KNOWLEDGE TO BECOME SUCCESS

 

                  HOW TO BECOME TOP RICH PERSON 

                    INCOME INCREASES DON'T HELP

                    SOMETIMES I ASK MY AUDIENCES, "WHO HERE WOULD LIKE TO BE FINANCIALLY INDEPENDENT? EVERYBODY RAISES THEIR HAND. SO THEN I ASK, IF I COULD WAVE A MAGIC WAND AND DOUBLE THE INCOME OF EVERY PERSON IN THIS ROOM, WOULD THAT HELP THE INCOME OF EVERY PERSON IN THIS ROOM, WOULD THAT HELP YOU TO BECOME FINANCIALLY INDEPENDENT?

                 EVERYBODY CHEERS AND LAUGHTS AND NODS THEIR HEAD, AGREEING THAT IF THEY COULD MIRACULOUSLY DOUBLE THEIR INCOME, THEY COULD BECOME FINANCIALLY INDEPENDENT.

               I THEN ASK THEM, "HOW MANY PEOPLE IN THIS ROOM, FROM THE TIME YOU TOOK YOUR FIRST JOB TO TODAY, HAVE ALREADY DOUBLED YOUR INCOME?

                WITHOUT HESITATION, EVERY HAND IN THE ROOM GOES UP.  I THEN ASK, "HOW MANY PEOPLE HERE, FROM THE TIME YOU TOOK YOUR FIRST JOB TO TODAY, HAVE INCREASED YOUR HOME THREE TIMES? FIVE TIMES? TEN TIMES?

               HANDS GO UP ALL OVER THE ROOM. EVERYONE IN THE ROOM HAS DOUBLED OR TRIPLED OR INCREASED THEIR INCOME FIVE OR TEN TIMES FROM THE TIME THEY TOOK THEIR FIRST JOB.

                 I THEN MAKE MY POINT: "EVERYONE HERE HAS ALREADY INCREASED THEIR INCOME DRAMATICALLY, BUT IT HAS DONE NO GOOD. SIMPLY INCREASING YOUR INCOME DOES NOT ENSURE THAT YOU WILL ACHIEVE FINANCIAL INDEPENDENCE. THIS IS BECAUSE OF PARKINSON'S LAW, WHICH SAYS, "EXPENDITURES RISE TO MEET INCOME, NO MATTER HOW MUCH YOU EARN, YOU END UP SPENDING IT ALL, AND MORE BESIDES.

                    PRACTICE THE WEDGE PRINCIPLE

                  THE WAY TO ACHIEVE FINANCIAL INDEPENDENCE IS FOR YOU TO BREAK PARKINSON'S LAW. YOU DO THIS BY PRACTICING THE "WEDGE PRINCIPLE" FOR THE REST OF YOUR LIFE. HERE IS HOW YOU DO IT. AS YOUR INCOME INCREASES IN THE MONTHS AND YEARS AHEAD, DRIVE A WEDGE BETWEEN YOUR INCREASING INCOME AND YOUR INCREASING EXPENSES. INSTEAD OF SPENDING IT ALL, RESOLVE THAT YOU WILL SAVE 50 PERCENT OF YOUR "INCREASE".

                     IF YOUR INCOME INCREASES BY $100 PER MONTH, RESOLVE TO SAVE $50 PER MONTH, OFF THE TOP, AND PUT IT INTO YOUR FINANCIAL FREEDOM ACCOUNT. YOU CAN SPEND THE OTHER $50 ON YOUR FAMILY AND ON IMPROVING YOUR LIFESTYLE. BUT YOU MUST RESOLVE TO SAVE HALF OF YOUR INCREASE FOR THE REST OF YOUR FINANCIAL LIFE.

                   WHEN YOU PAY YOURSELF FIRST, SAVING 10 OR 15 PERCENT OF YOUR INCOME OFF THE TOP AND THEN SAVING 50 PERCENT OF YOUR INCREASE FOR THE REST OF YOUR CAREER, YOU WILL SOON ACHIEVE FINANCIAL INDEPENDENCE. YOU WILL JOIN THE TOP 5 PERCENT OF WEALTHY PEOPLE IN OUT SOCIETY. YOU WILL NEVER HAVE TO WORRY ABOUT MONEY AGAIN.

                  THE MIRACLE OF COMPOUND INTEREST

                    ALBERT EINSTEIN SAID, "COMPOUND INTEREST IS THE MOST POWERFUL FORCE IN THE UNIVERSE.

                     IF FROM THE AGE OF TWENTY-ONE INTIL YOU ARE SIXTY-FIVE, YOU WERE TO SAVE ONLY $100 PERMONTH AND INVEST THAT AMOUNT IN A MUTUAL FUND OR INDEX, YOU WOULD BED WORTH MORE THAN A MILLION DOLLARS. IF YOU WERE TO SET UP YOUR PAYROLL ACCOUNT SO THAT $100 WERE AUTOMATICALLY DEDUCTED AND INVESTED FOR YOU, YOU COULD BE SURE OF BECOMING ONE OF THE  WEALTHIEST PEOPLE IN AMERICA.

               THIS MEANS THAT I FYOU ARE SERIOUS ABOUT ACHIEVING FINANCIAL INDEPENDENCE, THE MOST IMPORTANT SINGLE REQUIREMENT IS SELF-DISCIPLINE, THE MOST IMPORTANT REQUIREMENT IS SELF-DISCIPLINE COMBINED WITH ABILITY TO DELAY GRATIFICATION. YOUR ABILITY TO PRACTICE SELF-MASTERY, SELF-CONTROL, AND SELF-DENIAL THROUGHOUT YOUR LIFE WILL NOT ONLY ENABLE YOU TO ACHIEVE ALL YOUR FINANCIAL GOALS, BUT IT WILL ALSO MAKE YOU SUCCESSFUL AND HAPPY IN EVERYTHING ESLE YOU DO.

                  IN THE NEXT CHAPTER, WE WILL TALK ABOUT THE KEY TO MAKING ALMOST EVERYTHING IN YOUR LIFE WORK FOR YOU. THE USE OF YOUR TIME. WE ALL START OFF IN LIFE WITH LOTS OF TIME AND LITTLE MONEY. HOW YOU SPEND YOUR TIME THROUGHOUT YOUR ADULT YEARS LARGELY DETERMINES THE QUALITY OF YOUR LIFE.

 

                             POINTS TO UNDERSTAND

                    *  MAKE A DECISION TODAY TO TAKE COMPLETE CONTROL OF YOUR FINANCIAL LIFE, GET OUT OF DEPT, AND ACHIEVE FINANCIAL INDEPENDENCE.

                    * DETERMINE YOUR NET WORTH TODAY. ADD UP ALL YOUR ASSETS, SUBTRACT ALL YOUR DEBT AND LIABILITIES, AND CALCULATE THE EXACT NUMBER.

                    * SET UP A SEPARATE BANK ACCOUNT AND BEGIN SAVING AT LEAST 1 PERCENT OF YOUR INCOME AS YOU RECEIVE IT EVERY MONTH OR PAYCHECK.

                   * MAKE A LIST OF ALL YOUR DEBTS AND BEGIN PAYING THEM OFF, STARTING WITH THOSE CARRYING THE HIGHEST INTERST RATES.

                    * CALCULATE THE EXACT AMOUNT THAT YOU WILL NEED TO BE FINANCIALLY INDEPENDENT AND THE END OF YOUR CAREER AND THEN SET THIS AS A GOAL.

                    * SET A SPECIFIC FINANCIAL ACCUMULATION GOALS FOR YOURSELF FOR EACH MOMENT, QUARTER, AND YEAR FOR THE REST OF YOUR LIFE.

                    * PRACTICE FRUGALITY IN SPENDING BY PUTTING OFF AND DELAYING EVERY EXPENDITURE YOU POSSIBLY CAN UNTIL YOU ACHIEVE YOUR LONG-TERM FINANCIAL GOALS.