Wealth File #15
Rich people have their money work hard for them. Poor people work hard for their money.
If you’re like most people, you grew up being programmed that you “have to work hard for money.” Chances are good, however, that you didn’t grow up with the conditioning that it was just as important to make your money “work hard for you.” No question, working hard is important, but working hard alone will never make you rich. How do we know that? Take a look in the real world. There are millions—no, make that billions—of people who slave away, working their tails off all day and even all night long. Are they all rich? No! Are most of them rich? No! Are a lot of them rich? No! Most of them are broke or close to it. On the other hand, whom do you see lounging around the country clubs of the world? Who spends their afternoons playing golf, tennis, or sailing? Who spends their days shopping and their weeks vacationing? I’ll give you three guesses and the first two don’t count.
Rich people, that’s who! So let’s get this straight: the idea that you have to work hard to get rich is bogus! The old Protestant work ethic states “a dollar’s work for a dollar’s pay.” There’s nothing wrong with that adage except that they forgot to tell us what to do with that “dollar’s pay. ”Knowing what to do with that dollar is where you move from hard work to smart work. Rich people can spend their days playing and relaxing be-cause they work smart. They understand and use leverage. They employ other people to work for them and their mone yto work for them. Yes, in my experience, you do have to work hard for your money. For rich people, however, this is a temporary situation.
For poor people, it’s permanent. Rich people understand that “you” have to work hard until your “money” works hard enough to take your place. They understand that the more your money works, the less you will have to work. Remember, money is energy. Most people put work energy in and get money energy out. People who achieve financial freedom have learned how to substitute their investment of work energy with other forms of energy. These forms include other people’s work, business systems at work, or investment capital at work. Again, first you work hard for money, then you let money work hard for you. When it comes to the money game, most people don’t have a clue as to what it takes to win. What’s your goal? When do you win the game? Are you shooting for three square meals a day, $100,000 a year in income, becoming a millionaire, becoming a multimillionaire? At the Millionaire Mind Intensive Seminar, the goal of the money game we teach is to “never have to work again... unless you choose to” and that if you work, you work “by choice, not by necessity.” In other words, the goal is to become “financially free” as quickly as possible. My definition of financial freedom is simple: it is the ability to live the lifestyle you desire without having to work or rely on anyone else for money. Notice there is a good chance that your desired lifestyle is going to cost money. Therefore, to be “free,” you will need to earn money without working. We refer to income without work as passive income. To win the money game, the goal is to earn enough passive income to pay for your desired lifestyle. In short, you become financially free when your passive income exceeds your expenses. I have identified two primary sources of passive income.
The first is “money working for you.” This includes investment earnings from financial instruments such as stocks, bonds, T-bills, money markets, mutual funds, as well as owning mortgages or other assets that appreciate in value and can be liquidated for cash. The second major source of passive income is “business working for you.” This entails generating ongoing income from businesses where you do not need to be personally involved for that business to operate and yield an income.
Examples include rental real estate; royalties from books, music, or software; licensing your ideas; becoming a franchisor; owning storage units; owning vending or other types of coin-operated machines; and network marketing, to name just a few. It also includes setting up any business under the sun or moon that is systematized to work without you. Again, it’s a matter of energy. The idea is that the business is working and producing value for people, instead of you.
Network marketing, for example, is an amazing concept. First, it doesn’t usually require you to put up a lot of up-front capital. Second, once you’ve done the initial work, it allows you to enjoy ongoing residual income (another form of income without you working), year after year after year. Try creating that from a regular nine-to-five job! I can’t overemphasize the importance of creating passive income structures. It’s simple. Without passive income you can never be free. But, and it’s a big but, did you know that most people have a tough time creating passive income? There are three reasons. First, conditioning. Most of us were actually programmed not to earn passive income. When you were somewhere between thirteen and sixteen years old and you needed money, what did your parents tell you? Did they say, “Well, go out there and earn some passive income?” Doubtful! Most of us heard, “Go to work,” “Go get a job,” or something to that effect. We were taught to “work” for money, making passive income abnormal for most of us. Second, most of us were never taught how to earn passive income. In my school, Passive Income 101 was another subject that was never offered. This time I got to take woodworking and metalworking (notice both still entailed “working”) and make the perfect candleholder for my mom. Since we didn’t learn about creating passive income structures in school, we lear nedit elsewhere, right? Doubtful. The end result is that most of us don’t know much about it, and therefore don’t do much about it. Finally, since we were never exposed to or taught about passive income and investing, we have never given it much attention. We have largely based our career and business choices on generating working income. If you understood from an early age that a primary financial goal was to create passive income, wouldn’t you reconsider some of those career choices? I’m always recommending to folks choosing or changing their business or career to find a direction where generating streams of passive income is natural and relatively easy. This is especially important today because so many people work in service businesses where they have to be there personally to make money. There’s nothing wrong with being in a personal service business, other than that unless you get on your investment horse pretty soon and do exceptionally well, you’ll be trapped into working forever. By choosing business opportunities that immediately or eventually produce passive income, you’ll have the best of both worlds—working income now and passive income later. Refer back a few paragraphs to review some of the passive business income options we discussed. Unfortunately, almost everyone has a money blueprint that is set for earning working income and against earning passive income. This attitude will be radically changed after you attend the Millionaire Mind Intensive Seminar, where using experiential techniques, we change your money blueprint so that earning a massive passive income is normal and natural for you. Rich people think long-term. They balance their spending on enjoyment today with investing for freedom tomorrow. Poor people think short-term. They run their lives based on immediate gratification. Poor people use the excuse “How can I think about tomorrow when I can barely survive today?” The problem is that, eventually, tomorrow will become today; if you haven’t taken care of today’s problem, you’ll be saying the same thing again tomorrow too.
To increase your wealth, you either have to earn more or live on less. I don’t see anyone putting a gun to your head telling you the house you have to live in, the kind of car you have to drive, the clothes you have to wear, or the food you have to eat. You have the power to make choices. It’s a matter of priorities. Poor people choose now, rich people choose balance. I think about my in-laws. For twenty-five years my wife’s parents owned a variety store, a low-end version of a 7-Eleven and a lot smaller. Most of their income came from the sale of cigarettes, candy bars, ice cream bars, gum, and sodas. They didn’t even sell lottery tickets in those days. The average sale was less than a dollar. In short, they were in a “penny” business. Still, they saved most of those pennies. The didn’t eat out; they didn’t buy fancy clothes; they didn’t drive the latest car. They lived comfortably but modestly and eventually paid off their mortgage and even bought half of the plaza the store was located within. At the age of fifty-nine, by saving and investing “pennies,”my father-in-law was able to retire. I hate to be the one to have to tell you this, but for the most part, buying things for immediate gratification is nothing more than a futile attempt to make up for our dissatisfaction in life. More often than not, “spending” money you don’t have comes from “expending” emotions you do have. This syndrome is commonly known as retail therapy. Overspending and the need for immediate gratification have little to do with the actual item you’re buying, and everything to do with lack of fulfillment in your life. Of course, if overspending isn’t coming from your immediate emotions, it arises from your money blueprint. According to Natalie, another of our students, her parents were the ultimate cheapskates! They used coupons for everything.
Her mother had a file box full of coupons all sorted by category. Her father had a fifteen-year-old car that was rusting, and Natalie was embarrassed to be seen in it, especially when her mom picked her up from school. Anytime she got in the car, Natalie prayed that no one was looking. On vacation, her family never stayed in a motel or hotel; they didn’t even fly, but drove eleven days across the country and camped the whole way, every year! Everything was “too expensive.” The way they acted, Natalie thought her parents were broke. But her dad earned what she believed was a lot of money at the time, $75,000 a year. She was confused. Because she hated their stingy habits, she became the opposite. She wanted everything to be high-class and expensive. When she moved out on her own and started making her own money, she didn’t even realize it, but in a flash, she had spent all the money she had, and then some! Natalie had credit cards, membership cards, you name it. She racked up all of them to the point where she couldn’t even pay the minimums anymore! That’s when she took the Millionaire Mind Intensive Seminar, and she says it saved her life. At the Millionaire Mind Intensive, during the section where we identify your “money personality,” Natalie’s whole world changed. She recognized why she had been spending all her money.
It was a form of resentment toward her parents for being so cheap. It was also to prove to herself and the world that she wasn’t cheap. Since the course, with her blueprint changed, Natalie says she no longer has the urge to spend her money in “stupid” ways. Natalie related she was recently walking through a mall and noticed this gorgeous light brown suede and fur coat hanging in the window display of one of her favorite stores. Immediately her mind said, “That coat would look great on you, especially with your blond hair. You need that; you don’t have a really nice, dressy winter coat.” So she walked into the store, and as she was trying it on, she noticed the price tag,$400. She had never spent that much on a coat before. Her mind said, “So what, the coat looks gorgeous on you! Get it. You’ll make the money up later.” This is where she says she discovered how profound the Millionaire Mind Intensive is. Almost as soon as her mind suggested that she buy the coat, her new and more supportive mind “file” came up and said, “You’d be much better off putting that four hundred dollars toward your FFA account! What do you need this coat for? You already have a win tercoat that’s okay for now.” Before she knew it, she was putting the coat on hold until the next day instead of buying it right there in the moment as usual. She never went back to get the coat. Natalie realized that her mental “material gratification” files had been replaced with “financial freedom” files. She wasn’t programmed to spend anymore. She now knows it’s fine to take the best of what her parents modeled for her and save money, and at the same time, to treat herself to nice things with her play account. Natalie then sent her parents to the course so they could be more balanced as well. She’s thrilled to report, they now stay in motels (not hotels yet), they bought a new car, and in learning how to make their money work for them, they’ve retired as millionaires. Natalie now understands that she doesn’t have to be as “cheap” as her parents were to become a millionaire.
But she also knows that if she spends her money unconsciously as before, she’ll never be financially free. Natalie said, “It feels amazing to have my money and my mind under control.” Again, the idea is to have your money work as hard for you as you do for it, and that means you have to save and invest rather than make it your mission in life to spend it all. It’s almost funny: rich people have a lot of money and spend a little, while poor people have a little money and spend a lot. Long-term versus short-term: poor people work to ear nmoney to live today; rich people work to earn money to pay for their investments, which will pay for their future. Rich people buy assets, things that will likely go up in value.
Poor people buy expenses, things that will definitely go down in value. Rich people collect land. Poor people collect bills. I’ll tell you the same thing I tell my kids: “Buy real estate. ”It’s best if you can purchase property that can produce positive cash flow, but as far as I’m concerned, any real estate is better than no real estate. Sure, real estate has its ups and downs, but in the end, be it five, ten, twenty, or thirty years from now, you can bet it will be worth a heck of a lot more than it is today, and it could be all you need to get rich. Buy what you can afford now. If you need more capital to get involved, you can partner with people you trust and know well. The only way to get in trouble with real estate is too verextend yourself or have to sell in a down market. If you heed my earlier advice and manage your money properly, the likelihood of this happening will be extremely slim and like lynone. As the saying goes, “Don’t wait to buy real estate, buy real estate and wait.”
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