Saturday, January 12, 2019

Secret of the Millionaire Mind: Wealth File #13 Rich People Focus on Their Net Worth

This is a chapter-by-chapter summary of a book by T. Harv Eker’s Secret of the Millionaire Mind: Mastering the Inner Game of Wealth (2005) series. One chapter, one article. Read this summary, buy the book. Enjoy!

Wealth File #13:
Rich People Focus on Their Net Worth.
Poor People* Focus on Their Working Income.

The true measure of wealth is net worth, not working income,” said Harv Eker, “Always has been, always will be. Net worth is the financial value of everything you own. This may sound a well-off or only for the rich - but it’s valid.” Eker explains that there are four net worth factors: #1 Income; #2 Savings; #3 Investments; and #4 Simplification.

#1 Income. Income comes in two forms: Working Income and Passive Income. You all know what the working income is, you go to work and you earn money for your work (or time, as discussed in previous posts earlier). You’ve probably also heard of passive income. This is money you earn without actively working (We’ll discuss that in more detail in Wealth File #15). Working and passive income together make your income (for most people it’s just working income).

#2 Savings. You can earn massive amounts of money, but when you spend it all, you have zero savings. Many people have a financial blueprint that is wired for spending (I’m guilty). These people spend everything they have no matter how much they earn. That’s what Eker called the Parkinson’s Law: Expenses will always rise in direct proportion of income. “That’s why income alone will never create wealth.” That certainly makes sense. We need to make savings.

#3 Investments. Because of savings, we can make investments, another piece of the net worth puzzle. Rich people take time and energy to learn about investing and investments. Poor people* think investing is only for the rich people, so they never learn about it and stay broke.

#4 Simplification. The fourth net worth factor is simplification. This is about saving money by leading a ‘cheaper’ lifestyle. By decreasing your cost of living, you increase your savings and the amount of funds available for investing.

For more details about each factors of net worth, please refer to the book. In short, Eker explains that “rich people understand that buildings a high net worth is an equation that contains all four elements: Income, savings, investments and simplification.” We can raise our income either through promotions and/or by increasing our value. We all also can save more money. Follow the 50:30:20 Rule, spending 50% on needs, 30% on wants, and allocating 20% to savings (find out other Rules from the internet. Choose what’s suitable for you). We too can learn about investments and spend less money on our lifestyle. As Eker said, “To increase your wealth, you either have to earn more or live on less.”

[*I need to note that the Harv Eker makes it clear in this book that he does not mean to degrade poor people. He does not think that rich people are better than poor or middle-class people. They’re just richer.]

I Have A Millionaire Mind!

No comments:

Post a Comment

Top 10 Most Read Idea(s) Last 7 Days


Thinking Creative Question Action Change Your Life Essential Thinker Series Focus Positive Secrets of the Millionaire Mind Harv Eker Success Attitude Choice Learning Nurture Creativity Play Mindset Perspective Time Experience Habit Observation Curious Different Failure Hardworking How-to Generate Ideas Imagination Problem-Solving Wealth 12 Rules for Life Children Inspiration Jordan Peterson Relax Rich Break the Rules Change Perseverance Reading Risk-Taker Seeing Albert Einstein Barriers to Creativity Confidence I Wonder Series People The Subtle Art of Not Giving A F*ck (Mark Hanson) Connection Happiness Money Possibilities The 7 Habits of Highly Effective People Thought With Winning In Mind Asking Books Character Characteristics of Creative Person Is Technology Changing Our Brains Knowledge Practical Process Writing Believe Challenge Childlike Criticism How to Choose Optimism How to Nurture Your Child to Be Creative Innovative Listening Purpose Relationship Responsibility Story of Idea Thomas Edison Value 7 Climate Facts You Need to Know Communicate Control Enjoy Freedom Fun Idea-Quote Meaning Mistakes Open Mind Opportunity Optimistic Original Resourceful Roger von Oech Talent As A Man Thinketh Combination Commitment Discovery Don't Give Up Dream Energetic Environment Friendship Genius Give Up Growth Leonardo da Vinci Picture Playground Quiet Space Random Reason Start With Why (Simon Sinek) Steve Jobs Understand Walk Wisdom Yew Kam Keong Ability Ambiguity Behavior Crazy Daydreaming Decision-Making Example Facts about Creativity Faith Fear Feeling Goal Hearing Humour Improvement Independence Intuition Isaac Newton Lead Love Motivated Nature Non-Conformist Passion Potential Respect Savor Life Self-Image Stephen R. Covey The Power of Habit Word Alternative Application Awareness Common Blocks to Creativity Conversation Discipline Dynamic Emotion Encouragement Expectation Feedback Flexibility Idealistic Jack Foster Leader Logic Mindful Music Negative Performance Persistence Physical Reinforcement Result Right Answer Sixth Sense Society Talking The Human Body Tony Buzan Vincent Ryan Ruggiero Vision Adventurous Appreciate Attention Be Yourself Beautiful Christopher Columbus Conscious Daring Desire Edward de Bono Empathy Excuses Exercise Financial Galileo Goodness Hardship Help Henry Ford How to Be Innovative Humble IQ Jesus Kindness Laugh Let's Get Started! Memory Mental Rehearsal Michael J. Gelb Multitasking Nicolaus Copernicus Patient Pen and Paper Planning Power Praise Prejudice Proactive Progressive Quality Reality Recording Rejection Routine Sharing Simplicity Sleep Social Media Stand Firm Starbuck Stimulate Strength Stress Studying The Internet Theology Think like A Fool Touching Unpopular Usefulness Victor Hugo What If Win-Win Zig Ziglar 6 Common Creative Killers 9 Types of Intelligence A. Samad Said Affirmation Alexander the Great Aristotle Association Assumption Austin Kleon Balance Benedict de Spinoza Benjamin Franklin Bette Nesmith Graham Bill Gates Blessing Brainstorming Business Carpe Diem Chaos and Order Cicero Colonel Sanders Compliance Concentration Contribute Copernicus David Hume Descartes Desiderius Erasmus Development Diversity Don't Try Download Drug Elaboration Eleanor Roosevelt Enthusiasm Error Ethics Eurika Experiment Explore Extrovert Fluency Francis Bacon Free Book Generalist Giving Back Heroes Hopeful Hormones How to Spark Your Creative Mind How-to Maximizing a New Idea Howard Schultz Hunting Illustration Information Integrity Intention Interruption Introvert Investment James Webb Young Jason Mraz Jean-Jacques Rouseau Jim Carrey Jogging John Locke Jurgen Wolff Juxtapositions Legacy Leon Ann Mean Leon Trotsky Light Liquid Paper Machiavelli Management Manifestation Manipulation Marcus Aurelius Mark Zurkerberg Martin Luther Marty Neumeier Maturity Mental Mihaly Csikszentmihalyi Mind Maping Miracles Mission Statement Modeling Money Blueprint Mood Move On My Top 17 Book on Innovative and Creativity Lists Navigation Skills Niccolo Machiavelli Offline Ontology Ordinary Pablo Picasso Pain Paracelsus Paradigm Paradox of Creative People Parenting Passive Income Peace Perception Philosophy Plato Political Practice Priority Privacy Procrastination Productivity Promote Pythagoras of Samos Rational Rebellious Receiving Reformer Rene Descartes Resilience Resource Myopia Rest Reverse Robert Korn Running Safe Saving Say No Scientific Method Scott Belsky Self-Gratification Selling Seneca Skeptic Slow Down Smelling Social Skills Socrates of Athens Soichiro Honda Specialist Spider-Man St Anselm St Augustine of Hippo St Thomas Aquinas Steal like An Artist Stubborn Suffering Synergize Tasting Technology Thales of Miletus The Creative Environment The Empiricist The Mozart Effect Thomas More Tok Nan Toy Tradition Truth Uniformity Unique Universe Unorthodox Volunteer Walt Disney Wildlife Wonder Xenophanes of Colophon