Secret of the Millionaire Mind: Wealth File #15 Rich People have Their Money Work Hard for Them

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 #15:

Rich People have Their Money Work Hard for Them.

Poor People* Work Hard for Their Money.

“The more your money works, the less you will have to work,” said Harv Eker. The idea that you have to work hard to get rich is “bogus”! Eker suggests that if you want to be rich, let your money works for YOU. The magic word is working smart. That’s what the rich people have mastered, he said. The rich no doubt has to work hard, but only temporary. They work hard like everybody else but they think long-term and what they do with their money is smart – they save it to invest it later. First, they work hard for their money and later, they let their money work hard for them. Why do they do that? Because they want to be financially free!

“My definition of financial freedom is simple,” writes Eker, “It is the ability to live the lifestyle you deserve without having to work or rely on anyone else for money.” How is that possible? He said you need passive income. In short, you become financially free when your passive income exceeds your expenses (Income > Expense). There are two primary sources of passive income outline this wealth file. The first is “money working for you.” This includes investment earnings from financial instruments such as stocks, bonds, or other assets that “appreciate in value and can be liquidated for cash. Assets are the key here. These are investments in things that (hopefully) gain value over time.” Like buying land and selling it at a later point (when it has gained value).

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. An example of this would be buying real estate and rent it out. “The idea of passive income is to generate income without having to actually work. Yes, this is possible!” Eker emphasis this: “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.” You have the power to make choices. It’s a matter of priorities. “Poor people think now, rich people think balance.”

So, make the right choices and save some money today so you can invest tomorrow and be financially free the day after tomorrow. Like what Eker said, “Rich people see every dollar as a ‘seed’ that can be planted to earn a hundred more dollars, which can then be replanted to earn a thousand more dollars.” Awesome! From what I’m reading, that how the rich got rich! Hard work today, smart work tomorrow, and no work the day after tomorrow… pretty cool, right?

[*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!

Secret of the Millionaire Mind: Wealth File #14 Rich People Manage Their Money Well

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 #14:

Rich People Manage Their Money Well.

Poor People* Mismanage Their Money Well.

Thomas Stanley, in his best-selling book, The Millionaire Next Door, surveyed millionaires and one of the results of his finding can be summed up in one short sentence: “Rich people are good at managing their money.” Rich people are not any smarter than poor people*, they just have different and more supportive money habits. That’s important! Not smarter, but know how to manage their money. The issue is not intellect, but habit and action. To put it simply: To master money, you must manage money! And to manage money to you need to take action – learn, learn, learn, and try, try, try.

The saying, “I’ll start managing my money as soon as I get caught up” is like an overweight person saying, “I’ll start exercising and dieting as soon as I lose 10kg.” It’s putting the cart before the horse, which leads to going nowhere, or worst, backward! First, you have to start properly handling the money you have or as Harv Eker puts it, “Until you show you can handle what you’ve got, you won’t get any more!” If your son couldn’t handle his Vespa (the Italian scooter), would you buy him a motorbike? Since Eker wrote this book in a very straightforward way, let me also do the same… to put it bluntly: Don’t be stupid and wait for having much money to manage, you’ll die waiting! Start right now with what you got. Every master once started small. “The habit of managing your money,” reminds Eker, “is more important than the amount.”

A Universal Law goes like this: Until you show you can handle what you’ve got, you won’t get any more. This is also true in how we manage our money, even if we only have little. Again, to make the question more personal, if you can’t even handle little money, why would you get more? What does matter is that you immediately begin to manage what you’ve got and you’ll be in shock at how soon you get more. Okay, so how can you do that? Eker advices the readers to create six (6) accounts (first two are most important):

Financial Freedom Account – 10%

Play Account – 10%

Long-Term Savings for Spending Account – 10%

Education Account – 10%

Necessities Account – 50%

Give Account – 10%

I’m not following exactly what Eker suggested here. The main point is: Manage your money. Or as the author reminds his reader, “Either you control your money, or it will control you.” To control money, manage it. He continues, “Money is a big part of your life, and when you learn how to get your finances under control, all areas of your life will soar.” I regret that I was doing the opposite a few years ago. It’s not too late, you and I can start now! Check your wallet now, if you have RM10 in it, put RM1 into your Financial Freedom Account. Start small, start now.

[*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!

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!

Secret of the Millionaire Mind: Wealth File #12 Rich People Think "Both"; Poor People Think "Either/Or"

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 #12:

Rich People Think “Both.”

Poor People Think “Either/Or.”

As Harv Eker puts it, rich people live in a world of abundance, poor people live in a world of limitations. Many believe money and happiness are mutually exclusive, that either you can be rich or you can be happy. Again, this is nothing more than “poor” mentality programming. Do you want a successful career or a close relationship with your family? Seriously, think about it. What do you choose? The poor* will choose one. But why? Why you need to choose between the two? Why not both? The rich – the wise ones, of course – choose both. Be smart and choose both!

Do you want to focus on business or have fun and play? Both! Do you want money or meaning in your life? Both! Do you want to be rich or happy? Both! I choose both! You see, poor people always choose one. Poor people* feel that there is not enough and you can’t have everything. There is truth in that. Rich people, on the other hand, think there is plenty for everybody and you can have everything you truly want. You can’t have everything but you can have what you want. It’s possible. Poor people believe in scarcity; rich people believe in abundance. The difference couldn’t be bigger! Do you have to choose between wealth and happiness? No, of course not! Money is important and happiness is important. You can have both. Eker puts it in proper perspective: “Money enables you to ‘slide’ through life instead of having to ‘scrape’ by. Money brings freedom.” It can’t give or buy you freedom, but it can bring you freedom and make you smile.

Harv Eker writes, “If I can be an example for anything, it would be that you can be a kind, loving, caring, generous, and spiritual person and be really frickin’ rich… My friends, being kind, generous, and loving has nothing to do with what is or isn’t in your wallet. Those attributes come from what is in your heart.” Did you hear (or to be exact, read) that? It’s all about you! There we are again. I already cover this in the previous posts…. Money can’t make you someone you already are. You are who you are no matter what is or isn’t inside your wallet or bank account. So, you can be happy and you can be rich! You can choose both – I choose both. Yes, we can. Life is abundance. Yeah!

[*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!

Secret of the Millionaire Mind: Wealth File #11 Rich People Choose to Get Paid Based on Results

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 #11:

Rich People Choose to Get Paid Based on Results.

Poor People* Choose to Get Paid Based on Time.

Harv Eker writes, “There’s nothing wrong with getting a steady paycheck unless it interferes with your ability to earn what you’re worth. There’s the rub. It usually does.” Wealth Rule #1: Never have a ceiling on your income. If you choose to get paid for your time, you are pretty much killing your chances for wealth, says the author. A steady paycheck is safe. A steady paycheck is also a ceiling on your income. A steady paycheck is killing your chances for wealth…

If you want to become rich, work for yourself or at least work on commission or percentage. That’s the only way you can get paid based on results write Eker. Maybe it seems less safe but it’s certainly how you can earn more money. And it’s the only way to get rich. It’s how you can earn what you’re worth. And living based on security (like a safe, steady paycheck) is living based on fear. What you’re actually saying is, “I’m afraid I won’t be able to earn enough based on my performance, so I’ll settle for earning just enough to survive or to be comfortable.”

Eker asks his readers: Who should get paid more, a good or a bad lawyer? I guess we’re all clear on that – the more you deliver, the more you should get paid. In a 9 to 5 job though, everybody is paid the same. Everybody is paid based on the time they “work.” He puts work in quotation mark became he thought it’s less about the work and more about the time… Again. Harv Eker is completely clear on that: If you want to get rich, you work for yourself!

[*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!