtaxloopholesordubiouslylegalschemes•Usestheword“offshore”

•UsesthelettersMLM*orpyramidselling*i.e.,MultiLevelMarketing•Claimstobeincrediblywealthyandisofferingtosharetheirsecretswithyou—thesecretistheymaketheirmoneyoutofpeoplelikeyou(seeRule68)•OfferstoincreaseyourwealthbyusingtheInternet•Asksformoneyupfronttoseedinvestment,payforpromotionalmaterial,orcarryoutasurveyAndthreethingstoalwaysremember:•Ifitwaddleslikeaduckandquackslikeaduck,thenitisaduck,anddon’tletanyonetellyouitisn’t.•Ifitlookstoogoodtobetrueitprobablyis.•Notallthatglittersisgold.

Rememberalsotokeepasking“What’sinitforthisperson?”Don’ttrustanyone.Don’tgiveyourmoneytoanyonetolookafterforyou.Checkthesmall

anyone.Don’tgiveyourmoneytoanyonetolookafterforyou.Checkthesmallprintofanythingyousign.Beonyourguard.

BESUSPICIOUSOFANYONEANDANYTHINGTHATCOULDMAKEINROADSINTOYOURWEALTH.

Rule79.MakeYourMoneyWorkforYou

Anawfullotofusareguiltyofwastingmoneybynotmakingthebestuseofit—whetherit’sasmallamountorlarge,longtermorshortterm.Fromnotcashingcheckstoleavingcashinlowinterestaccountsbecauseyou’veforgottenaboutitorcan’tfindthetimeorbebotheredtomoveit.Hereareafewtipstogetyouthinkingaboutwhetheryouaremakingallyourmoneyworkforyou:

•Don’tleavemoneyinactiveinbankaccounts—moveitaroundtohighinterestaccounts,evenifit’sonlyforafewdays.Electronicbankingmeansmoneycanbeeasilyandsimplyswitchedfromoneaccounttoanother—evenforveryshortperiods.•Neverbesatisfiedwiththeinterestrateyouaregetting—there’salwaysabetteroneoutthere.Keepactivelylooking.•Shoparoundforallservicesyoupayfor.Therearealwayscheaperoptions.Don’tjustpayforaname;payforwhatyouaregetting.•Don’tleavepropertyempty—itmaybeincreasinginvaluebutyouaremissingvaluablerentalincome.•Ifyouinvestinanythingthatisappreciatinginvalue,coulditalsobeuseful?Wouldaclassiccaryoucandrivebemoreusefultoyouasopposedtoapaintingyoucanonlylookat.(Althoughthatcouldberegardedasusefulinthesenseitmightberelaxingortherapeutic,butlet’snotgothere.)•Explorealloptions.Don’tbecontenteverwithwhatyouaredoing,butalwaysbeonthelookoutforwaystoimprove,enhance,perkup,progress,andadvance.Thisdoesnotmeanfiddlingofcourse.•Continueon.Don’tputanythingofffortomorrow.Doittoday.Doitnow.Ifyoutakefourmonthstodepositacheck,thenthat’sfourmonth’sinterestyou’velost.•Alwaysrememberidlemoneyiswastedmoney—useitorloseit.

NEVERBESATISFIEDWITHTHEINTERESTRATEYOUAREGETTING.

Rule80.KnowWhentoLetGoofInvestments

IhavemyownlittlecalculationwhichIamhappytopassontoyou.IlearneditfromanInternetsiteawhileback,andithasstoodmeingoodstead.BasicallyforaninvestmenttoworkformemeansIamgenerallylookingforareturnthatwilldoublemymoneyinfiveyears.InarecessionImightextendthatto,maybe,sevenyears—ofcoursethehigher/fasterthereturn,thehighertherisk.ThecalculationIuseistodividetheinterestrateinto72tofindouthowlongitwilltakemetodoublemymoney.Forexample,iftheinterestrateonaparticularinvestmentis6percent,thenitwilltakeme12years(72÷6=12)todoublemymoney.Toolongforme.SoIwouldbelookingforaninterestrate(knownasa“return”)ofaround14.4percent.(Iknow,Iknow,you’dbeluckyatthemomentbutthisisonlyanexample.)Thisworksforanyamountofmoneyincidentally.So,ifyouwanttoknowwhatinterestratetolookfor,divide72bythenumberofyearsyouarepreparedtowait.72÷5=14.4percent.Gosh,somethingusefulforyouthereandIdidalltheworkforyou.Forme,therefore,anyinvestmentthatlookslikeitwon’tdoublemymoneyinfiveyearsIpasson,orifitmakesfinancialsensetogetout(i.e.nopenaltyfordoingso),Iwillletgoof.Ihavemycriteria,youneedyours.Perhapsyouneedtoletgowhen

•Youfeelinyourwatersthatsomethingisnotright.•Themarkethastakenadownturn.•Youreadsomethingthatmakesyoucuriousorsuspiciousofaparticularinvestment.•Youneedthemoneyforsomethingbetter,hotter.•Theinvestmenthasn’tbeendoingwellforawhileandissluggish.•You’veachievedyourmaximumprofitandit’stimetogetout.•You’velostinterestinaparticularinvestmentandsimplycan’tbebotheredanymore.•Youhavechangedemotionallyorideologicallyandneedtomoveon—perhapsyouonlyinvestedgreenandnowwantmainstreamorviceversa.•Theinvestmentisn’tfashionableanymore—oldhatcanbecostlyifthereturnisn’tthere.•Youneedtospreadyourportfolioaroundtominimizelossesinarecession

•Youneedtospreadyourportfolioaroundtominimizelossesinarecessionordownmarket.•Youboughtblindandnowhavemoreinformation—andcanseeyourfingersgettingburned.•Throwinggoodmoneyafterbadwilljustaggravatethesituation—cutyourlossesandgetout(seeRule81).

PERHAPSYOUONLYINVESTEDGREENANDNOWWANTMAINSTREAMORVICEVERSA.

Rule81.KnowYourOwnStyle

Weallhaveatendencytobuyontipsfromotherpeople,buyonawhim,buyglamorous,investtoomuchinonething,rideawinnertodeathand,mostfatallyofall,failtoquitaloser.Thisistheonehabitwemustreallylearntoletgoof.Therearedifferentapproachestoinvestingofcourse,andyouneedtorecognizeyourownstyle.Otherwiseyoucan’tlearntocurbyourworsttendencies.SoI’mgoingtogiveyouafewexamples,andIwantyoutobebrutallyhonestaboutrecognizingwhichoneisyou.Areyoucompetitive?Ifso,you’relikelytohaveplentyofenthusiasmandgetinearly.You’veprobablytakenthetroubletolearnaboutyourinvestments.Howeveryoumaybeoverconfidentandoptimistic,andpronetochasealosingstreak.Ofcourseyoumaybemoresolid—careful,secureandlong-termist.Awiseapproach,butagainstillpronetochaseabadluckrun.Thentherearetheinvestorswhoaren’treallysuretheywanttobethere.Ifyou’rethistype,youprobablyuseanadvisor,andtakealongtime(maybetoolong)todecidetoinvest.You’regoodatlettinggooflosers.Thechiefdownsideisthatwhileyouprobablywon’tsustainhugelosses,youmaynotmakethebigbucksothersdo.Someinvestorsdon’tpreparethemselveswell.Theyinvesttoolittle,toolate,theyarelikelytoputtoomanyeggsinonebasket(maybefollowingatip)andtaketoolongtoletgowhenthingsgodownhill.Thetroubleisthatemotionsandpersonalitycangetinthewayofsuccessfulinvesting.Characteristicssuchasoptimism,over-cautiousness,competitiveness,impatience,fear,desperation,andalltherestcaneasilyswayyou.Butthisisyourretirement,yourhouse,yourluxuryvacation,yourkids’inheritanceyou’regamblingwith,andyouneedtomakesurethatyoudoitinaclinical,calculated,risk-assessedfashion.Itisimperativethatyouknowwhattypeofinvestoryouare—andwhentoquitridingalosingstreak.Nothingcloudsyourjudgmentmorethanthrowinggoodmoneyafterbad.Youhavetolearntocutyourlossesandwalkaway.Andyes,Idoknowhowhardthatcanbe.

EMOTIONSANDPERSONALITYCANGETINTHEWAYOFSUCCESSFULINVESTING.

Rule82.KnowWhyYouShouldBeAbletoReadaBalanceSheet—andHow

Ifyouaregoingtorunacompanyorinvestincompanies,youneedtobeabletoreadabalancesheet.Thisisdifferenttoknowingwhatprofitorlossacompanyhasmade(i.e.,readingaprofitandlossaccount).Why?Becauseaprofitandlossaccountshowsyouonlyhalfthepicture.Forinstance,CompanyXmighthaveaturnoverof1millionandexpensesof500,000,thusithasmadeaprofitof500,000andmustbedoingreallywell.No,actually.Becausewhatyoucan’tseefromthissimpleprofitandlossaccountisthatitowesthebank2million,the1millioninturnoverisverysketchy,andthereisa4milliontaxbillhangingoveritsheadfrompreviousyears”accounts,afranchiseexpiring,taxloopholeabouttoclose,andapowerfulcompetitorabouttostartup.InvestinCompanyX?Idon’tthinkso.It’sbankruptandfraudulentlytradingandnotworthadime.Stayaway.Soyouneedtoseeabalancesheet.Withoutfail.Andbecauseofwhatitisnottellingyou.Abalancesheethastobalance.That’swhyit’scalledabalancesheet.*ThebasicformulayouneedtoknowisAssetsminusLiabilities=EquityorA—B=C.Intoevensimplerterms:whatyouownlesswhatyouoweequalswhatyouareworth.Thisappliestoyourself,companiesyouworkfor/own,andcompaniesyouintendinvestingin.*TheactualbalanceisEquity+Liabilities=Assets,thusbalancing.Yougetassetsononesideandliabilitiesandequityontheother.

Let’shaveacloserlook.•Whatyouown—yourassets.Madeupofcurrentassetsincludingcashandanythingthatcanberealized(i.e.,turnedintocash)withinsayathree-monthperiod(thismightincludecast-irondebtors,moneyintransit,andsoon);stock(stuffreadytobesoldandrawmaterialsthathavevalueandcanbemadeintoproducts);anypropertyyouorthecompanymayown;equipmentandgoodwill.•Whatyouowe—yourliabilities.Thisincludesyourcreditors,long-termloans,andbankloans.Basicallywhatyouwouldhavetofindincashifeveryonecalledinwhatyouowedthem.•Whatyouareworth—yourequity.ThisisAminusB.Ittellsuswhatyouoryourcompanyisreallyworth.Thereisaformulathatsaysthatyoutakeyourcurrentassetsanddivideitbyyourliabilitiesandiftheansweris

biggerthan1.5you’redoingOK.Obviouslyyouneedtoadjustthisfordifferentindustriesandbusinessesbutitservesasabasicindicator.Ialsotaketheequityanddivideitbytheassetsasapercentage.Andiftheanswerishigherthan50,Ifeelconfident.Forinstance,equity35million÷byassets(capitalemployed)of70millionasapercentage=35,000,000÷70,000,000%=50whichisfine.Butassetsof120millionandequityof35millionisnotsohot—around29.

Soifyoujusthearaboutacompanythathasmadeaprofitof1millionandareofferedthechancetoinvest,don’tbeimpressedbythatsinglefigure.Asktoseethebalancesheet.Readitthoroughly.Infact,don’tjustreadthebalancesheet,importantasitis,thereareotherthingsyouneedtoknow,suchasacompany’sfinancialstatementsintotal.Themoreinformationyoucanget(andshouldget),themoresolidyourdecisionwillbe.

ABALANCESHEETHASTOBALANCE.

Rule83.BeOneStepAheadofYourTaxCollector

Youmustneverevertrytoevadepayingyourtaxes.Ifyoudoyouwillgotoprison—andquiterightlyso.No,IamnotonthesideoftheIRS.There’sadifferenceherebetweenevade(criminal)andavoid(sensible).Thereisalinebetweenmakingsureyouaren’tgivingmoneyunnecessarilytothetaxcollector—avoiding—anddeliberatelyevadingtaxillegitimately.Crossthatlineatyourperil.Butthereshouldbenoneedtodoso.Therearemanygoodpeopleouttherewhowillgiveyoualltheadviceyouneed.Themoremoneyyouhave,thegreatertheneedtoavoidtaxes—Istressthisisnotthesamethingatallasevading—andthemoreexpensiveitbecomestodoso.Obviouslythereisatippingpointwherebyyouareobligedtohandoveryourtaxaffairstoexperts—whonaturallycostanarmandleg—soyoucanavoidpayingtheIRStheotherarmandlegyouhaveleft.Asyoumoveuptheprosperityladder,thetaxissuesgetmorecomplex.Andthereareallsortsofoptions.Butrememberthetaxcollectorsareclosingloopholes,changinglaws,cuttingoffavenuesasfastasyouandyourexpensiveexpertscandevisewaysofavoidingtax.It’slikeachessgameonlymuchmoreexcitingandexpensive.Iamnotgoingtogiveyouanyspecificadvicebecauseitchangestooquickly,andIdon’twanttogetsued,butareasworthbearinginmindare

•Alwaysmakesureyoumakefulluseofyourexemptions—usethemorlosethem.•Alwaysconsiderifsomethingistaxdeductiblebeforeyoubuyit.•Investheavilyinyourownpensionfund—itgrowstaxfree,orasabouttaxfreeasyoucangetthesedays.

Andofcoursemakesureyouareawareofinvestmentsthatyoudon’thavetopaytaxon—getgoodadviceandbewillingtopayforgoodadvice.

THEREAREMANYGOODPEOPLEOUTTHEREWHOWILLGIVEYOUALLTHEADVICEYOUNEED.

Rule84.LearnHowtoMakeYourAssetsWorkforYou

First,doyouknowwhatassetsyouhave?Imeanyoutoincludebothlong-termassets(fixedassets)andshort-termassets(currentassets).Thefixedassetsaretheonesitwouldtakeyouawhiletoturnintocash,andthecurrentassetsaretheoneseasilyconvertedintocash.Haveyoulistedthem?Ifnot,dosonow.I’llwait.Backalready?Gotyourlist?Ihopeithassomeofthefollowingonit:•Property

•Land•Motorvehicles•Pensionfunds•Cash•Goodwill•Worksofart,antiques,andsoon•Investments•Moneyowed•Furnitureandotherpossessions•Patents•Stocksandbonds•IntellectualpropertiesIfyouhaveabusinessitmayalsoincludethingslike•Stock•Workinprogress•Rawmaterials•Plantandmachinery•Equipment•Trademarks•MailinglistsAfteryoustartwritingitdownasalist,youbegintoseeendlesspossibilitiesforusingassetstomakemoremoney.Basicallytheadviceis•Don’tletanassetsitidle—ifyouownproperty,rentitout.AndIdon’tjustmeanbuy-to-lease.Someenterprisingpeoplehaverentedgaragesorsmallbitsoflandtheydon’tuseinareaswherethereisn’tenoughparkingforcommutersandsoon.Thinklaterallyanddon’tdiscountanything!•Noassetisbeautifulunlessitisworkingforyou—ithastobeaccumulating,increasinginvalue,tobeworthkeeping.•Neverleavecashsittingaround—ittendstogetboredandwanderoff.Makeitwork.

YOUBEGINTOSEEENDLESSPOSSIBILITIESFORUSINGASSETSTOMAKEMOREMONEY.

Rule85.Don’tEverBelieveYou’reOnlyWorthWhatYouAreBeingPaid

Thosewhobelievetheyareonlyworthwhatanemployerpaysthemarealmostalwayssellingthemselvesshort.Bigcompaniesdependonpeoplenotquestioningtheirworth.Don’tletthemgetawaywithit.Thereareseveralpointshere.Firstly,it’safactthatifyouworkforanemployer,thosewhochangetheirjobsfairlyfrequentlytendtogetpayraiseseachtimeandthereforeendupearningmorethanthosewhostaywiththesamecompany(maybeforverygoodreasons,likebeinghappy).Ifyouarestayingputyouhavetolearntoaskformoreanddemonstratehowyouareaddingvaluetoanorganizationtojustifybeingpaidmore.Secondly,nocompanyisevergoingtopaymoreforanythingthantheyreallyhaveto.Youneedtobeproactiveandaskformore,andshowyouareworthmore.Itrequiresyoutotakeaction,however.Don’twaittoberecognized.Ifyouarefreelancethesameapplies—nobodywillsuddenlyoffertopayyoumoreforyourwork—youneedtobeproactiveandshowyouareworthmore.Thirdly,ifyouthinkyouarealwaysworthmore,itmakesyourestless,ambitious,anxioustomoveon.Ifyouacceptwhatisofferedandneverquestionit,thenitmakesyoucomplacent,andyou’llgettakenforgranted.Nowthisisnotabookabouthowtogetapayraise,buthereareafewtips.

•Beveryclearaboutwhatyouthinkyouareworth—andwhy.Ifyouhaveworkedharder,achievedmore,producedmore,gotbetterresults,thenyouareentitledtosaysoandaskforcompensation.•Don’tbargainjustformoney—alwaystakeintoaccountcars,pensions,vacationtime,responsibility,workingenvironmentandspace,staffing,whateveritisyouwant.•Ifyoudogetturneddown,alwaysfindoutwhyandwhatitisyoucoulddotogetwhatyouaskfor.•Returnafterputtingrightwhateverwaswronginthepreviouspoint.•Nevercompareyourselfwithanyoneelse—youareuniqueandthereisnocomparison.

Gettingmoremoney—oranythingelse—isamatterofnegotiating.Thosewhoaregoodnegotiatorsgetmore.It’sassimpleasthat.Brushuponyour

negotiatingskills(seeRule34).Anddon’tmoanifyoudon’tgetwhatyouwant.Workharderandgobackagain.

IFYOUTHINKYOUAREALWAYSWORTHMORE,ITMAKESYOURESTLESS,AMBITIOUS,ANXIOUSTOMOVEON.

Rule86.Don’tFollowtheSameRouteasEveryoneElse

Obviouslyyoucanfollowwhateverrouteyouwant,butyoumightendupinthesameplaceasalotofotherpeople.Ifthatisagoodplace,you’llhavetosharealot.Andifit’sabadplace,whybethereatall?Beingcreativeisabrilliantwaytomakemoney.Lookatallthebestmoneymakers,andoneofthethingstheyshareistheabilitytobeonestepahead,tothinkcreatively(outofthebox,ifyoulike),tocomeupwithschemesandideasthatotherpeoplehaven’tthoughtof.Thisdoesn’tmeanyouhavetoberecklessoragambler.Itjustmeansthinkingdifferentlyfromotherpeople.Butthat’stheproblemmostpeoplehave.Followingtheherdisterriblycomforting.Ifitallgoeswrong,beinginaherdgivesacollectivefeelingofsharedgriefandtheoppositeofsharedblame.Bealonerandgoingwrongisatoughcookietoswallow.Andtheconverseistrue.Ifitallgoeswellandyouareinaherd,youcancelebratetogether—sharedjoy.Abitlikebeingatafootballgame.It’sagoodfeeling.Ittakesapersonofrealcourage,confidenceandmaturity—nottomentioncreativityanddrive—tostandupandgoyourownway.You’vegottobeprettyconfidenttoturnyourbackonsharedjoyandsharedgrief.InthegreatstockmarketcrashofOctober1987,anawfullotofpeoplelostanawfullotofmoney.Twowhodidn’t,andgotoutofsharesandintocashinAugust,werethebillionairesKerryPackerandJimmyGoldsmith.Andrememberthatthecloseryougettobecomingawinner,thelessriskyouwant.Andthenearertolosingyouget,themoreyouareinclinedtogamble.Isawawebsitetheotherday—aninvestmentbroker’sone—whichclaimedtoshowthefivemostpopularstocksandthereasonswhyyoushouldsellthemnownomatterwhatyourfriends,neighborsorfamilysay.Thesestockshavebeensohighforsolongthattheymustcrashsoon.Sellnowandgetoutaheadofthecrowd.Iwasthinkingthatrealmoneymakerswouldn’thavebeenthereanywaybutwouldhavebeenoutthereinvestinginsomethingnoneofushadeventhoughtof.Lotsofpeopleinvestedinostrichfarms.Wherearetheynow?Lotsofpeopleinvestedinwormfarms.Youboughteggsandturnedthemintowormsandthebigwormfarmwouldbuythemback.Lovedthatone.Yeah,right.Ofcourse

bigwormfarmwouldbuythemback.Lovedthatone.Yeah,right.Ofcoursethey’llbuyallyourwormsbackoffyou.Oneofmysonsinvested$10tostarthisowngiantsnailbusiness.Heboughttwogiantsnailstobreedwith(orshouldthatbefrom?).HefedandlookedafterthemforaboutsixmonthswhenIhadtobreakittohimtheyweresnailsoutofsomeone’sgardenhe’dbought.Hewasn’talone.Loadsofkidsathisschoolweresoldthesamedream.Andthesamesnails.

IFITALLGOESWELLANDYOUAREINAHERD,YOUCANCELEBRATETOGETHER—SHAREDJOY.

PartIV.StayingWealthyNowyou’vegotit,youdon’twanttoletitgo,sothenextsectionishowtohangontoitonceyou’vegotit.Assumingyounowknowtoavoidthegiantsnailscamsandtheostrichfarms.Howtopreserve,protect,enjoy,andmaintainit.Afterall,whenyou’vefinallygotit,youdon’twanttowasteit,squanderit,throwitaway,orgiveittome.Actuallythelastoneisn’ttrue.Youcanifyoureallywantto.Thereareendlesswebsitesallofferingtolookafteryourmoneyforyou.Ignorethemall.Theyusuallysaysomethinglike:StartYourOwnWealthFreedomJourneyToday—NoTimetoLose!Allyouhavetodoissignupforanewsletterandbuyaget-rich-quickbookrightaway.Theypromisetomakeyouamillionairewithinthreetofiveyears.PerhapsyoushouldaskforarefundonthisonebecauseIpromiseyounothingbeyondhardwork,dedication,focus,creativity,standingoutfromthecrowd,forwardplanning,andthehonestsweatofyourbrow.Gosh.Nopromisesthereatall.

Rule87.ShopforQuality

Mylovelywifetaughtmethisone—creditwhereitisdue.WhenwemetIwasagreatoneforfindingabargain—twochickensforthepriceofoneatthesupermarket,thatsortofthing.She,ontheotherhand,boughtless(Ineverdiddoanythingwiththatotherchicken)butboughtquality.SoIwouldcookathinandsick-lookingchickenanddrinkitwithcheapwhitewineandshewouldprovidelobsterandchampagne.YoucanseewhyIfellforher.IboughtfivecheapT-shirtsinapackandsheboughtanimmaculateoneofmuchbetterquality.Nowherstuff•Lastedlonger

•Washedbetter•Lookedbetterwithage•Keptitscolorbetter•Keptitsshapebetter•Saidmoreaboutherinapositiveway•Tooklessmaintenance(IdroveacheapcarthatwasalwaysbreakingdownandImissedmeetings,andsoon,whereasshedroveabettercarandalwaysarrivedlookingcalmandimmaculate.)ShetaughtmethatthemoneyIwasspending,althoughless,wasbeingwastedbecauseIhadtoreplacestuffmuchmoreoften.Iwasthrowingmoneyawayandlookingcheapatthat.

Shoppingforqualityratherthanpricewasahardlessontolearn.Ihadtodiscardallthosemoneymythsfrommychildhood:•Don’tspendmorethanyouneedto.

•Nooneneedstolookthatexpensive.•Itissomehowwrongtospendmoneyonyourself.•Itissomehowbettertogetabargainthantobuyquality.

Shoppingforqualitysaysmassesaboutthewayyoulive,thewayyouconductyourselfandyourbusiness.Itsaysqualitytootherswhowilladjustthewaytheytreatyou.Italsosavesyoumoneyinthelongrun—cheapcanoftenbeafalseeconomy.

IWOULDCOOKATHINANDSICK-LOOKINGCHICKENWITHCHEAPWHITEWINEANDSHEWOULDPROVIDELOBSTERANDCHAMPAGNE.

Rule88.ChecktheSmallPrint

Icouldwriteyouacontractpromisingyouacast-iron,noget-outclauses,guaranteed,moneybackwithoutquestions,crossmyheartandhopetodieinacellarfulofrats,sortofthingthatwouldstandupinacourtoflawandwithstandanyscrutinyyoucaredtoputitunder.WhatamIselling?Itdoesn’tmatter.Smallprintcancostyou.Checkitcarefully.Ilovethesortofsmallprintclassics,suchastakingshoesbackthatdon’tfitonlytobetoldtheycan’tberefundediftheyhaveleftthestore.Orthesmallprintonmedicationsthatsaytheycanmakeyousickandyoucan’tsue.Orthesmallprintoncomputersoftwarethatsaysyouareboundbytheagreementifyoubreakthesealonthepackaging—andthesoftwarecan’tbetesteduntilithasbeenrunandyoucan’trunituntilyou’veinstalleditandyoucan’tdothatuntilyou’vebrokenopenthepackaging.Agh!There’sawonderfulstoryofsomeonewhosoldtheirsoultothedevil.Thedevilwantedfiveyearsofftheirlifeandthepersonreckoneditwasworthit.Ohno!Hedidn’tcheckthesmallprint.Thedeviltookfiveyearsoffhislifeallright—thefirstfiveyears.Agh!Canyouimaginewhatmissingthefirstfiveyearswoulddotoyou?Andyouthoughtcreditcardcompanieswerebad?WhatdoImeanby“checkingthesmallprint”?Whatdoyouactuallyhavetodo?Threebasicthings:

•Obviouslycheckthatitcoversyouforwhatyouwant.•Checktherearenohiddenclausesthatwilltwistthebasicmeaningofthecontract.•Checkforpenaltyclauses—onesthatpenalizeyouforlateornonpaymentofanything.

It’sabitlikecheckingthesmallprintonfoodpackaging.Ifyoudon’tlikewhat’sinit,don’tbuyit.Moveonuptheaisleandbuyorganic,green,fresh,unpasteurized,whatever.Ifthereissmallprint,thehairsonthebackofyourneckshouldberising.Thereisonlyonereasonforittobethere—totripyouup.Moveon.

SMALLPRINTCANCOSTYOU.CHECKITCAREFULLY.

Rule89.Don’tSpendItBeforeYou’veGotIt

Goshthisisahardoneforme.IhavetoadmitIfindthisoneofthemostdifficulttotakeonboard.HowamItolearnthisone?Anytips?IknowIshould

•Budgetfortodayandonlyfortoday.IfIdon’thaveit,Idon’tspendit.•IgnorewhatIthinkorknowiscomingin,inthefuture.•Putloadsasidefortax—no,evenmorethanthat.•Noloans,overdrafts,noborrowingsofanysortsothatIwon’tbetemptedtousefutureincometopayoffdebtsrunuptoday—orthereverse,runupdebtstodayknowingthatincomefromthefuturecanbeusedtopaythemoff(verynaughty).

Thedownsideofspendingfutureincomeis•Theincomemaynotmaterializeorbelessthanyouthought.(Countingchickensthatneverhatch....)•Thebubblehastoburstsomewhere,andifyouarealwaysspendinginadvance,youwillgetcaughtoneday.•Itencouragessloppyfinancialplanning.•Whateveryouboughtwillhavelonglostitsappealorwearout,getbroken,orevencompletelyforgotten.•Youlosetouchwithreality—thefutureisn’trealuntilitbecomestoday—andassuchyoucanoverspendtooeasily.

IguessIneedafour-pointplan:1QuestionwhetherIneedaparticularthingtodayorcouldwaituntillatertobuyit—ausefulployaswhenthe“bloodlust”haswornoff,theappealoftenwearsoff,too.2Questionwhetheritisworthit.Obviously,ifbuyingtodayagainsttomorrow’sincome,youwillincurinterest—soisitworththeextra?3Questiontheriskfactor.IfIcommitmyselftoday,whatifmycircumstanceschangeandIneedthatfutureincomeforotherpurposes?4QuestionthatifIspendtodayImightnothaveincomeforareallyexcitingspendthatmightcomeup—bettertokeepitjustincase.

Followthiswithmeanditshouldreduceourcreditcardbalancesconsiderably.

BUYINGTODAYAGAINSTTOMORROW’SINCOME,YOUWILLINCURINTEREST.

Rule90.PutSomethingAsideforYourOldAge—No,MoreThanThat!

Whenyourealizeyouaretravelingalongfastintheoutsidelaneoftheagehighwayandcanseelessroadaheadthanthereusedtobe,youshouldbesurethatifyoudostopearningyoucanstillaffordthelevelofstyle,luxury,andcomfortyounowenjoyorwanttoenjoy.Therearesomereallygoodreasonswhyyoushouldputasidemoneyforyouroldage:

•Ifyoudon’tsaveforyourself,thenyoumayhavetorelyonthekindnessofstrangers—orfamily,whichmightbeworse.•Ifyouhavenooldageplan,youmaylosecontrolofyourlevelofcomfort,style,andluxury.•Youwilllosecontrolofyourfinancialfreedom.•Youmaylosecontrolofbodilyfunctionsandwillneedmoneytotakecareofmedicalbills.•Asyouageyoudoslowdown,andworkingashardasyouarenowwillbeimpossible.•Youalsodon’twanttohavetoalwaysworkhard(thoughyoumaychooseto)—formostofusthereisatimeforsittinginthesunshine,andifitisn’twhenyou’reold,thenwhenisit?

Sowhyhaven’tweputsomethingasidealready?Well,whenweareyoungit’shardtoenvisageatimewhenwewon’tbe.Sowedon’tneedtoprepareforit.Alsowearetoobusyhavingagoodtimetothinkaboutsuchthings.Alsowearetoobusylookingafterothermembersofourfamilytohavemuchtimetothinkaboutourselves.Alsowearemortgageduptothehiltandworkishardenough.Alsowehaven’tenteredourearningboomperiodofourfifties,sodon’thavelumpsumstosaltaway.Also,also,also.So,ifwearegoingtoputsomethingaside,perhapsweneedafewguidelines:

•It’snevertoolatetostart,buttheearlieryoudoit,thelessitwillhurt.Prioritizespending—listwhatyouaregoingtospendonandseeif“thefuture”isthere.Ifitisn’t,putitthereandmakeittopofthelistaheadofthatnewboatortriptoParis.•Ifyouhaven’tsavedmuchbyyourfiftiesputinalumpsumtoseedyour

retirementplan.**God,don’tever“retire,”you’lldropdowndeadimmediatelyifyoudothat.

•Getyourfinancesinorderandcurbwaste—spenditinsteadonyourplan.•Ifyoudon’thaveapension,makesureyouhavethingsthatwillfundyourretirement/lateryears(propertytosell?stockstocashin?)andthattheywillbesufficient.•Alwaysthinkhighinterestandmovemoneyaroundtogetthebestoutofit.

Tradedownpropertyasyougetolderandyourneedsgetsmaller—whenthekidshavealllefthome,youdon’tneedsomuchspace;sodownsizeandinvesttheprofits.

IFYOUDOSTOPEARNINGYOUWILLSTILLBEABLETOAFFORDTHELEVELOFSTYLE,LUXURYANDCOMFORTYOUNOWENJOYORWANTTOENJOY.

Rule91.PutSomethingAsideforEmergencies/RainyDays—theContingencyFund

Aswellassavingforyouroldage,you’llalwaysneedtohaveacontingencyfund.Ican’tgiveyouadefinitivelistofemergencies,buthere’safewtogetyouthinking.Don’thavenightmaresnow:

•Accidents—automobile,industrial,work-related•Illnesses•Suddenlegalproblems—likebeingsuedorarrestedwrongly•Propertydisputes—veryexpensiveindeed•Problemswithchildren—don’tstartmeoff,therearetoomanytolisthereincludingdrugs,unwantedpregnancies,troublewithpolice,automobile,illnesses,travelproblems.(It’sexpensivetogetthembackfromThailandwhentheyrunoutofmoneyand/orenthusiasm.)•ActsofGod—floods,earthquakes,tsunami,droughts,subsidence,forestfire,pestilence(whateverthatis)•Suddenunemployment•Suddenliquidationofyourcompany•Recession

Sohowmuchtoputasideandwheredoweputit?Well,thewisemoveistoputasideenoughtokeepyougoinginthesamestyleasyoulivenowforthreetosixmonthswithouthavingtoeventhinkaboutmoneyforthatperiod.Roughlyhalfyourannualincomeifyoulike.Obviouslyifyougetcompletelywipedoutinatsunamiorforestfire,you’llbeinsuredsocancollect,butyouwillneedsomethingtotideyouover.Medicalbillscanalsobecoveredbyinsurance.Sowheretokeepit?Mostpeoplekeepitasasavingsaccount—highinterestofcourse,butinstantaccess.PersonallyI’venoticedtheshrewdrichoneskeepasafetydepositboxwithcashforemergenciesaswell.Alwayshandyindesperatetimes.Youonlyhavetolookathumanitariandisasterstorealizehowquicklymoneyrunsoutandhowconventionalsourcesbecomedesperatelydifficulttoaccess.SurvivingthestormsofLouisianawasbadenoughformostpeople,butitwasagreatlevelerbecausenoonecouldaccessthebanksbecausetheytoowereunder10feetofwater.Andmoneyquicklybecomesauselesscurrency—foodandwaterbecometheprioritiesthen.(AndgunsIbelieve,butIdon’twanttogo

waterbecometheprioritiesthen.(AndgunsIbelieve,butIdon’twanttogothere.)Youmightchoosetotakeoutsizeableinsurancepoliciestohelpalleviatetheproblemssuddenemergenciescancause....Alternativelyyoumightprefertosquirrelawayanemergencyfundinahighlyliquidaccount(easyquickaccess),suchasasavingaccountormoneymarketaccount(whichpayshigherinterestrates).But,asusual,takedetailedadvicefromaproperfinancialexpert—notme.

PERSONALLYI’VENOTICEDTHESHREWDRICHONESKEEPASAFETYDEPOSITBOXWITHCASHFOREMERGENCIESASWELL.

Rule92.YouPaidWhatforIt?HowtoShopAround

IknowIsaidshopforquality,andIdoreallybelievethat,butIdon’tbelieveinthrowingyourmoneyawayonexpensivestuffthatcouldbeboughtjustascheaplyfromanothersource.Forinstance,adearfriendwasrecentlybuyingaveryexpensivecar,awonderfulcar.Iwasmostjealous.IwassojealousIbrokeallmyownrulesandaskedhimwhathewaspayingforit.Icouldn’tbelievemyears.“You’repayingwhatforit?!”Hesaidhecouldaffordit—asindeedhemostcertainlycan.Butitwastheprincipleofthething.“Youcangetitalotcheaperhere,here,orhere,”Isuggested.“Yes,”hereplied,“butthenIwouldhavetogetupoffmyassanddosomethinginsteadofjustreachingforthephone.”Iofferedtobuyitforhimatthecheaperlocationandthensellittohimandsplitthedifference.Buthewashavingnoneofit.Heexplainedhehadearnedhismoney,sohecouldstayonthesofaandliftaphoneandhavetheworldbroughttohim,deliveredwiththeminimumofeffort.Thatwaswhathethoughtgreatwealthwasallabout.Now,unlikemyfriend,thesensiblerichdon’tjustthrowmoneyawaybecausetheycan.Insteadthey

•Alwaysgetatleastthreequotesforworkbeingdoneanddon’tjustacceptthefirstquotetheyget.•Shoparoundtomakesuretheyaren’twastingtheirmoney.•Arecautiousaboutspendingiftheyhavehadtoworkhardfortheirmoney.Theyaren’tmiserly,justcautiousandselectiveanddiscriminating.

ThereisanoldRussiansayingthatspendingisquickbutearninglong.That’strue.Wecanoffloadtheworkofyearsinafewmoments.Wehavetobeprudentwhenitcomestospending.Nottodenyourselvesanything—GodforbidIshouldrecommendthat.Butinsteadjustbeabitcautiousanddon’tgothrowingmoneyawayneedlessly.Ithinkwisespendingissomethingweshouldbeteachingourkidsfromaveryearlyage.Theyarealltoooftenpersuadedbyadvertisingthatifsomethingisbrightlycolored,noisy,messy,orinsomewayrepugnanttoparents,itmustbeagoodthing.Andtheyrushhomeandstripoffallthosewrappingsanddisappointmentsetsinsoveryquickly.Teach’emyoung.Asforyou,timetodiscoverforyourselfthejoyofgettingvalueformoneyineverythingyoubuy(ifyouhaven’talready).TheInternetmakesitallterribly

everythingyoubuy(ifyouhaven’talready).TheInternetmakesitallterriblyeasytocomparepricesandshoparoundandmakesureyouaren’tpayingmorethanyouhavetoforanything.Useit.

JUSTBEABITCAUTIOUSANDDON’TGOTHROWINGMONEYAWAYNEEDLESSLY.

Rule93.NeverBorrowMoneyfromFriendsorFamily(butYouCanAllowThemtoInvest)

Ithinkwemightneedtohaveaquickrecapofwhatfriendsandfamilyaretherefor—andwhatyouaretherefor,forthemaswell.Friendsarefor•Caring

•Loving•Supporting•Nurturing•Helping•Advising—andgettingadvicefrom•Comforting•Havingfunwith•Sharing

Nowhereinthatlotdoesitmention•Borrowingfrom•Stealingfrom•ConningPutsimply,itisverybadmannerstoborrowfromfriendsandfamily.Itsetsuptoomanyissuesandagendas.Itcausesresentmentsandrecriminationsandsuspicions.Itjeopardizesrelationshipsthatareimportant.Don’tdoit.Besideswhich,friendsandfamilyaren’tpropersourcesofloansbecausetheyaren’tlicensedforit.I’mnottalkinghereoftheodd$20togetaroundofdrinksinbutsignificantlylargeamounts—howmuchthatiswilldependonyourcircumstances.Youdoneedtobelicensedtobeacreditbroker(noseriously)andifyouborrowfromfriends(orconverselylendtothesame)youhavenolegalrecourseifitallgoeswrong—anditwill,assureasthesunrises.Iknowtechnicallyyoucouldgetproperagreementsdrawnupandallthatbuteventhen,andeveniftheyarechargingyoutheproperinterestrates,it’sdangerous.Ifyoufailtopaythemback—duetocircumstancesbeyondyourcontrolofcourse—yourisklosingtheirfriendship,whichofcoursewouldmeanmuchmoretoyouthantheloanwouldinthefirstplace.Theonlyexceptiontothisisiffamilyandfriendswanttoinvestinsayabusinessyouarestarting,andtheyfullyunderstandthat,likeanyinvestment,theymaynotseeareturnandalltheusualrisksapply.(SeeRule97formoreonthis.)Whatyoucan’taffordisforittocauseariftifthingsdon’tworkout.Familyandfriendsaretooimportantforthat.

ITISVERYBADMANNERSTOBORROWFROMFRIENDSANDFAMILY.

Rule94.Don’tSurrenderEquity

ThisisaRuleforanybodywhorunsacompany,orwhoisafreelancerandisthinkingofsettingthemselvesupasasoletraderbusiness.Essentiallythepointisnottogiveawaybitsofyouoryourcompany.Theaimoftheexerciseistopreservewealthsodon’tsurrenderequity(sharesorastakeinyourcompany)oryou’llbepayingsomeoneashareofyourhardwork,time,andenergy.Bettertogivethemmoney,evenifitiswithinterest,ratherthanashareofyou.InalaterRuleonspendingyourmoneyI’lltellyoutoaskforequity,butthat’sdifferent—that’syouasalenderofmoney.Theshoeisontheotherbankaccountthen,sodifferentrulesapply.Thereisamisconceptionthathavingtotalcontrolofone’sbusinessisabadthing,andmanybusinessadviserswilladvocategivingawayequityasagoodthing.ButIhavenoticedthatthereallysuccessfulwealthydon’tdothis.Theyhangontoeverybitthey’vegot.Theymayborrowandtakeoutloansandrunupoverdraftsbuttheydon’tgiveawayequity.Adviserswillsuggeststeeringclearofabankloanbecausethebankcanclosedownyourbusinesssoquickly.Abusinessangelwilllendmoneyinstead,buttheywilldemandequity.Ifyoudohavetosurrenderequity,thenmakesureyouswapitfor

•Businessskillsandacumen•Hands-ondirectorships•Afreedom-from-hassleagreement,soyoucanrunthebusinessthewayyouwant•Arealisticpercentagesoyoudon’tgiveawaytoomuch•Abuy-backclause,soyoucanbuybacktheequityforcashatalaterstagewhenyouarecashrich

Irunacompanyandhavesomeshareholders,butthesharestheyholddon’tgivethemvotingrights.So,althoughtheydogetsomeequity,theydon’tgetcontrol,andinfactthesharesweregivenasarewardforadviceratherthanmoneyIborrowed.Onlytakemoneyintoyourbusinessfrompeoplewhohaveexperienceinyourbusinessandunderstanditsebbsandflowsandindustry-relatedproblemsandremember,nevergivevotingsharesawaytoanyone.

remember,nevergivevotingsharesawaytoanyone.

NEVERGIVEVOTINGSHARESAWAYTOANYONE.

Rule95.KnowWhentoStop

What?Icanhearagaspofsurprise.Knowwhentostop?!Didn’tyousayearlierthatyoushouldn’trestonyourlaurelsortheywillwilt?YesIdid,butthatwaswhenyouwerestartingtogetresults,notwhenyou’ddonereallywellandwerewealthierthanyouthoughtyoueverwouldbe.Look,therehastocomeatimewhenenoughisenough.Therehastocomeatimewhenyouwantto•Spendmoretimewithyourfamily•Enjoyyourlife

•Havefun•Gotraveling•Getthework/lifebalancetippedabitinfavorofthelife•UseyourtimetopassonwhatyouhavelearnedtoothersOfcourseyoumightdoallthesewithoutgivingupthegainingwealthideal.Butitisthefocusthatstopsperhaps.Beingdriventogainprosperityisagoodthing.Butoncegained,youshouldreturntothefold,sotospeak.IamalwaysimpressedbypeoplelikeBillGates,whodecidedtoretirefromhisworktorunhischaritablefoundation.Inhiscaseheprobablydidn’tneedandcouldn’tspendorcountanymoremoneythanhealreadyhad/has,andit’sprobablyaccumulatingfastereachdaythanhecancount.He’sprobablylivingontheinterestontheinterestontheinterestontheinterest....

AndIseeWarrenBuffetisdoingthesame—andactuallycontributingtoBill’sfoundation.*Iknowtheseboysareplayingaroundwithsumswellintothebillions,buttheirheartsareintherightplace.Thesesortsofpeoplearewherethisrulecomesfrom.OthersdoingthesameincludeThomasMonaghan,theDominoPizzafounder,whoisreputedtohavegivenawayoverabilliondollarsandfoundedAveMariaUniversity.*Sorry,itisactuallycalledtheBillandMelindaGatesFoundation–BMGF–soundslikesomethingfromastorybyRoaldDahl.

You’rethinkingthatyouaren’tanywhereinthesameleague.No,butyoucanstillhaveanendgamestrategywherebyyoubuildan“enoughisenough”clauseintoyourplan.Otherwisewheredoyoustop?Howmuchisenough?Wheredoyoudrawtheline?ThereisanArabsaying:“Ifyouhavemuch,giveofyourwealth;ifyouhavelittle,giveofyourheart.”Sowhenyougetalot,givesomeofitaway—we’llspeakmoreaboutthisinamoment.I’mnotgoingtobrowbeatyouaboutgivingtocharity,butIamsuggestingthatknowingwhenyou’vegotenoughmoneyisimportant.Iknowthereisanexpressionthatyoucan’thavetoomuchofagoodthing,butfocusingonprosperityisonlyonepartofarichandvariedlife,andyoucanbetoodedicated.

prosperityisonlyonepartofarichandvariedlife,andyoucanbetoodedicated.

LOOK,THEREHASTOCOMEATIMEWHENENOUGHISENOUGH.

PartV.SharingYourWealthAfteryou’veworkedhardtoearnit,itdoesseemabitunfairtoshareit.Butifyoudon’tyouruntheriskofyourhardworkingoutstretchedhandturningintoanarthritic,graspingclaw.Moneycanbeearned,grown,guarded,foughtover,usedwell,usedbadly,won,lost,buried,invested,givenaway,boughtback,exchanged,anddividedup.Butthenicestthingtodowithitissurelytoshareit.I’mnottalkingdo-goodinghere.I’mtalkingsharingbecausesharingisakindthingtodo.Itwon’tbuyyouaticketintoheavenbutitwillhelpothers.Iknowyou’veworkedhard,grafted,andburnedthemidnightoiltogettowhereyouaretoday,andwhyshouldyougiveitawaytothosewhoarelazyorlessfocusedorindulgentorplainliberty-takers?Yep,goodpoint.ButI’mtalkinghereaboutthelesswelloff,theunfortunate,theweak,theneedy,andthedeserving.Wealthisabitlikeabeautifulpainting.Sureyoucanhangitinyourstudyandonlyyougettolookatit.Butyoucanalsoshareitandletotherslookaswell.Ah,butyou’llsaywealthdecreasesifweshareit.Doesit?Doesitreally?Idoubtitsomehow.Ithinkforeverypennyyougiveaway—orsharewithsomeonelessabletogainprosperity—youdoubleitsvalue.Maybenotinhardcashbutinotherways.AsIsay,Idon’twanttobrowbeatyou.It’sjustI’venoticedthatthereallysuccessful,happyrichpeopledofeelateasesharingtheirwealthandthatisalessonforallofus.

Rule96.UseYourWealthWisely

Ireadofanicecoupletheotherday—bothrockmusicians—whohadboughtabighouseinthecountrysideinupstateNYwithnineacresandweresettlingdowntoraisekids,andIthoughtwhatagoodinvestmentasitprovides•Astableplacetobringupkids

•Asoundinvestmentinthelongterm•Aniceplacetoliveinthesenseofpeaceandquietwithnocitypollution•Afriendlyplaceforthechildrentogrowupwithneighborslookingoutforthem•AsoundinvestmentinhistoryandheritageOntheotherhand,Ireadinthesamepaperofafashionmodelwhowasinthenewsalotbecauseofherdrughabit.AnexpensivehabitIhavenodoubt.Iguessyoucanseewheremyinterestsliefromthesetwosnippetsgleamedfromthenewspapers.Oneisasoundandwiseinvestment,andtheotherisjustself-indulgenttroublethatlendsnothingtothewisdomofwealth.

I’mnotapartypooperbutIhavenoticedthatthosewhohandletheirwealthsensiblyandshareitandaregenerouswiththeirtimeandmoneygetbackawholelotmorethanthosewhosquander,misuse,indulge,andgenerallybehaveasiftheirwealthgivesthemalicencetoshowoff.Enoughmoralizingandpreaching.Ididpromisenotto.ButthesearegenuineobservationsandI’msureyou’vemadesimilarobservationsyourself.Thosewhoabusetheirwealthdon’ttendtostaywealthyforlong.Hereareafewquestionsregardingourwealthandhowwiselywemighthandleit:•Whydidwegetwealthyinthefirstplace?

•Whatisthebestuseofwealth?•Whatareourlong-termgoalsandexpectationsforourwealth?•Whatdowethinkourwealthwillbringus?•Whatcouldwedowithourwealththatwouldbebeneficialtoothers?•Whatsortofworlddowewant?•Howdoweandourwealthwanttobeseen?•Whatwilltheysayaboutusafterwe’vegone?•Whatlegacywillweleavebehind?

Ipersonallythinkthebestuseofwealthistoteachchildrenhowtoearnit,investit,saveit,andspenditwisely.Asweallgetmoreandmoreaffluent,thereisarealneedtointroducesomeelementofmonetarydiscussionintothecurriculum.Childrenneedtolearnabouttax,insurance,andspendingandallthestuffwe

Childrenneedtolearnabouttax,insurance,andspendingandallthestuffwenevergottaughtandhavehadtolearnthehardwayaswewentalong.Mindyou,Iwouldalsomakesureeverychildcouldreadandwritebeforetheyleftschoolandcoulddriveacar.

THOSEWHOABUSETHEIRWEALTHDON’TTENDTOSTAYWEALTHYFORLONG.

Rule97.NeverLendMoneytoFriendsorFamilyUnlessYouArePreparedtoWriteItOff

Canyoushareyourwealthwithfamilyandfriends?Yes,butifyouwanttoretainyoursanity,Iwouldstronglysuggestyoudon’tlendanyoneanymoneyunless,mentally,youarepreparedtowriteitoff.Thatwaywhentheydon’trepayyou—andIbettheywon’t—you’llfeeljustfineaboutit.Ifyouexpectthemtorepayyouandtheydon’t,imaginehowhurtandletdownyouaregoingtofeel.Iknow.Ihavesons.Butmymoneyisforthemasmuchasitisforme,soweplaythisgameofthemaskingforaloanandmegivingittothem.SometimestheypayitbackandIampleasantlysurprisedbutsometimestheydon’tandIwriteitoffandthat’sfine,too.(Ireallyhopetheydon’treadthis,orI’llbecorneredlikearatinmyownhome.)Ivaluethemandtheirrelationshipwithme,andIwouldn’twanttofalloutwiththemoversomethingassqualidasmoneywhentherearesomanybetterthingstofalloutwiththemoveranyway.Ifyoudolendmoneytofriendsanddon’tgetitback,youlosemorethanjustthemoney—youlosethefriendshipaswell.Theyfeelembarrassedbecausetheyaren’trepayingyouandthusdon’tcomeroundtoseeyou.Youfeelgrievedanddon’tinvitethembecauseofit.Result:endoffriendship.Writeitoffthoughandyou’llstillbehappytoseethem,andthey’llquicklyforgettheembarrassmentandregardyouasoneofakind.Ofcourseyoudon’thavetodoeither.Youcanjustsayno(seeRule100).Oryoucouldjustgivethemmoney(seeRule101).I’vebeenreadinganadviceblogonthewebaboutayoungmanwholenthisroommateatcollege$350—notahugeamount—buttherepaymentnevermaterialized.Hehadaskedvariousfriendsfirstiftheyhadeverlenthisroommatemoneyandtheysaidhehadpaidthemback.Nowhehasofcoursefallenoutbigtimewithhisroommate—despiteofferinghimtheoptionofrepaymenttermsat$50amonth.Worsestill,hehasfallenoutwithallhisotherfriendsbecausethey“approved”theloaninhiseyes.TheadvicewastotakethefriendtocourtbutIfigurehewon’tseethemoneyanywayandwillcopalotoflegalexpenseintothebargain.Bettertochalkituptoexperienceandwalkawaywhistling.Iknow,forhim,itisalotofmoneybutanydecenteducationdoesn’tcomecheap.Thediscussiondidgoonintohis

anydecenteducationdoesn’tcomecheap.Thediscussiondidgoonintohisrightsto“seize”hisroommate’spossessions,andsoon.Istillsaywalkawaywhistlinganddon’teverdoitagain.

IREALLYHOPETHEYDON’TREADTHIS,ORI’LLBECORNEREDLIKEARATINMYOWNHOME.

Rule98.Don’tLend,TakeEquities

Ifyouareaskedforaloanbysomebodyforaspecificprojectsuchasstartingacompanyorexpandingone,thereareavarietyofanswersincluding•No

•Yes•Yesbut•Yesontheconditionthat•Yeswithequity•Yeswithaconvertibleloan.

Obviously“no”cancauseoffense(seeRule100).“Yes”isano-no,ifyouseewhatImean.Lendingfriendsandfamilymoneyisn’tonunlessyouarepreparedtowriteitoff(seeRule97)andgenerallypeoplewhowantbigloansaren’tthatcloseorthey’dknowyoubetter.Thisleavesuswiththelastthree—conditions,equity,orconvertible?Theremaybeothersofcourse.Conditions:Afutileeffortifyouaskme.Ontheconditionyourepaymewhenyou’vemadeyourfortune.Hmm.Ontheconditionyoudon’tdoanythingsillywiththis.Hmm.Ontheconditionyouonlyusethisforthegoodofmankind.Hmm.Conditionsissuchatrickyonebuttherearemanywho’llaskforconditions—“IfyouwouldjustbesogoodastolendmethisIpromiseto...blahblah.”Yeah,right.Equity:Better.Youdon’tlend,youoffertobuyashareinwhateverprojectitis.Ifitissuccessfulyourecoupwithinterest.Ifitfails,youshouldn’thavebeenlending—orbuyingintoit—inthefirstplace.Morefoolyou.Thetroublewithequityisthatit’softenblackandwhite,hitormiss.Yougetyourmoneybackiftheprojectissuccessful—andperhapsthatshouldbewhentheprojectissuccessful.Convertible:Muchbetter.Youlendasaproperloanwithrepaymentdetailsallworkedoutlegallysoitisabindingloan.Butiftheprojectissuccessful—itshouldbeoryoushouldn’tbelendinginthefirstplace—youconverttheloanintoequity.Thiswayyougetyourmoneybackplusabigshareoftheprofits.Itsortofmakeslendingseemworthwhile.Ifapproachedforaloan,askingforaconvertibleloanwillsortthewheatfromthechaff,theseriousfromthenotsoserious.Itmakestheseriousstandupandbecounted.Iftheprojectthenfailsyougetyourmoneyback—intheoryatleast.Obviouslyiftheprojectfailstheremaynotbeanymoneybutyouwillhavesecureditagainsttheirpropertyofcourse.(IknowIsaidnevertodothat,butthatwasadviceforyouasaborrower;asalenderalwaysmakesureyoudo.)I

thatwasadviceforyouasaborrower;asalenderalwaysmakesureyoudo.)Ievendothiswithmychildreniftemptedtolendthemanymoneyforbigitemslikecarsandhouses.YesyoucanhavethemoneybutIwanttoownashare,soyoucan’tsellitifyougetboredorrestlessorwhateverwithoutmypermission.AmazinghowoftentheybackoffwhentheyknowI’llbetheirpartner.AndIalsothenknowthattheydidbuytheitemratherthansomethingthey’drathernottellmeabout.

ASKINGFORACONVERTIBLELOANWILLSORTTHEWHEATFROMTHECHAFF.

Rule99.YouReally,ReallyCan’tTakeItwithYou

Iknowthere’sasaying—whoeverhasthemosttoysattheendwins.Butyoureallycan’ttakeitwithyouandyoucan’tbuyanythingwithitwhenyougo—noticketsintoheaven,noindulgences,noget-out-of-hell-freecards.Whenyougo,yougoaloneandwithnothing,justasyoucamein.Soallthateffort,inaway,iswasted.Unlessofcourseyoudidsomethingusefulwithitwhenyouhaditandhadtheabilitytodoit.Leftdroolinginsomeoldfolks”homeisn’tthetimeorplacetostartbeingphilanthropic,isit?Notgettingridofitisknownaswealthbondage—beingtiedsotightlytoyourmoneythatyoureallydotrytotakeitwithyou—andthatreallyiskinky.Sureyoucanleaveittoyourkidsbutyoushouldhavegivenmostofitawaylongbeforeyoukickthebucketoryou’llbeleavingamassivetaxliabilityforsomeonedowntheline.Whateveryoudecidetodo,taketheproperadvice—nothinggratessomuchasapoorlythoughtoutwillandlotsoftaxafteryou’vegone.Youcanofcourseinsureagainsttaxliabilitiesafteryou’vegone.Youhavetocalculatewhatyouthinkyourtaxliabilityislikelytobeandthensetupawholelifeinsurancepolicytocoverit.Butthepolicyhastobewrittenintoatrusttoensuretheproceedsfromthepolicyaren’tincludedwithyourestate—butforheaven’ssakebecarefulofplacinganythingintrustbecauseifyouusethewrongoneyoucanmakethingsevenworse.Gosh,I’mnotafinancialadviser(exceptonabehaviorallevel—youneedsomebodyelseforthenitty-gritty-which-investment-is-best-for-medetail)butitseemstomakesensetohaveallthistiedupbeforeyougo.IwasreadingabouttheDalaiLama’swealththeotherday.Hegetspaidtheequivalentofaround$.38adayforexpenses,ownstworobes—oneonandoneinthewash—andhisonlyindulgenceisanewwatchstrapeverynowandagain.(Ididwonderifheboughtleatherones.)Andyetheistheheadofanentirecountry—albeitoneinexile.Nowthatiscoolinmybook.

NOTGETTINGRIDOFITISKNOWNASWEALTHBONDAGE.

Rule100.KnowWhen/HowtoSayNo—andYes

Nowyou’vemadesomemoneytherewillbethosewhoseeyouas•Atarget—easypickings•Owingthemsomething—afterall,theyhaveknownyouforyears...•Worthtakingachanceon—youneverknow•Agenuinesourceoflow-interestloanorfreegifts—andsomucheasierthanpreparingaproperbusinessplanandgoingtothebank.

I’mnotsayingyouwillalwaysgettheoutstretchedhand.Infact,somerequestswillbecloakedinthemostattractivebrochuresofpotentialinvestments.Sohowdoyouknowwhentosayyesandwhentosayno?Andhowtosayneither?Sayingnotofriendsandfamilyiseasy,inasense.Rightfromdayoneyoumakeitapolicy—andaveryeasilyidentifiableone—nottolendtofriendsandfamily(seeRule90).Youneverdo,sotheylearnnottoask.Sayingnotobusinessacquaintancesisalsoeasy.Justaskthemtorefereverythingtoyouraccountantorbusinessadviser.Sayyounevermakeadecisionwithouttheirinput,andyoucan’tproceeduntiltheyhavestudiedeverythinginclosedetail.Thatputsofftheoneswhoarejustarm-round-the-shouldertryingiton.Theothersmightbeworthconsideringiftheyhavegenuineplans.Inwhichcaseitmightbeworthhavingalook.Nowwhentosayyesorno.Saynoif

•Yourgutinstinctsaystosayno.•Theyhaven’tdoneanyworkontheirpresentation—iftheyarelazyatgroundzeroitstrikesmethey’llbelazyrightthrough.•Youhavenoconnectionwiththem—alwayssaynotostrangersbasically.

Tosayyesisfine.Tosaynoisfine.It’syourmoneyandyoucandowithitwhatyouwant.Youhaveto

•Letgoofanyguilt—thisisbusiness.•Makesureyouunderstandexactlywhatisbeingaskedfor—that’swhycallinginadvisersisalwaysagoodidea.•Keepaclosed-doorpolicytostopyourselfbeingoverwhelmedbyrequests—makeithardforthemtogettoyou.•Avoidsayingyesbecauseyouthinkitwillmakepeoplehappy—theyareemotionallyblackmailingyouandthusgetthemselvescrossedoffthelist

emotionallyblackmailingyouandthusgetthemselvescrossedoffthelistautomaticallyandwithoutguilt.•Alwaysbeveryclearwhenyouaresaying“no.”No“maybes”or“we’llsee”or“I’llhavetosleeponthatone.”Saynoandputeveryoneoutoftheirmisery—includingyou.•Don’tallowyourselftobebadgered.Beassertive.•Stopthemintheirtracks—asimple“I’dratheryoudidn’taskme”beforethey’veevengotstarted.

Rule101.FindWaystoGivePeopleMoneyWithoutThemFeelingTheyAreInYourDebt

Ilovethisone.Itissuchachallengetogivemoneytopeoplewho•Haven’taskedforit•Needit•Deserveit•Willuseitwisely/well

Andthechallengeistogetthemtoacceptitwithoutfeelingindebtedtoyou,beholden,grudging,guilty,whatever.Thisisoneofthoseruleswealloughttopracticenomatterhowmuchmoneywehave.Ireckonyougettostartassoonasyoubecomeaparentandgiveyourkidsbigmoneyforcarsandthings.Theyarealwayssaying:“I’llpayyouback,”andyouknowtheywon’t.Butifyoucangivethemmoneywithoutallthatstuffbeingattachedtoit,youaredoingwell.Thereareavarietyoftipstohelpyougiveyourmoneyawaywithoutthemfeelingguiltyoryouembarrassed:

•The“Youmightwinthelotteryoneday”approach.Thisisagoodoneasitimpliesthatthere,butforabitofluck,yougo.Allthey’vegottodoisbeasluckyasyouandthey’llpayyouback.•The“Fortuneschangeandtheygodownaswellasup”approach.Basicallywhatyouaresayingisthatyouareflushatthemomentbutthatmightnotalwaysbethecase,andwhenyourfortunesgodown,theycanhelpyouout.•The“Ilikemyfriendstobehappy”approach.HowcanIbehappywhenIseemyfriendsinmisery/trouble/debt/whatever?Ifyouaren’thappythenIcan’tbe,soI’llhelpmyselftobecomehappybyhelpingyoutobecomehappy.Howcananyonerefuse?•Thisisthe“Whyshouldn’tIhelpmyfriends?”approach—asubsetoftheoneabovebutstillvaluableanduseful.Look,it’swhatfriendsarefor.You’vehelpedmeoutinthepast/arehelpingmeby.../havealwaysofferedhelpanywaysowhycan’tIdothesameforyou?•The“Helpmeouthere,I’vegotataxproblem”approach.Look,ifIcanoffloadsomeofthiscashIcanalleviatemytaxburden,socanyouhelpmebytakingsome?Iwouldbeeversograteful.•“TheTaxmanwillonlygetitafterI’mdeadapproach”socanIgiveittoyounowandseethepleasureit’llbringyouratherthanyoubegrievingand

younowandseethepleasureit’llbringyouratherthanyoubegrievingandmopingafterI’vegone?•Helpthemwithahousingupgradebytakingequityinthenewhouse.Theypaynothinguntiltheysellit,atwhichpointyourinvestmentwillprobablyshowbetterappreciationthantheinterestrateitwouldhaveearnedondeposit.Andifitdoesn’tsowhat?Profitwasneverthepointanyway,buttheycanfeelhappyaboutit.

I’msureifyouputyourmindtoittherewillbemanymoreyoucancomeupwith.Hey,thisoneisfun.Yougettohelpothers,giveloadsaway,shareyourwealth,andbecreativeallatthesametime.

IFYOUCANGIVETHEMMONEYWITHOUTALLTHATSTUFFBEINGATTACHEDTOIT,YOUAREDOINGWELL

Rule102.Don’tOver-ProtectYourChildrenfromtheValuableExperienceofPoverty

Look,ifyou’reabouttoaskyourparentsforareallybigloan(gift?)thenyou’dbetterbuyupeverycopyofthisbookyoucanandburnthelotofthembecauseyou’renotgoingtolikewhatIhavetosaynext.Parents,ifyouarereadingthis,thendon’tgivethemthatloan(gift).ItisOKnottocoddlethem,tomakethemlearnthevalueofmoney,tomakethemtreatmoneywithrespectrightfromthewordgo.Andjustbecauseyouhavelotsdoesn’tmeantheyareentitledtostandtherewiththeirhandoutrightfromthedaytheygetoutofdiapers.I’mtheworld’sworstatthisonebutIamlearning.Therearevariouswaysyoucangofrombeingutterlymeanandnotgivingthemacenttobeingoverlygenerousandgivingthemeverything.Now,Iwasgoingtotalkaboutsettingbudgetsforchildrenandsettinguptrustfundsforthem.Amonthlyallowanceisalwaysagoodideaastheythenhavetolivewithintheirmeans.Itteachesthemtobudgetandtoscrimpandsaveattheendofthemonth—orhalfwaythroughitinmostcases.Whentheyfirstgoofftocollegeisprobablythebesttimetodothisastheyarealsolearningawholenewbatchofthingsaboutbeinggrownup—sex,drugs,stayingoutlate,wrongsortoffriends,bingedrinking.Learningtobalancetheirownbooksatthesametimeisgoodforthem.Youcansetasidelumpsumsforthemaswellsothattheycanbuyahouse,business,ordecentcar.Ifyouadministerit,thentheycan’tblowitonaplasmaTVora$1,000designerhandbagbutonlyasensiblethingthattheyhavetoexplaintoyouinsomedetail.Andofcourseatrustfundforwhenyouhaveshuffledoff.Orofcourseletthemhavesuchafundwhentheyareofanagesensibleenoughtoenjoyitwithoutitdivertingthemfromtheireducation.PersonallyIwouldgiveittothemafteritwouldnotmakeanyrealdifferencetothem;ineffectaftertheyhavestartedtoearntheirownmoneyinworthwhileamounts.Andforgoodness”sakedon’tevertellthemtheyaregettingalumpsumaged25orwhateveryoudecide.Nothingdemotivatesachildmorethanthinkingthey’recomingintomoney.They’llthinktheydon’thavetomakeanyeffort.Letthemthinkthey’llalwaysbepoorandwatchthemgo.Andhowdoyousetagoodallowancefigure?Onlyyoucanworkitoutforyour

Andhowdoyousetagoodallowancefigure?Onlyyoucanworkitoutforyourchild,anditobviouslyvariesdependingonagebutoncetheyreachtheirteensit’saswelltothrashitoutwiththem—aprocesssometimesofpainfuldiscussion(whosaidarguments?).Butmakethemargueeverypennyandjustifyit.It’llmakethemvalueitwhentheygettospendit.

AMONTHLYALLOWANCEISALWAYSAGOODIDEA.

Rule103.KnowHowtoChooseCharities/GoodCauses

Onceyouhavesomemoney,yougetinundatedwithrequeststogivetocharities.I’mnottalkingabouttheemotionalblackmailonesweallgetthroughthemailbox—thesethreepenniescouldpayforfoodforanentirefamilyforeverandarainforestandsightforalltheblindpeopleintheworld,andallyouhavetodoissendthembackwithwhateveryoucanafford.Oh,theguiltwhenyouspendthosethreepennies—not!I’mtalkingaboutbigcharitabledonations,supportingaparticularcause,supportingaparticularperson.I’vealwayshadmydoubts—andthisisentirelysubjective,entirelypersonal—aboutsupportingapenguinorendangeredfishorthreatenedalbatross.Howdoyouknowwhichisyours?Inthezooyoucanatleastgoandhavealookatyourownsavedpet,butinthewilditissomuchmoredifficult.Anywayhereareafewtipsforchoosingagoodcharity—agoodoneforyou:

•Decidewhatisimportanttoyou—theplanet,savingwhales,smallchildren,thepoor,cancerresearch.•Workoutwhatyouwanttodo—justgivemoney,getinvolved,beanadviser,raisefunds.(I’vealwayswantedtodriveoneofthoseinflatablesforGreenpeace;Ijustthinkthoseboatsaresocool.)•CheckoutcharitiesyoumightthinksuitableontheInternetandseeifyouridealsfitinwiththeirs.•Checkoutthecharitiesthemselves—financialstatements,accounts,brochures,campaigninformation,membership,missionstatements.•Trustyourgutfeelings.

Personally,Irejectanycharitiesthatdirectlyapproachme.NotbecauseitmakesmecrossbutasawayofweedingouttheonesIdon’twanttosupport.Ihavemyownmissionstatementswhenitcomestocharitygivingandnotbeingapproachedispartofthat.Ialsolikecharitiesthatsetouttohelpdirectlyinsteadofmerelychurningoutaid—teachingvillagerstofishandallthat.IalsosupportonlysmallcharitiesasIfiguretheyneeditmore.AndIwillsupportonlysmallcharitiesthataredoingthingsthatseemattainable.Ifigurefeedingthepooroftheworldrequiresabottomlesspit.Notthatitisn’tadecentobjectivebutoneIfindtooremote.Butonethatseekstoprovidefresh

waterforaparticularvillageIcanrelateto;orprovidingabreakfastforaninner-cityschoolkid.**www.magicbreakfast.comissomethingIcangetmyheadround.

I’VEALWAYSHADMYDOUBTS—ANDTHISISENTIRELYSUBJECTIVE,ENTIRELYPERSONAL—ABOUTSUPPORTINGAPENGUIN.

Rule104.SpendYourOwnMoneyBecauseNoOneWillSpendItasWiselyasYou

What!Surelyweallspendourownmoney?No,wedon’t.Aswegetricher,theneedtohaveothersspenditforusgrowsstronger.Believeme,itbecomesarealrisktohandthingsoverandlosevalueandwealthbecauseofit.Itissoeasytofigurethatbecausewearebusyandsomeoneoffers,itisagoodthingtohandover.Ihavenoticedthatthesuccessfulrichdon’thandoveranything;theycarryonpayingattentiontodetailallthetime.Obviouslytheremightcomeatimetohandoveraswegrowtoooldtoadministerourownaffairsbutuntilthen,giveupnothing.Examples?Ofcourse.Ihaveafriendwhohasconsiderablewealthandwhoishappytohandoverhisspendingtoanyonearoundhimwhoofferstodoitforhim.Hisgardenerbuysallhisequipment,includingmowersandchainsawsandthelike.Topoftheline?Ishouldsay.ThisgardenerisdrivingaroundonmowersthatarethegardeningequivalentofaRollsRoyce.Myfriendjustsignsthechecksandthegardenerislaughingallthewaytothetoolshed.Myfriendalsopayscatererstocomeinandorganizemealseverytimehewantstoentertain.Againhesignsthecheckandthecatererssupplyhimwithacompletedinnerparty.Ah,butIhearyousay,“Sowhat?Hecanaffordit.”Yes,indeedhecanbutheisalso:

•Beingrippedoffrepeatedly•Notgettinggoodvalueformoney•Slowlylosingcontroloverhisownfinancialaffairs•Losingtherespectofhisemployeesandhiredservicecompanieswhoseehimasabitofajoke—toomuchmoneyandnotenoughsense.(Itwouldbeallrightifhewerearistocracyasyouexpectitofthem,butheisaself-maderichperson.)

He’sthesamewhenitcomestobuyinganewcar.Hejustringsuptheshowroomandtheydeliverwhathewants.Troubleistheyfrequentlydeliverwhatthey’vehadsittingintheirshowroomsfortoolongandcan’tshift.AskhimaboutthepinkBentleyheboughtthatnooneelsewasgoingtotouchinamillionyears.Iteasehimandaskhimiftheshowroomhadabigglassofficewheretheycouldsitandseehimcoming.

couldsitandseehimcoming.You’vegottoretaincontrolofyourownspendingifyouwanttoretaincontroloveryourfinances—anddignity.NopinkBentleysforyou.Don’thandoutcreditcards.Don’tgiveanyoneauthoritytosignpersonalchecks.Don’tuseapersonalshopper.Givepeopleproperbudgets.Getthemtosubmitproperproposalsforspending.Checkthesmallprint.Checkeverything.Questioneverything.Stayontop.Stayincontrol.Andifyouwantmyadvice—nojointaccountsever.There’snoneedforitinthisdayandage.

IHAVENOTICEDTHATTHESUCCESSFULRICHDON’THANDOVERANYTHING.

Rule105.TakeResponsibilityBeforeYouTakeAdvice

Thisisafollow-onfromthepreviousRule.Ifyouaregoingtotakeadvice,youneedtoknowinadvance•Whatyouexpecttoget

•Whyyouareasking•Yourexactposition—ifyoudon’tknow,howcantheyadviseyouofanything?•Whatyouwanttohappennext•Whatroletheywillplayinthat•Whatactionyoucantakeiftheiradviceiswrong/outofdate/harmful•WhatfurtheradviceyoumightneedAndbeforeyoucandoanyofthese,youneedtotakeresponsibility.

Weallstartout—oratleastIdid,andsodidmostpeopleI’veevertalkedtoaboutit—somehowexpectingthatwewouldenduprich.Itwas/isanassumedprocess,sortofbyosmosis.Asyougetolderandaddyearstoyourlife,sointheoryyouaddriches.Thenyouwakeuponedayanditisn’t/isjustlikethat.Formeitwasn’t,soIwentintohyperdrivetochangethesituationandamnowfabulouslywealthy.*Butittookhardworkandtremendouseffort.Nowthatyou’vemadeit,itistimetoreview.Timetotakeresponsibility.Timetotakestock.Youneedtoknow*Ifyouarethetaxcollector,Iwasonlyjokingand/orI’vealreadypaidmytaxbill.

•Whereyouare•Howyougotthere•Whatyouareworth—bothfinanciallyandspiritually•Whereyouwanttogonext•HowyouexpecttogetthereWhenyouhaveansweredthesequestions,youarereadytotakeadviceaboutyourplans.Anditdoesn’thavetobeadviceofthepaidkind,theexpertkind,theman-in-a-suitkind,theallseriousandheavykind.Sometimesadvicecancomefromunlikelysourcesandunlikelypeople.Learntolisten.Learntotakeinwhatisnotbeingsaid.Learntobehappy.(Gosh,that’sabigoneforallofus.)Thewealthierwebecome,theeasieritappearstobetohandoverouraffairs(financialones)topeoplewethinkhaveourbestinterestsatheartorwhoweassumeknowwhattheyaredoingorareontopofthelatestdevelopmentsandlaws.Myobservationisthat(a)they’renotand(b)theshrewdwealthyonesdon’thandoveranythingunlesstheyarereally,reallysureoftheiradvisers.Andthat’smy

advice.

ANDITDOESN’THAVETOBEADVICEOFTHEPAIDKIND,THEEXPERTKIND,THEMAN-IN-A-SUITKIND.

Rule106.OnceYou’veGotIt,Don’tFlauntIt

Wealthislovely.Havingmoneyisgreat.Gettingrichisaworthwhileandenjoyableactivity.BuyingthepinkBentleyisjustplaingross.Asisalotofotherthingsthatshoutnouveauriche,over-the-top,flaunting,bling.Sotacky.Takelessonsinhowtohandlewealthbyallmeans,butdohandleitwell.Ireadanicestorytheotherdayofayoungladwhogottostayinamillionaire’smansion—arelativeIassume—andwhenhewenttobedheleftthelighton.Themillionairepoppedhisheadroundthedoorandtoldhimitwaswastingmoney,andheshouldturnitoff.Heeventhreatenedhimwitha$1fine.Butinsteadhetossedhimadollarbillandturnedthelightouthimself.Thekidneverforgottheincidentandisstillturninglightsoffwhenhegoestobedorleavesaroomtothisday.Andhestilldoesn’tknowwhythereversepsychologyworked.Ashesays,hewentfromapossible$1finetoabigwindfall(itwas1953whenadollarwasalot).Befrugal.Becarefulwithyourmoney.Don’tflauntit.Andasyounowbelongtoanexclusiveclub,couldyoupleaseobserveafewrules:•Noflashycars.

•Nocastles,ranches,orranch-stylehouse—thisisn’tDallasyouknow.•Nobling.•Noglitzorshowingoff.•Noimpulsespending.•Nowildanimalsaspets.•Nobuyingislands.•Noprivatejets.•Noflyingallyourrelativestoaforeigncountyforaparty.•Noflyingyourrelativestoaforeigncountryforyourlatesttrophywedding.•Nohugediamonds—orbigjewelryofanysort.It’llonlyattracttherobbersandthieves.

Beadiscreet,tasteful,refined,cultured,less-is-more,more-is-tacky,quietsortofrichperson.Someonewecanalllookupto.Someonewhowillinspireandnotcultivateridicule—theydolaughatthoseleopardskintrousersI’mafraid(notthatyou’vegotany).Someonewhowillsetagoodexampletotheyoung,theimpressionable,thenotsowell-off.We’veallseenthosewhocomeintomoneytoosuddenlyandflauntthefactthattheyhaveloads,andweallthink“God,howtacky.”Iknowweshouldn’tsitin

theyhaveloads,andweallthink“God,howtacky.”Iknowweshouldn’tsitinjudgmentonothersbutIdofindmytoescurlat...no,Ican’tsayincaseyou’vegotone.Flauntingitcreatesenvy,jealousy(differentfromenvy),criticism,snobbery,condemnation,censure—andallquiterightly.Discretion,ontheotherhand,encouragesrespect,admiration,andemulation.Don’tevermentionhowmuchyou’vegot,whatyouareworthorhowmuchyouearn.Ever.Ifyoutellpeople,halfwilldespiseyoufornothavingmore,andtheotherhalfresentyouforhavingsomuch.Onlyrevealsuchinformationtoyourbankmanager,andeventhentheyshouldhavetodragtheinfofromyou.

DON’TEVERMENTIONHOWMUCHYOU’VEGOT,WHATYOUAREWORTH,ORHOWMUCHYOUEARN.

Rule107.What’sNext?PactswiththeDevil?

It’sthelastRuleandIguesswecanhavesomefun.Creatingwealthisasvariedanddifferentanadventureforeachofusasanythingelse.Wecanworkforit,winthelotteryorapokergame(mindyouitwouldhavetobeaprettybigone),inheritit,stealit,beawardeditasaprize(NobelPrizeforliterature—youdogetaround$1.3million.*Gulp.Putmynameforwardatonceplease,somebody.OrwhatabouttheTempletonPrize,whichgetsyou$1.4million**),orfinditinthestreet(lotsofexamplesontheInternetofpeoplefindinghugewadsofcash),marryintoit,younameit.Andofcourseifyouarereallydesperatethereistheoldpactwiththedevil—butbewareofgotchaclauses.*10millionSwedishkrona–theactualvaluechangeswithfluctuatingcurrencyconversionrates.

**TheTempletonPrizeisawardedannuallybyaninternational,multifaithpanelofjudgestoalivingpersonofanyreligioustraditionwhohasmadeauniquecontributiontoprogressinresearchordiscoveriesaboutspiritualrealities.

TheChinesebelieve,viafengshui,thatifyouleaveyourtoiletseatup,yourmoneywillgetflushedaway.IwonderifthisisamoderninventionbecauseIhavenoevidenceofflushingtoiletsinChinawhenfengshuiwasbeingestablishedintheTaoisteras.Thenthereareaffirmations—youwritedownthewealthyouwantandpinitupsoyoucanseeiteverydayandchantitouthundredsoftimes.Mightwork.Thenthere’sthecosmicorderingservice—youtellthegreatcosmicbankhowmuchitowesyouanditrepaysyouimmediately—therehasgottobeacatchtheresomewhereknowingbanks;they’reallthesameIreckon.Thentherearecrystals—youwearone/sleepwithit/carryitaround.Certaincrystalsresonatewiththecosmicbank(themagain)andit’sasortofrockcheck,Iguess.**Citrine,ruby,andtigereyearesupposedtowork,butIfigureifyoucanbuyrubies,youdon’tneedthewealth,oryou’regivingitalltothecrystalseller,soIsupposeitworksforthem.

Dowsing?Youfollowhazelrods(orbitsofbentcoathangersandemptyBirosdependingonwhichbooksyouread)thattwitchwhenyouareaboveburiedtreasureoraseamofgoldoroneofthosering-pullthingsoffthetopofabeercan.Bitlikeametaldetectorbutdoesn’tneedbatteries.Isupposeyoucouldbuyaracehorse,butitseemssoveryriskytome.Layingdownfinewines?Couldwork,butIcouldn’tresistthetemptationIthink.Iamnotscoffingatanyofthesemethods.However,ifyouintendtogainprosperity,youshouldgetonwithit,believeinit,followit,give100percenttoit,andnotlistentoothers.Includingme.Especiallyme.Goodluck.

it,andnotlistentoothers.Includingme.Especiallyme.Goodluck.RichardTemplar

THEREISTHEOLDPACTWITHTHEDEVIL—BUTBEWAREOFGOTCHACLAUSES.