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7 Money Habits of the Rich by PAUL ROBINSON

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Excerepts from Paul Robinson's Money Magnetism audio book. To download the full version of the audio program log on to www.learnoutloud.com and search Paul Robinson titles.
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seven money habits of the rich PAUL ROBINSON
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Page 1: 7 Money Habits of the Rich by PAUL ROBINSON

sevenmoneyhabitsof the rich

PAUL ROBINSON

Page 2: 7 Money Habits of the Rich by PAUL ROBINSON

INTRODUCTION

Most of the things we do everyday are just habits. First we make them then they make us. Habits are very powerful because they almost determine 90% of our daily activities and those activities determine the result and outcome in our lives. All of us have money habits. For example ,saving money is a habit just as money spending habits. Surprisingly our money habits will eventually determine whether we are going to end up poor or rich. I know it a profound statement ,but that is just the way it is. The sad fact is that we do not pay attention to our habits.

Let us look at the money habits of the rich. Rich people have different money habits that are completely a contrast to that of poor people. There are few exceptional habits; usually the rich practice them as their way of life. The Rich has seven powerful financial habits. These habits not only make them acquire wealth ,but also help them manage and keep their wealth.

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HABIT ONEPAY YOURSELF FIRST

The first habit is the practice of 'Paying yourself first'

In the best-selling book 'the richest man of Babylon' author George Clawson explains the first principle to wealth as an advice to Arkad from the money lender is “A part of all you earn ,must be yours to keep “In other words the formula is- Pay Yourself First. This is better known as the Babylonian law of financial success.One rule is this; a part of all you earn is yours to keep! More specifically ,what you earn on Monday morning is yours to keep ,so it should go directly into a special account that you do not have easy access to ,not even an ATM card account. This money should go straight to your Financial Freedom Account (FFA).

Some people have fixed income as salaried people and some will have variable income like business people. Whatever may be the income ,a part of your earning is put aside every month to make a fortune matured enough to make an investment in passive income opportunities. Now pause for a moment and ask this question to yourself.

How often do you pay yourself?Less than 5 people in every 100 pay themselves first. And ,if you were to ask the other 95 why they don't ,they would probably tell you that by the time they pay everyone else ,there is nothing left for them! What a typical story of the poor. “There was nothing left for me. There is scarcity”. This will be the biggest lie you can tell it yourself. On the other side ,the rich people have a habit of taking care of themselves first. They know that they are the leading person in their movie. The poor people play the role of an extra in their own movie. That is why they get nothing at the end. In order to become rich you must pay yourself first. Write a check to yourself. Pay your taxes second ,your lifestyle budget third and your bills fourth.

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HABIT TWOSAVING & INVESTING

The Second habit is saving and investing.Why do some people earn 10 times more money in their lifetime than the rest of us? Do they work 10 times harder? Are they ten times smarter? Of course not.

Wealthy people love to save money by spending it wisely. And they invest 10% of what they earn in to their Financial Freedom Account. The importance of this account is that ,this will help you to later invest your money on passive income streaming businesses like rental properties ,mutual funds or stocks.

It is not about how much you make ,it is how much you keep that matters. Many people say 'I don't have enough money to save on the first place.' Well then the question is 'How much is enough?. Saving is not about the money. It is about the habit of saving money. Even if you can save one rupee ,it is a saving habit. If you have debts ,then borrow an extra rupee to save. Even if it is little start saving today. May be with a piggy bank. Take a baby step. If you think when you have plenty of money ,you can manage it. You are wrong. It is when you begin to manage what you have now; you will have plenty of it. Those people ,who get to manage plenty of money today ,were good at managing small amounts of money earlier. You can ask any wealthy person and they will agree on this.

The wealthy people see every penny and money as a seed ,capable of becoming a money tree. They are successful in every penny they invest ,because they know the energy money has for expansion and multiplication. Money attracts more money. They keep a part of money for breeding purposes. They don't eat the seeds kept for sawing purpose. Poor people on the other hand use them for immediate gratification. No wonder when the rich reap the rewards the poor will be just wondering what's going on.

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All rich people look at money differently than the average person would. The rich person treats money as an investment tool and not as something to merely save and spend. They invest their money prudently and wisely with the position of growing wealth as their primary goal.

Rich and poor have different investment models. For most people their investment model is you earn 100 percent and your expenses and liabilities are 100 percent and your saving and assets are 0 percent. It is a paycheck to pay check adjustment ,which means this month's paycheck clears last month's bills. I know that many people are caught up in this vicious circle. For some people there is no investment model because ,money is never enough to think about investments. But Wealthy people approach their investments in a different manner. They take the money they earn and invest a large portion of it in income producing assets such as real estate ,small businesses ,stocks ,and bonds ,gold and so on. If you want to become wealthy ,follow their lead.

But there is a Parkinson's Law ,which says “expenses will always rise in direct proportion to income”. The more you earn the more you likely to spend. How do you handle this? Now you need the third habit

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HABIT THREEFRUGALITY

The Third habit is Practicing FRUGALITY or becoming frugal

Being frugal means being very wise with your money. In order to save money first of all you must learn the art of spending. Several millionaires have adapted frugality as their major habit and the very reason they became some of the top most richest people in the world is also because of this habit.

For example Ikea founder Ingvar Kamprad drives a 15-year-old Volvo ,flies in economy class ,avoids expensive suits and eat simply at lower-tier restaurants. The world's richest man(2007) and investor Warren Buffet lives in the same house he bought for just US$31,000 nearly 50 years ago instead of building a grandiose mansion with sprawling grounds. IT Billionaires like Azim Premji and Narayana Murthy is known for the frugal life style habits.

Will Rogers an American humorist and actor said once” Too many people spend money they haven't earned ,to buy things they don't want ,to impress people they don't like” Trust me people do these.

Spending too much can wreck havoc with your financial goals. It keeps you in debt ,prevents you from saving as much as could ,and turn your focus to more consumption , rather than to wealth creation and accumulation. It will be surprising to check on everything you bought in a year and seldom used and the price you paid for all that actually equals to your credit card debts or even more.

This is how you develop the frugal habit. First prioritize your expenses ,follow the First thing first policy to spending. That which gratifies the most should be bought first. That which gratifies least ,try not to even buy it if you can.

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There is an Old Russian saying 'spending is quick and earning is long'. Therefore be very prudent and wise when it comes to spending.

Stop paying by credit card and start paying in cash for virtually everything. When you buy in cash you tend to think what you are buying and why you are buying. Today's plastic currency has no intrinsic value of money. Remember this ,whatever you buy today with tomorrow's income will incur interest; it costs you more. Using credit card is borrowing and using debit card is still spending.

Stop compulsive borrowing and avoid the vicious circles of debts. Lots of individuals who have debts are having the tendency to try harder to be in more 'comfortable debts”. Debts arise from the habit of overspending on too many desires and having no self-control. Beware of small expenses; a small leak can sink a ship. If you can master the spending game you can get out of debts very easily.

The best thing you can do if you find yourself in a hole is to stop digging further. If you have debts ,clear the small ones first because it's easy and it will give you a sense of achievement. When you are in debts ,go on a money diet ,which means you will run your expenses with minimum amount of money and you will save enough to pay back. As you commit enough to being debt free and saving more ,you will encounter an almost miraculous force working in your life. You can measure your success in terms of debts paid than goods purchased. If you want to get out of debt stop borrowing money from institutions that charge you big interests. And remember one thing 'Forgetting a debt does not pay it'.

Being frugal also means having a financial plan. Have a retirement program. Put something aside for emergencies ,your contingency fund. Rich people have a habit of keeping money in a safety deposit box with cash for emergencies.

If you want to be rich ,focus on making ,keeping and investing your money. It is about being FRUGAL. If you want to be poor focus on spending your money; the opposite of frugal is wastefulness.

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HABIT FOURLOOK AFTER YOUR BUSINESS

Fourth habit is looking after your business and not minding other people's business.Your business or the job you are holding is your number one priority in the financial matters. Your business or the job you are holding is like a goose that lays the golden egg everyday. Just like in the ESOPs fable you need to look after the duck ,you need to feed the duck to lay the golden egg; you must look after your career or business on a day-to-day basis. Protect your assets. Feed your business. Pay attention. And don't kill the goose.

Taking care of your business also means having a vision and making progress everyday.

Vision is having a strong belief in the unseen side of your business. Having a vision is a the spiritual processes of creation. Rich people have a habit of dreaming big. They get inspired by their goals and vision everyday and they develop a laser focus attention to achieve their projected outcome.

Financially successful people constantly upgrade their standards. People with high standards achieve more. Always make room for improvements. You begin with an end in mind because you can't aim without a target. Have your eye on the pie; the rest will naturally follow in acquiring it. Another principle attached to it is to never give up therefore practice the habit of persistence.

Also be Disciplined and organized. Wealthy people organize time ,energy ,contacts and finances to attain their goals. They have a proper financial plan. Wealthy individuals follow the advice of financial experts. Know your priorities; prioritize your daily activities , just like the way you prioritize your goals.

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HABIT FIVETAKING EDUCATED RISK

The Fifth habit is about 'Taking educated risk, or calculative risks'.

Financially rich people and especially self-made millionaires have the tolerance to take some managed risk. When they see opportunities that have an upside potential that far outweighs the potential loss ,they jump on those opportunities. However ,they learned to become a millionaire by limiting their risk in order to reduce the chance potential losses and accelerate their wealth creation.

Knowledgeable people ,who study situations carefully ,have confidence in their own abilities and have a very healthy self-image. They discuss ,share information ,research and study markets ,think deeply about the subject of investment and they plunge in with eyes open. Not eyes closed. They take educated or calculated risks. It is entirely up to you what level of risk you feel happy with. I can give you few tips for risk management. It's commonsense. Commonsense is having awareness to what you already know. There are few common sense tips to risk management.

Gather as much as intelligent reliable information possible before you make a decision.Don't put all your eggs in one basket.Don't swallow more than you can chew.If it waddles like a duck and quacks like a duck ,chances are it is a duck.If you don't trust someone don’t do business with him or her.If you don't trust your boss don't work for him or her.If you don't trust your product or service don't sell them.If you don't know the business don't do it.If some one offers you a quick get rich scheme ,there is a coning side it.

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Remember common sense is bigger than your Harvard MBA degree. Trust your guts.

Believe in your intuition and what conscience is trying to tell you every time. Listen to your inner voice. Your inner voice is wiser than your rational self. Pay attention to every detail. Plan the worst-case scenario. Have a Plan B. The American CIA has a principle 'Hope for the best and prepare for the worst'. That is being optimistic and practical at the same time.

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HABIT SIXTITHING

Sixth habit is tithing.Tithing means giving away one tenth of your income for a cause or charity.

Money can be earned ,grown ,guarded ,fought over ,used well ,used badly ,won ,lost ,buried ,invested ,given away ,bought back ,exchanged and divided up. But the nicest thing to do with it is surely to share it. When I say share ,I don't encourage you to give it to the lazy or less focused liberty takers. I mean it to the unfortunate ,the weak and the deserving ones ,always for a good cause.

Giving has it's own rewards. Giving and receiving is the two sides of the same coin. It is sowing and reaping and that is good karma. TITHING follows the principle that THE MORE YOU GIVE THE MORE YOU RECEIVE. You may wonder now ,How does this happen?

Most of us believe that the more we give the more we lose or deducted from our wealth quotient. But that's not true. Let me explain this. Giving actually expands money. When you give money from an attitude of gratitude ,it thrusts you from the material state into the ethereal or spiritual dimension. Many people in poverty consciousness think that money shrinks when you give it away. Their math's is that 100 minus 10 is 90.A rich person knows that giving money actually expands ,10 times in to 100 that is 1000.This is the spiritual math and the spiritual dimension to wealth. Sharing money is multiplied not money subtracted.

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Money like harvest is created to multiply. As Junior Murchison once puts it” Money is like manure. If you spread it around it does a lot of good. But if you pile it up in one place it stinks like hell” You can have everything you want if you help others get what they want. Practice the power of giving. Because IN LIFE WHAT YOU GIVE YOU GET TO KEEP ,WHAT YOU FAIL TO GIVE YOU LOSE FOREVER.

Now many people will say how I can give away when I don't have enough money for myself. We believe that money is a scarce commodity ,which is not true. There are trillions and trillions of cash printed everyday joining the pool of abundance. Think of this one. There are 600 billion people in this planet and there are so many people lonely out here feeling left alone and friendless even if there are so many people around us.

Poverty is a symptom of what is going around in our mind. Giving away small portion of money will eliminate your money worries and also communicates a message to your subconscious mind that there is enough.You can also add value by time tithing , that is volunteering your time for a charitable cause or for community help. There is an Arab saying” If you have much ,give off your wealth ,if you have little ,give off your heart’

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HABIT SEVENINVEST ON ONESELF

Seventh habit is the habit of investing on oneself.Millionaires make their biggest investment on oneself. A strong characteristic of the ultra rich is the fact that they spend time and money educating themselves. They have a voracious appetite to learning and curiousness to know more about adding value to their products and services. They invest their time and money attending business seminars and personal growth workshops conducted by experts. They read financial magazines that give rich information. You go to a wealthy person's house you won't be surprised to find a library.

One of the biggest challenges to big success is the small success of people that put them on a complacent stage. When you are open to learning new information in this rapidly changing economy you get to learn the fact that there is some one doing it better than you. Learning puts you on your toes. When you are complacent about your business ,you tend to relax and that's when your competitors will overtake you. When you are complacent about your health ,you tend to neglect it and t hat's when illnesses will attack you. Therefore ,no matter how successful or wealthy you might think you are ,always ask yourself how can be the best.

Another way of investing on your growth is the habit of learning from other people through building your networks. You can network with other individuals in high circles of influence. Rich people habitually interact with other rich and successful people. Their intention of joining social clubs is not to just make merry but to build solid contacts that will build them referrals to boost their income.

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Another great way of investing on oneself is spending time with yourself. Our body needs food and exercise ,the mind needs mental feeding and mental exercise and the spirit needs the joy of good karma or spiritual exercises. If you can satisfy your body ,mind and soul ,you have done your part to be happy in life. But most often we don't pay attention to our mind. What is usually done is feeding the mind with mindless television.What is strongly recommended is a habit of an hour of power for your mind. You can do this by reading a good book ,an hour of visualization or meditation ,yoga ,goal setting exercise ,or listening to a motivational audio from Positive Revolution.

Feed your mind ,with inputs that will empower you. An hour of power can give you stimulations for success; inspirations to take action ,and focus on completing things you have been procrastinating for a while. Bottom line of this daily habit is to stay motivated and inspired.

These are the major 7 habits of the rich. There can be more habits but these 7 habits are the strong foundation for our financial success. As you develop these 7 basic financial habits you will surely build a momentum with more richer habits.

Remember most of the results we have in our life is an outcome of several actions and the absence of actions we take. We are all habituated to do or not to do something. Now interestingly both are habits. Doing something about what you learn is a wonderful habit. Now you have learned something , go on and apply them in your life. That is your eighth successful habit ie applying knowledge and information in life.

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ABOUT PAUL ROBINSON

This selection of article is from author's best selling audio book titled Money Magnetism. You can download the full audio from www.learnoutloud.com

Paul Robinson is the best selling author of several hit motivational audio books and an internationally sought after motivational teacher who conducts seminars and workshops for personal and business growth. You can write to him at or visit him at [email protected]


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