Contents
Introduction
Acknowledgements
Thinking wealthy
1 Anybody can be wealthy – you just need to apply yourself
2 Decide on your definition of wealth
3 Set your objectives
4 Keep it under your hat
5 Most people are too lazy to be wealthy
6 Get a reality check
7 Understand your money beliefs and where they come from
8 Understand that wealth is a consequence, not a reward
9 Decide what you want money for
10 Understand that money begets money
11 Calculate the net return
12 If you see money as the solution you’ll find it becomes the problem
13 You can make lots of money, you can enjoy your job, and you can sleep nights
14 Don’t make money by being bad
15 Money and happiness – understand their relationship
16 Know the difference between price and value
17 Know how the wealthy think
18 Don’t envy what others have
19 It’s harder to manage yourself than it is to manage your money
Getting wealthy
20 You’ve got to know where you are before you start
21 You’ve got to have a plan
22 Get your finances under control
23 Insurance pays someone, and odds are it’s not you
24 Only by looking wealthy can you become wealthy
25 Speculate to accumulate (no, this isn’t gambling)
26 Decide your attitude to risk
27 Think through the alternatives to taking a risk
28 If you don’t trust someone, don’t do business with them
29 It’s never too late to start getting wealthy
30 Start saving young (or teach your kids this one if it’s too late for you)
31 Understand that your financial needs change at different stages of your life
32 You have to work hard to get rich enough not to have to work hard
33 Learn the art of deal making
34 Learn the art of negotiating
35 Small economies won’t make you wealthy but they will make you miserable
36 Real wealth comes from deals not fees
37 Understand that working for others won’t necessarily make you rich – but it might
38 Don’t waste time procrastinating – make money decisions quickly
39 Work as if you didn’t need the money
40 Spend less than you earn
41 Don’t borrow money – unless you really, really have to
42 Consider consolidating debts
43 Cultivate a skill and it’ll repay you over and over again
44 Pay off your loans and debts as a priority
45 Don’t be too busy earning a living to make some money
46 Save in big chunks – or should you?
47 Don’t rent, buy
48 Understand what investing really means
49 Build a bit of capital then invest it wisely
50 Understand that property, in the long run, will not outpace shares
51 Master the art of selling
52 See yourself as others do
53 Don’t believe you can always win
54 Don’t pick stocks yourself if you don’t know what you’re doing
55 Understand how the stock market really works
56 Only buy shares (or anything) you can understand
57 Use your head
58 By all means, use the investment professionals (but don’t be used by them)
59 If you are going to get financial advice, pay for it
60 Don’t fiddle
61 Think long term
62 Have a set time of day to work on your wealth strategy
63 Pay attention to detail
64 Create new income streams
65 Learn to play ‘What if?’
66 Control spending impulses
67 Don’t answer ads that promise get-rich-quick schemes – it won’t be you who gets rich quick
68 There are no secrets
69 Don’t just read this – do something
Getting even wealthier
70 Carry out a finance health check regularly
71 Get some money mentors
72 Play your hunches
73 Don’t sit back
74 Get someone to do the stuff you can’t
75 Know yourself – solo, duo or team player
76 Look for the hidden asset/opportunity
77 Don’t try to get rich too quickly
78 Always ask what’s in it for them
79 Make your money work for you
80 Know when to let go of investments
81 Know your own style
82 Know why you should be able to read a balance sheet – and how
83 Be one step ahead of your tax collector
84 Learn how to make your assets work for you
85 Don’t ever believe you’re only worth what you are being paid
86 Don’t follow the same route as everyone else
Staying wealthy
87 Shop for quality
88 Check the small print
89 Don’t spend it before you’ve got it
90 Put something aside for your old age – no, more than that!
91 Put something aside for emergencies/rainy days – the contingency fund
92 You paid what for it? How to shop around
93 Never borrow money from friends or family (but you can allow them to invest)
94 Don’t surrender equity
95 Know when to stop
Sharing your wealth
96 Use your wealth wisely
97 Never lend money to friends or family unless you are prepared to write it off
98 Don’t lend, take equities
99 You really, really can’t take it with you
100 Know when/how to say no – and yes
101 Find ways to give people money without them feeling they are in your debt
102 Don’t over-protect your children from the valuable experience of poverty
103 Know how to choose charities/good causes
104 Spend your own money because no one will spend it as wisely as you
105 Take responsibility before you take advice
106 Once you’ve got it, don’t flaunt it
107 What’s next? Pacts with the devil?
The Rules of other people’s wealth
1 Don’t judge
2 Don’t envy it
3 Other people’s money belongs to them
4 They can give it all away if they like
5a Once they’ve gone, you can’t ask questions
5b Once they’ve gone, you can’t ask questions
6 Blood comes before money
7 Your children owe you nothing
8 Don’t make money taboo
9 If they give it to you, it’s yours
Had enough yet . . .?
Introduction
There’s an old saying ‘Money, money, money – it’s all they can think about’. Unlikely to be true of course, given that hardly anybody thinks about money itself (unless they happen to be a coin collector). The reason we all pursue and desire and fiercely protect money is because of what we can do with it.
And no, of course money can’t buy you love or happiness. Although it can buy a good deal of pleasure – and remove a lot of unhappiness. But it can buy you plenty of other things. Over the years I’ve identified the ten things which people most seem to want to spend their money on:
Security. A home of your own and enough money in the bank to support you in the way you want, plus a bit in hand for
emergencies, and a big enough pension to ensure a comfortable retirement.
Comfort. A warm and spacious house, a big car, someone to clean or mow the lawns or do the laundry or mind the kids, and good quality medical care whenever you want it.
Luxuries. Exotic holidays, fine wines, meals in top-class restaurants, expensive clothes, the best seats at sports events or opera or whatever you enjoy.
Mobility. First-class train seats and plane tickets, trips on cruise ships, and chauffeur-driven cars wherever you are in the world.
Status. Prestigious invitations, access to important people and exclusive clubs, and perhaps even gratifying deference from others.
Influence. As a generous donor of substantial sums, being able to make sure that your views and wishes are listened to and taken seriously.
Freedom. Not being dependent on employers, bosses, creditors, clients, customers. Not being a slave to the calendar, diary or clock. Knowing you won’t have to be a burden on your children.
Leisure. Time to do the things you want, go where you want, meet who you want, when you want.
Popularity. Being able to entertain friends, acquaintances and contacts frequently and generously, which does wonders for your social life.
Philanthropy. Being able to make regular and substantial donations, which gives you the satisfaction of helping people, supporting organizations and furthering causes you believe in.
Seems a reasonable enough list to me. And whether it’s some or all of those things that you’d like more of, you’ll need to know how to go about generating greater wealth – which means you need to know what it is that separates the wealthy from the not-so-wealthy. So, what you need to know is what principles, and what behaviours the rich have, that you don’t (yet). Some of them you will realize that you know, but don’t do. None of this is actually rocket science, it’s about understanding and then doing. I’ve studied a lot of wealthy people and it’s clear to me that there are some fundamental common principles followed by almost all. The bulk of the Rules in this book fall into that category. Then there are also some principles which some rich people swear by, but not all. I’ve included some of those too for good measure, just in case you too are one of the people they do the trick for.
Security, comfort, luxuries, mobility, status, influence, freedom, leisure, popularity, philanthropy – that’s all some people think about. They may not be everything, they may not even guarantee a happy life, but they’re a pretty good basis to build happiness on.
I’ve tried to set out in this book the most important Rules that will help you achieve these ten things. All of them purport to be about accumulating money, and of course in a sense they are, but at heart they’re about money only as a means to an end. A means to achieve those ten ends.
Of course I don’t claim that these hundred or so Rules are the only means to these particular ends. You may encounter others along the way that you find helpful. If so, please do feel free to share them. You can post your very own Rules on my Facebook page at www.facebook.com/richardtemplar
Richard Templar
Acknowledgements
I would like to thank Dan Clayden, director of Clayden Associates – Independent Financial Advisers (www.claydenassociates.co.uk) who was so kind as to go through a draft of this book in the early stages and put me right on a few things and is one of the best financial advisers I have ever met professionally.
I would also like to dedicate this book to my delightful father-in-law who manages his money in a kind, generous, honest and moral way and still manages to make it work for him efficiently and expertly. He is an example to all of us. He is a Rules Player par excellence.
Money is a concept. You can’t really see or touch it (unless you are holding a gold bar in your hand). You can only do that with some physical symbol of it like bank notes or a cheque. Bits of paper, yes, but bits of paper with enormous power.
The concept of money comes with a lot of baggage to most of us. We have an inherent belief that it is good or bad and that wanting it is good or bad. That loving it is good or bad. That spending it is good or bad.
What I am going to suggest in the first few Rules is that maybe, just maybe, how we think about wealth might be holding us back from having wealth. If, in our heart, we believe (even subconsciously) that money is a bad thing and having lots and lots of it is a really bad thing, then chances are we might be undermining our own efforts, unwittingly, to get lots of it.
I am also going to get you to look at how much effort you are prepared to put into making money. It’s a bit like a sport – the more you practise the better you become. Likewise you can’t make money while being lazy. You’ve got to put in some work here, you know.
You’ve also got to know pretty intimately what you want, why you want it, how you think you are going to get it, what you are going to do with it after you’ve got it – stuff like that. No one said this was going to be easy...
RULE 1
Anybody can be wealthy – you just need to apply yourself
The lovely thing about money is that it really doesn’t discriminate. It doesn’t care what colour or race you are, what class you are, what your parents did, or even who you think you are. Each and every day starts with a clean slate so that no matter what you did yesterday, today begins anew and you have the same rights and opportunities as everyone else to take as much as you want. The only thing that can hold you back is yourself and your own money myths (see Rule 7).
YOU HAVE THE SAME RIGHTS
AND OPPORTUNITIES AS
EVERYONE ELSE TO TAKE AS
MUCH AS YOU WANT
Of the wealth of the world each has as much as they take. What else could make sense? There is no way money can know who is handling it, what their qualifications are, what ambitions they have or what class they belong to. Money has no ears or eyes or senses. It is inert, inanimate, impassive. It hasn’t a clue. It is there to be used and spent, saved and invested, fought over, seduced with and worked for. It has no discriminatory apparatus so it can’t judge whether you are ‘worthy’ or not.
I have watched a lot of extremely wealthy people and the one thing they all have in common is that they have nothing in common – apart from all being Rules Players of course. The wealthy are a diverse band of people – the least likely can be loaded. They vary from the genteel to the uncouth, the savvy to the plain stupid, the deserving to the undeserving. But each and every one of them has stepped up and said, ‘Yes please, I want some of that’. And the poor are the ones saying, ‘No thank you, not for me, I am not worthy. I am not deserving enough. I couldn’t. I mustn’t. I shouldn’t’.
That’s what this book is about, challenging your perceptions of money and the wealthy. We all assume the poor are poor because of circumstances, their background, their upbringing, their nurture. But if you have the means to buy a book such as this and live in comparative security and comfort in the world then you too have the power to be wealthy. It may be hard. It may be tough but it is doable. And that is Rule 1 – anyone can be wealthy, you just need to apply yourself. All the other Rules are about that application.
RULE 2
Decide on your definition of wealth
So, what, to you, is wealth? This is one you have to sit down and work out in advance if you are going to get wealthy. My observation is that wealthy people invariably have worked this one out. They know exactly what, to them, wealth means.
I have a wealthy and extremely generous friend who says that he knew long ago when he was starting out in business that he would consider he had made enough when he wasn’t living off the money he had amassed (which we will call his capital). Nor would he be living off the interest on his capital. No, he would consider himself wealthy when he was living on the interest on the interest on his capital. Sounds good to me.
Now, this friend knows how much his interest on the interest is making him, pretty much by the hour. Thus if we all go out for a meal in the evening he knows (a) how much the meal has
cost and (b) how much he has made while eating the meal. He says that as long as (b) is more than (a), then he is happy.
This is setting the definition of wealth pretty high, you might think. Maybe you wouldn’t want to set it this high. And that’s fine of course. Then again, maybe you’d want to put some kind of figure on it. In the old days everyone wanted to be a millionaire. That was an easy one to judge if you’d got there or not. Today there are a lot of people who have houses worth more than that and they wouldn’t consider themselves wealthy at all and yet haven’t quite got around to upping the ante to wishing themselves billionaires.*
My own definition, for comparison, is having enough so that I don’t have to worry about having enough. How much is that? I never know. There always seems to be more to worry about – and less coming in. But seriously, I feel that I have been ‘comfortable’ since I started counting in thousands rather than in pounds. I know to the nearest thousand how much I’ve got, how much I need and how much I can spend.
For some people, not worrying might mean having enough to pay for any emergency that might arise in their family or home. So how will you define it? By the number of cars you own? Servants? Cash in the bank? Value of your house? Portfolio of investments? There are, of course, no right or wrong answers, but I do feel that until you’ve worked this one out you shouldn’t read on. If we don’t have a target we can’t take aim. If we don’t have a destination we can’t leave home or we’ll be driving around in circles for hours. If we don’t have a definition how can we monitor or judge success? If we don’t do this how will you know if this book has been helpful to you?
IF WE DON’T HAVE A
DEFINITION HOW CAN
WE MONITOR OR JUDGE
SUCCESS? IF WE DON’T DO
THIS HOW WILL YOU KNOW
IF THIS BOOK HAS BEEN
HELPFUL TO YOU?
* Sorry, but to me a billion is a million million and I won’t be persuaded otherwise.
RULE 3
Set your objectives
By defining what you mean by wealth, you now have a destination. Setting your objectives is establishing a timetable to reach that destination. It’s quite simple. If you know you are going to drive to a certain place it makes sense to know:
The Rules of Wealth Page 1