The Rules of Wealth

by Richard Templar

  Of course you can cast an envious glance at the easy three – lottery, inherited, married (or divorced!) into – we all do. But money earned is entirely the business of the person earning it. They did the work. They had the idea or entrepreneurial spirit. They got up earlier than us. They were driven or fired up by what they wanted to achieve. Envying them is pointless; learning from them is invaluable.

  And learning from them is the greatest gift they can give us. Ideally you need a money mentor. Someone you look up to who has made a lot of money and in the right way – legally, enjoyably and nicely – who will give you the odd tip, tuck you under their wing, set you on the right path. And refuse to lend you any money of course. Not that you’d ask.

  If I come across someone extremely rich, I immediately try to work out how they did it and if that route would suit me. What bits of information could I glean to help me get to that position, bearing in mind I only want to do it right – legally and enjoyably?

  I think 90 per cent of getting these Rules right is to approach getting wealthy as sympathetic magic – do as they do and you’ll end up as them.

  I have my money mentor and I hang on to his every word when it comes to money as he’s living on the interest on the interest on his money – and that’s the place I’m heading for.

  Use other people as a source of inspiration. Besides, envy is not a characteristic of a Rules Player – that’s you now, by the way.

  ENVYING THEM IS POINTLESS;

  LEARNING FROM THEM IS

  INVALUABLE

  RULE 19

  It’s harder to manage yourself than it is to manage your money

  So how well do you know yourself? Pretty well? Not at all? Vaguely? We think we know ourselves until we come to give up smoking, lose weight, get fit, get rich. And then we realize we are lazier, have less willpower, less determination, make less effort, get too easily dissuaded, fall by the wayside too readily.

  If I wanted to tuck you under my wing and make you wealthy, the first thing I would need to know is: ‘Do you have what it takes to be wealthy? Are you determined enough? Will you work hard enough? Will you stick at it? Do you have backbone? Stamina? Guts? Relentless focus?’ You see, if you don’t, the chances are you won’t succeed. I’m not trying to put you off. I am trying to make you see that making money is a skill that can be taught – as long as the person is ready and willing to learn and apply themselves diligently.

  THE FIRST THING I WOULD

  NEED TO KNOW IS: ‘DO

  YOU HAVE WHAT IT TAKES

  TO BE WEALTHY?’

  If you decided you wanted to win Wimbledon you would have needed to start playing tennis when you were about five and have been winning junior championships by the time you were fourteen. It’s the same with money. You can’t expect an overweight, middle-aged person to suddenly be in the final.

  When I was a young struggling student I once sold a valuable book so I could eat. I made a direct choice between owning something that was going to increase in value, and thus potentially make me wealthy, and having a slap-up meal for one. You see what I mean? I, in essence, chose – at that time anyway – to be poor rather than wealthy. I saw the same book recently in a bookshop and, believe me, I made a bad call that day.

  And what I have noticed is that the wealthy – when they are starting out anyway – have enormous drive and are prepared to make enormous sacrifices. They manage themselves and forgo instant rewards for bigger payback in the longer term. Self-control and delayed gratification are useful arts to learn.

  We’ve entered the dark uncharted waters of Part Two. This is where we get serious. This is where we start the real practical stuff. This is where you have to start taking a good hard look at your situation, doing some planning and taking some action.

  Getting wealthy means being very honest with yourself and being willing to invest your time and efforts into the quest for greater prosperity. Many of the Rules are behavioural and changing your behaviour is never easy. Some Rules will seem stunningly simple, but for every Rule you have to ask yourself: ‘I may already know this – but do I do it?’ The willingness to put in the graft and do something, make things happen, is vital.

  RULE 20

  You’ve got to know where you are before you start

  Before we can go forward we have to know where we are now. Or rather you have to. When Robinson Crusoe swam ashore from his shipwrecked boat, the first thing he did was check out what stores and guns and ammunition he had. Once he knew that, he could assess the situation and move forward.

  WE HAVE TO KNOW

  WHERE WE ARE NOW

  So you are going to swim ashore and begin your new life. The first thing you have to do is to take stock. Find out what you’ve already got, what can be used, what can be discarded or discounted, what you owe, what you are owed, what basically is your net worth.

  We’re going to do a full financial audit on you and your life. If you don’t know where you are before you start, you can’t really work efficiently towards becoming wealthy. It’s a wise man who lays out his tools before he begins the job.

  Here’s your check list. It may need adapting to suit your individual circumstances. Start with the big figures to get a picture of where you are right now overall:

  Now you have an overall figure, you need to look at your typical inflow and outflow of cash on a monthly or annual basis – you can choose which you assess, but all figures have to be made either monthly or annual.

  This may not be ideal for your circumstances but I’m sure you get the idea. Don’t be tempted to skip this exercise. Even if your financial situation is none too rosy, it’s good to face up to reality so you can take positive action to address the situation.

  RULE 21

  You’ve got to have a plan

  Why are a fool and his money so easily parted? Because the fool doesn’t have a plan. If you don’t have a plan you’ll be tempted to fritter your cash away, spend it instead of investing, or forget the new business idea or career move. If you have a plan you know exactly what does and what doesn’t fit into it.

  The last Rule helped you work out where you are now, and you already know where you’re going (your objective). The plan gives you the important bit – how you are going to get there. Back to the Robinson Crusoe analogy. Once he had been shipwrecked and taken stock he made a plan. ‘I’ll need a shelter to keep warm, some food, and something to do.’ And he set about building a thatched shelter on the beach, which of course got blown over in the first gale and he had to retreat inland to a cave. You see, even the best plans have to be open to adjustment.

  THE PLAN GIVES YOU THE

  IMPORTANT BIT – HOW YOU

  ARE GOING TO GET THERE

  First things first. If you have a job you love and are happy then you’ll probably want to stick at it. If it doesn’t make you enough money, you need a plan to generate income another way. If your job is making you miserable and what’s worse keeping you in a poverty trap then you must prioritize getting out of it in your plan.

  Your plan should involve taking financial control of your life. If you have debts, it will definitely include tackling these as a priority, ditto spending excesses. The plan might involve a career change, investigating a business idea, investing money or generating some capital so you can enter the buy-to-let market. It may well include selling things. A lot of money is generated through selling things – whether it’s a product, a service or your time and skill. That’s why I like writing books – even while I sleep there is a bookshop somewhere that is selling books for me. In fact one of the fundamental truths about gettng rich is that wealth – real wealth – comes from doing deals, not from earning wages, salaries or fees.

  As General Patton said, ‘A good plan today is better than a perfect plan tomorrow’. Whatever the plan includes, just make sure you have one, and that you stick to it. Don’t worry, the rest of this book will give you lots of ideas as to what your plan could contain. Just remember: never sit b
ack and wait for somebody to give you money – ever.

  RULE 22

  Get your finances under control

  There’s been a huge fuss made over the last few years in the UK about hosepipe bans. If you live elsewhere this may be a complete mystery. It’s even a mystery to me to be honest. In the UK there are companies that are allowed to collect water in reservoirs and then sell it to householders. The reservoirs have been low recently due to a lack of rain – apparently. If you live in the UK you’ll know that it never stops raining. A lot of the householders are saying that there is a shortage of water because the water utility companies don’t repair their pipes and masses of water leaks away. The poor householders are being told they can’t water their gardens because there isn’t enough water. They say there is enough water and that they are being punished unfairly. See where I’m going with this?

  You may well have enough money but it leaks away before you get to spend it. In a whole variety of ways – taxation, paying interest, lack of use (not invested properly), too much being spent on the wrong things. Before you can control your finances you have to stop the leaks.

  If you carried out the exercise in Rule 20 (of course you did) you’ll have a record of your credit card balances. Higher than you cared to admit? Probably. We are all encouraged to spend on plastic. We are all seduced into racking up debts monthly. If you want to stop the leaks, cut up all the cards and pay them off.*

  BEFORE YOU CAN CONTROL

  YOUR FINANCES YOU HAVE

  TO STOP THE LEAKS

  Do a quick calculation and see what levels of interest you are paying. It’s the same with your mortgage. Make sure you’re not paying more than you have to through negligence. If your fixed rate deal has come to an end it could be time to check out the best deals that are now available.

  Keep a record of everything you spend. Everything. Do this for a short while – even just a week – and see where the leakages are. If you are going to be wealthy, first you have to know where your money is going. Sorry if you thought this was going to be easy or this book was going to be full of get-rich-quick schemes. But stick with me, and you’ll be glad you did.

  When you carry out your financial stock-check, watch out for the hidden things which can easily be overlooked. For instance, direct debits and subscriptions that are too high, wrong or out of date. The rich are eagle-eyed and miss nothing.

  * ‘And spend what?’ I hear you ask. Spend what you can afford on what you have to, and above that spend nothing for a while. Make the choice: wealth or spending sprees. You’ve tried the spending sprees. We all have. Now take the prosperity route and see if it isn’t better. You are only postponing spending, not cancelling it forever. You’ll also be able to spend more later. Look forward to that as you tighten your belt. Think of the better belt you’ll be able to buy.

  RULE 23

  Insurance pays someone, and odds are it’s not you

  Just think this one through with me. Insurance companies set their premiums so that on balance (if not on every contract) they’ll make money. At whose expense? Yours of course. Suppose you pay £100 a year over 10 years, that’ll be £1000 in total. The insurer will have calculated that the odds are they’ll pay out less than £1000 in total for whatever-it-is you’re insuring. In which case it would have cost you less to pay the costs of repairs/replacement/medical care or whatever, than it was to pay your insurance premiums.

  It doesn’t matter what you’re insuring, or who with. This is just the way that insurance companies make their money. Plus they have admin costs, overheads, marketing costs and all the rest to cover, and they’ll have factored those into your premiums too. In fact, most people don’t get back more than two-thirds of the money they pay in insurance, even long term. So it just doesn’t make financial sense to take out insurance on all your pets, property, washing machines and so on.

  Having said that, there are two instances where you are better off taking out insurance. The first is, of course, where it’s a legal necessity, such as driver’s insurance. You just have to swallow that one.

  The other instance is if you don’t have enough in your bank to pay out the lump sum if the worst happens. Say you don’t insure your pet, and then they need an operation costing £1000 – will you be able to find the money all at once? If not, what would you do? Maybe you’ll feel you’d rather pay out more over the years in insurance for the peace of mind it gives you. Then, if Tibbles gets a fishbone stuck in his throat when you’re having a particularly tight month financially, you can still afford the op.

  There are a few tricky ones, such as health insurance, but where you’re insuring property, pets or white goods it’s pretty straightforward. It doesn’t matter what goes wrong with your washing machine, you know the most it can set you back is the cost of a new machine. Could you afford that? If so, you’re wasting your money on insurance.

  Have you added up how much you’re spending every month on insurance premiums? Well, why not? Go and do it now. Now think about what you could do with that money if you weren’t paying for all that insurance. If you just put it in a savings account it would at least earn a little interest.

  And that’s something that the canniest wealth-builders do. If they’re worried about losing the cash flow safety-net of insurance, they cancel their contracts and then ringfence that amount each month in a savings account. If they have a sudden problem with Tibbles or their washing machine or anything else, the money is there for just such emergencies. Meanwhile it still belongs to them, along with the interest, rather than to the insurance company. And that extra third most of us pay out and never get back – well, that’s still theirs too, to spend or save as they wish.

  MOST PEOPLE DON’T GET

  BACK MORE THAN TWO-

  THIRDS OF THE MONEY THEY

  PAY IN INSURANCE, EVEN

  LONG TERM

  RULE 24

  Only by looking wealthy can you become wealthy

  I once watched a man looking at a job vacancy board. He was dressed in scruffy trainers, wore a hood (up), was unshaven and slouched with his hands in his pockets. You just knew he was going to go for job interviews dressed like that – and fail to get them. And then he’d claim it was unfair, nobody would give him a break, life sucks and so on.

  I’ve held many job interviews and have always been seriously under-impressed with the way people turned up. The lack of effort is always staggering – as is the lack of research and interest. ‘Why do you want to work for this company?’ ‘Dunno.’ ‘What do we do here?’ ‘Dunno.’

  I’m trying not to be an old reactionary here. But I can’t fail to notice that the lack of effort is directly related to the lack of results. The poor look poor. Not because they have to. They wear a uniform that marks them out. If they change that uniform they change their circumstances because people will react differently to them. We aren’t too far removed from the great apes and they relate to each other based a lot on how they move and look. Those who look weak and needy are treated as such. The powerful will strut and look confident. What I am suggesting is that you need to look powerful and confident. We should all look powerful and confident.

  Ah, but how can we afford to dress as if we are more wealthy? Come on, come on. I expected better of you. Think laterally. The great apes do it with no clothes at all. It’s about the way you walk rather than what you wear. It’s about the overall image you project.

  YOU NEED TO LOOK

  POWERFUL AND CONFIDENT

  But this doesn’t mean you can get away with dressing inappropriately or badly – anyone can dress smartly. Borrow a decent outfit or buy a good suit cheaply (no, no, don’t buy full price and just put it on your credit card). For the interview for my first casino job, I bought a fabulous jacket from a charity shop – double breasted, wide satin lapels – and proper bow tie you had to tie yourself (none of those rubbish ones on elastic for me). I practised for hours until I got it right and turned up for the first night looking more James Bo
nd than trainee. I made a dramatic impression. Obviously I had got it wrong and had to go and buy a simple black suit from the high street afterwards, but I was remembered as somehow standing out, stylish not scruffy. And I got offered the plum trainee job despite not being in any way qualified for it.

  This stuff works you know. Dress wealthy and people will assume you are and treat you accordingly. Learn style, class, how the wealthy dress. Look poor and you’ll get poor service. And whatever you do, no bling. Yes, rich rap stars can get away with it but you can’t. Nor can I. Restrained elegance is what we shall aim for. Old money. Quality. Simple lines. Good haircut. Clean nails. You know the sort of stuff I mean.

  RULE 25

  Speculate to accumulate (no, this isn’t gambling)

  We all know the actor who achieves overnight fame after one starring role and everyone says how lucky they must have been. Luck? They starred in every school production. Studied at drama school for three years. Worked their socks off in some dreadful soap. Slaved on the stage for the whole run of Mind Your Manners by Agatha Christie. Played an extra in Extras. Did panto every Christmas – playing the pumpkin of course. And finally landed their plum job, their starring role, in some deservedly successful film. And everyone says, ‘How lucky you are!’