20
rules of money
Think about this. In your entire lifetime,
how much money has gone through your hands? Let me explain to you what I mean
by this. Maybe you made $73,000 last year as a 28-year-old. And you got your
first check at the age of 14 for $100.00. Add everything up from that first
check until today. You’ll come up with a number. It could be $493,000 or $1.9
million or $6.3 million, depending on who is reading this. The question is how
much is left in your wallet? Truly. How much is in your wallet? Not your credit
card limit, but how much savings do you have left? If you’re unhappy with the
answer, the reason is very simple. It’s because you don’t know how to play the
money game. It’s as simple as that. So in this video and article, I get into
the 20 rules of money.
These are the rules of money that I’ve
followed. They’re based on a lot of mistakes I’ve made because there was a
point in my life where I made money and there was nothing left in my pocket. So
what I’m telling you is based on my experiences.
Here are the Rules of Money
Rule #1 is the most important one, and
it's the one you have to buy into immediately. It's very simple. You may want
to fight it, but regardless of what you do, it's a rule. And the rule is that
money is a game. The great thing about any game is that no matter what game you
play, you eventually get good at it. If I've never played chess, and you've
played it 100 times, you're probably going to beat me. If I've played Monopoly
1,000 times and you've played it three times, I'm probably going to beat you.
So the great thing about the money game is that it can be learned.
Next, don't be a hater of money. If you hate
money, you'll never get money. Why? Because money doesn't like haters. If you
constantly say things like, "Money doesn't grow on trees" or
"Rich people are this or that," money responds by saying,
"You're right!"
It's almost like if you go on a date with an
attractive girl, and you tell her you don't like attractive girls that don't
know a lot about philosophy. You say that all they care about is their looks,
doing makeup, and working out. The girl's response is, "Dude, I put on
makeup and I work out every day to stay in shape. But I also like other things
in my life. But you know what? You're right. You're not attracted to me and I
don't like you." She then goes and finds another guy that says, "I
like a girl that takes care of her body and skin, and puts on makeup. I like a
girl that works out five days a week." She's attracted to that guy.
So keep that part in mind, and don't be a
hater with money.
Number three of the rules of money is that
money is a doubles game. Listen, you could stop reading right now, as long as
you understand this.
The entire game of money is about doubling
your money. What do I mean by double your money? Let me explain it to you this
way.
If you have $1,000 cash in your bank account,
you are 10 doubles away from having a million dollars. You're five doubles away
from $32,000, 13 doubles away from having $8.192 million, and 14 doubles away
from $16 million dollars. How soon can you double your money?
That's it. It's a doubles game. Can you take
that $1,000 and double it to $2,000 in the next year? Now that it's $2,000,
you're nine steps away from a million dollars. If you already have $100,000 in
your account, then you're three to four doubles away from a million dollars.
Building wealth is a piece of cake when you understand the doubles game.
Risk Tolerance and Horizon
Now that you have the basic concept, the
question comes down to two things, your risk tolerance and your horizon. Your
risk tolerance depends on your age. If you're 65, your risk tolerance is lower
than if you're 22. Horizon has to do with time. What is your time horizon? The
time horizon could be, "I want to have a million dollars by ten years from
now." Great. If you want to have a million dollars by 10 years from now,
first start with what do you have right now. Then you play the doubles game.
For instance, if you have $17,000, you'd ask how many doubles do you need to
get to a million bucks. From there you can determine a time goal for each of
the doubles to meet your goal within 10 years.
It's a simple game, as long as you know the
amount you have, the amount you want, and your risk tolerance, and time
horizon.
To get a free "Doubles
Game" worksheet, fill out the form below.
Let me explain to you about seduction. Money
likes to be seduced. Money's attracted to seducers. Just like a woman doesn't
like a desperate man, money doesn't like desperate people. Money's not
attracted to desperate people that want it so bad because they want to show it
off to everybody. No, no, you need to seduce money. When you do, all of a
sudden money will say, "Ooohhhhh, I like this guy, I like this girl. Oh my
gosh! I'm turned on by you."
Don't let money seduce you. You seduce money.
Once you learn the seduction game with money, all of a sudden money starts
coming from all over the place to you, because money's turned on by people that
know exactly what they're doing. By the way, the more learn to seduce money,
you'll get better at this game as well.
Listen in here for my thoughts on
the important role that timing plays when it comes to money rules.
Number six of the rules of money is boredom.
Let me explain what boredom means. Money needs to be moved. Okay? Again, if a
girl is bored with you, she leaves you, because you're too boring. The same is
true for men. When people get bored, they leave. And money doesn't like to be
bored.
What do I mean? If money stays in a checking
account, the money goes to somebody that knows how to use it. Money doesn't
like to stay somewhere where it's not working. So it goes to someone else that
knows what to do with money. So you have to make sure that money's always moving
for you, working for you, and doing something to create more money for you.
The next of the rules of money is to have a
secret account. You always have to have a secret account.
What's a secret account? It's an account no
one else - including your spouse, parents, best friend, siblings - knows about.
A secret account is a crisis account and
could be cash. It's an account that's sitting somewhere that no one else knows about.
I know you may say, "Pat, you talked about boredom." But this is a
completely different story. You have to have a crisis account that's not your
emergency fund.
A secret account is what saved my business
when we were going through a difficult time. The company's checking account
went down to $13,000, and I had payroll, commissions and everything to pay out
of it. The crisis account that I had is what saved us. No one knew about it.
That money showed up, I put it back into the business, and we lasted through
the tough times. So you always need to have a secret crisis account.
Next, don't pay to fly first class until you
have $10 million in the bank. I see so many people spending $2,000 on a flight
when they can spend $400. Listen, I'm 6'4" and weigh 240 pounds, and do
you know how many times I've paid first class? Zero. I don't pay first class.
Other people pay for my first class, but I don't pay for first class. I've
flown first class many times because I have miles, or people pay for my flight.
But I don't pay for first class myself.
Why is that? It's because I did the math.
Obviously, I can afford to do it, no problem. But here's how I did the math. If
I pay $2,000 for a first class flight and I can get on the same flight for
$500, that's $1500 more I'm paying for the flight. If I fly nine times a month,
that's a $13,500 monthly difference. Do you know what I can do with $13,500?
That's four employees or marketing or expansion. Over a year, it's $162,000.
Why would I waste that money? That's an executive I could bring in, or two
incredible employees. So I don't pay first class.
Once you have $10 million in the bank and you
want to do it, great. At that point you may want to buy a private jet, but
don't pay for first class until you get to that point.
The next of the rules of
money has to do with your comp plan. Listen in here as I explain what I
mean by comp plan.
The next of the rules of money is end of the
world mentality. Listen, CNN, MSNBC, Fox, Suze Orman, Dave Ramsey and others
are all paid to sell crisis. Why? Because you have to be ready for a crisis. So
a lot of times people are fearful, and think it's the end of the world. For
example, in 2008 when the market crisis took place, everybody started pulling
their money out. At the time, the Dow Jones was down to 6,000 something. It's
at 21,000 points today. Imagine if you left the money in. How much compounding
money was lost simply because people thought it was the end of the world?
You have to learn to manage the times when
90% of the world thinks it's the end of the world. You have to be ready for
those times. So how do you do that?
Let me explain. I was part of the community
that said it's always the end of the world. Then I realized how you become
wealthy during those times. In the times when people say it's the end of the
world, do you know who wins? The ones that have cash. That's why it's so
important to have cash set aside. And I'm not talking boredom money. I'm
talking about having cash said aside so that when it's the end of the world,
you can buy stuff.
Crisis Makes Some People Wealthy
Every time crisis happens, a LOT of people
become wealthy. Why? Because everything's on sale when there's a crisis. People
sell exotics because they can no longer afford them. People sell artwork for
1/5 of the price and homes for 1/2 of the price. All kinds of things are for
sale when there's an end of the world type of mentality.
So it's important to have a strategy for this
time. Some say the markets will tank again in the next two to three years. I
don't know if that will happen, but what I do know is that they'll tank in the
next 20 years. And you have to be ready for it because there will be
opportunities, if you're prepared.
Next, study your politicians, especially your
president. Here's why. You have to know the philosophies of and what the
politicians in your nation and local community are going to do. For example, if
their philosophy is to do heavy-duty taxing, you need to adjust accordingly. If
their philosophy is to cut down taxes, you need to adjust accordingly.
People ask me, "Pat, what should I do
with Trump?" Start a business! Taxes are being cut. So go make your
millions of dollars in the next four years, and if it's eight years, go make
your money. Adjust. Everything's about adjustment. But you have to know the
philosophies of your politicians and adjust accordingly.
Next, study smart investors. For instance,
you should read everything Warren Buffett puts out. Every single thing. Read
all his books, because as you do, he'll teach you his way of thinking, his
mindset.
People ask, "Why did Warren Buffett
spend $35 million to buy silver six years ago? And why does he stay away from
technology?" The thing you have to respect about Warren Buffett is that he
sticks to a philosophy long enough until it works. So study smart investors.
Number 13 of the 20 rules of money is to play
your game. Don't compare or play someone else's game. Play your game.
Let me explain. Let's say that when you play
the doubles game, you're at $8,000. And let's say your cousin is at $4,096,000.
Or let's say your friend is at $128,000. Why are you comparing yourself to
them? You need to play YOUR doubles game. They are four or more doubles ahead
of you, so it's not the same game.
You can't say, "I'm going to play my
game at the level with the other guys" because when you do that, you make
reckless decisions and you may lose a double. You don't want to lose doubles.
It's important not to go backwards, and any
time you focus on the people ahead of you, you may go backwards. So focus on
your game, your strategies, and your time horizon. Focus on your risk
tolerance, and play according to that game.
Your vision may not be to be a billionaire.
Your vision may not be to do something very big. Perhaps your vision is not be
a deca-millionaire, but instead to someday have $2 million. That's all good.
Play to that game. And put a plan to it. But don't constantly compare yourself
to other people.
And by the way, if you didn't fill out the
form under point three to get your doubles game worksheet, put your name and
email address in the form below. And when you fill out the doubles game worksheet,
be sure to have your game, instead of someone else's in mind.
The next of the 20 rules of money is to
befriend money makers that you trust. Here's why. If you're around other people
that know how to make money, you're going to make money. If you're around
people that don't make money and don't know how to make money, you won't make a
lot of money. That's just how things work.
It's also important to know who you're going
into business with. Sometimes things seem too sweet or sexy, but you don't know
the person. It's important for me to know who I'm going to do business with. I
hire very, very slowly and fire very fast. The moment I'm done with somebody,
boom, they're gone. It's no problem for me to fire four people in a day. If
things aren't in the right place, we need to move on.
Especially for higher up positions, I hire
very slowly. I travel with the person so I get to know them. So whoever you're
going to do business with, befriend them. Travel with them. If somebody's
extremely wealthy, go to dinner with them. Get to know their spouse, and how
they are around their kids. See their standard of living, behavior, and
discipline and if you like what you see, determine to do business with them.
The next money rule is that diversification
is for sissies. So if you're a sissy and your risk tolerance is very low, it's
okay. It's okay to be a sissy. A lot of people are sissies. But if you truly
want to create wealth, and you wonder why you don't have a single penny after
working for 17 years, you have a problem.
What's the problem? Diversification is a
great concept for financial advisers to sell to people that want to play things
safe. If you're watching this and you're 73 years old, diversification may be
good for you. Or if you're 62 years old and you've already hit your numbers,
your risk tolerance is lower because your time horizon is lower. In that case,
you're playing a different game.
I'm mainly talking to the people that are in
the offensive mode of their lives. I'm talking to people that are trying to get
their doubles to go faster. If you rely on diversification, it takes 20 to 40
years, and that's if everything goes the way it's supposed to. So don't rely on
diversification to take you where you want to go.
The next of the rules of money is about
leverage. Everything is leverage.
Let me explain what leverage means. When I
say leverage, I'm not talking about going into debt. I'm talking about
leverage, period. Here are some ways to use leverage in your business:
- Gain more support
- Expansion
- Market yourself more
- Get to the customer faster
- Increase the speed of growth of your business
You need to ask how you can leverage every
aspect of your business because leverage is a growth game. And the more you
study the concept of leverage, the better it is for your wealth.
Listen in here for why positioning
is an important money rule.
Number 19 of the 20 rules of money is to
develop strategic partnerships. This is similar to befriending money makers but
it's slightly different because it's intentional. For instance, in our company
we have strategic partnerships where a lot of people make money. And the more
that people make money, the more they'll continue to do business with you.
I have strategic partnerships with $400
billion companies, $200 billion companies, and $60 billion companies. I have
strategic partnerships with a lot of different companies that benefits them.
Strategic partnerships increases the value of making money because a lot more
people make money when they go into business with you.
Last but not least of the rules of money is
big check syndrome. Oh my gosh, I've seen so many people screw this whole thing
up.
Let me tell you what I mean by big check
syndrome. Let's hypothetically say you sell real estate. And all of a sudden a
client wants you to sell their $3 million home. You sell it and get a $100,000
commission check. You say to yourself, "Oh my gosh! I made $100,000!"
And for two months you live as if you made $100,000 in a month.
What you don't realize is that you need to
look at that $100,000 as $8300 a month income for a year. Don't look at it as
$100,000. Look at it as $8300. I see so many people that see it as $100,000 and
get arrogant and cocky. They don't realize it's just a big payday. And their
double goes lower and lower and lower.
Here's a question for you. Would you rather
take a half a million dollars up front, or take a guaranteed income stream of
$100,000 over 20 years? Which one would you take? Most people would take the
half a million dollars. Let me tell you why $100,000 is more. $100,000 adds up
to two million bucks. And a half a million dollars is just a half a million
dollars. The $100,000 gives you the opportunity to have a stronger backing to
make bigger decisions to get bigger doubles.
Now you may say, "But Pat, a half a
million dollars? That already moves me a long way in the doubles game."
But that's irrelevant if you don't know how to play the money game. I want high
income as well. I want income coming in that feeds my game so I can increase my
net worth. Income is a very, very important game, so don't get too crazy about
big check syndrome and all of a sudden fall for it and lose everything.
Your Turn to Play the Money Game
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