All my life I’d never had money at the end of the month, so I never really had to worry about what to do with them. Whenever I did have some money left, there was either a loan to pay, or something to save for (hosting for the site), or something I needed to buy (a replacement laptop after I hit the last one against the floor in a moment of fury).
But recently, I’ve been doing better.
One day I got a check from Google along with some other windfall cash. Walking out of the bank, smelling the crisp autumn air, I thought – hey, life IS good! All my bills are paid for, my savings for the month are cushioned away, and there’s nothing urgent that I need to buy. And now I have all this extra money to use as I see fit!
I had total creative freedom with my money. Here’s how it felt:
My first thought was to save some of the money. Hmm, well, saving is okay, but do I really want to go overboard with it? I have enough savings for now, and besides, 8% interest is not that great given the inflation rate in Bulgaria.
Then how about that suuuuper cute pink cell phone I’ve been drueling over? I could buy that and still have enough left to drink Baileys every time I went out!
I almost bought the super cute pink cell phone, but it turned out the phone didn’t have a Cyrilic alphabet installed, so I passed. Walking out of the store with no cell phone, I said to myself – it’s actually a great thing that I didn’t buy it. Sure, I could use a new cell phone and sure, I could easily afford it; BUT HOW IS A CELL PHONE GOING TO PAY ME BACK?
Now you might be wondering how is an inanimate object supposed to pay me back.
For most people, the thought that they could spend their money on something that would pay them back is absurd (except maybe reward points on their credit card). And that’s the problem.
Money management is not hard at all. But you need someone to open your eyes to it.
Think of money management in LEVELS. In planes. The lowest money-plane is where most people are. They are not even aware of money management – they just spend what they have on “dead stuff” (stuff that won’t pay them back). They use credit to buy stuff they can’t really afford – stuff that is meant for people from the upper planes. People who are on this lowest plane know nothing better than the sad lifestyle of living on credit.
The next money plane is above the first one. Here are the people who understand some basic money stuff like how it is important to save and how you must not spend more than you earn. These people are on a higher money plane, and also their thinking is on a HIGHER LEVEL compared to the thinking of inhabitants of the lowest plane.
The next money plane is even higher – here we have people who focus not so much on saving but on earning more money by working more or negotiating higher wages. Their level of thinking is also higher – they don’t focus on scraping savings but on getting rich by earning more money.
The next money plane is higher still, and it hosts people who earn more not by WORKING more at their job, but by creating a business or freelance practice. Their level of thinking is higher still – they don’t want to just work work work and then hand off the big bucks to someone else while keeping only crumbs for themselves. People on this money plane are working to secure their own clients independently.
The top plane is reserved for people who are busy creating rivers of gold. (We’ll get to that shortly.)
What’s interesting about these planes is, getting on a higher plane requires you to achieve a higher level of thinking.
Sometimes this (change in thinking) happens by accident – for example, you’ve had an eye-opening battle with debt and so you strikingly realize all of a sudden that debt is a bad thing.
Other times you get pulled on the higher plane by a person who has decided to share their knowledge with you (and you had the ears to hear it!). However it happens, you can only be on a higher plane if you have a higher level of thinking.
Okay, okay, sometimes people do get on a higher money plane by accident – like, winning the lottery, or getting lucky with a high-paying job. So for a while, you get to be amongst people from a higher plane. Unfortunately, if your money status has progressed but your thinking has not, you will quickly fall back to a lower plane, adequate to your lower level of thinking. And that is exactly why people who get “lucky money” don’t keep them for long – a fool and his money are soon parted.
The other interesting thing about those planes is that YOU ARE NOT AWARE OF THE EXISTENCE OF THE HIGHER PLANES UNTIL YOU GET THERE. People on the lowest plane don’t know any better while they are there, but once they get to the higher plane their eyes suddenly open and when they look down, they see that their original plane really WAS lower. They now see all the errors their former plane-mates do with their money.
So when someone talks to you about money, take the time to listen to them and consider their point of view. If you find their point of view is strange or gives you a headache, then listen good and hard! They are most likely from a higher plane and you have a headache because they are challenging your way of thinking, they are making your brain stretch to a higher level. That always hurts a little at first, but it’s worth it. And if you find yourself talking to someone and if by the first words coming out of their mouths you know what they are about to say, that person is probably from a lower plane than you. Help them.
And don’t be dismayed if the person from the lower money plane is not listening to you or is resisting what you want to tell them. As Arthur Schopenhauer said, “All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”
Anyway, so I wanted to say that people who are on the top plane with the top level of thinking are there because they have managed to create rivers of gold.
And you can, too.
By the way – no, I don’t have huge rivers of gold myself. Not yet, because I just recently came to this conclusion, this simple rule that I think is a great discovery for me. So simple yet so effective and easy to apply. You can probably tell by my rushed style of writing that I am very excited to share it with you!
The rule is: ALWAYS TRY TO SPEND YOUR MONEY ON SOMETHING THAT WILL PAY YOU BACK A % OF THE ORIGINAL AMOUNT YOU PAID FOR IT. NO MATTER HOW SMALL THAT % IS. MOST THINGS YOU BUY PAY YOU BACK 0%, SO EVEN A 0.5% WILL BE BETTER THAN WHAT YOU’VE BEEN DOING NOW.
Okay, so it’s not rocket science. THAT’S THE BEAUTY OF IT! It’s so simple!
When you’re buying something, ask yourself: is this thing going to pay me back? AM I EVER GOING TO SEE THIS MONEY AGAIN? That’s the single best thing you can do to improve your life financially.
Make a habit out of asking that question constantly. Repeat it in your mind every single time you make a purchase. You won’t see a change at first, but I’m betting you’ll start changing the way you think pretty quick. (As you already know, changing your thinking is required if you want to get on a higher money plane.)
And the point of that question (“AM I EVER GOING TO SEE THIS MONEY AGAIN?”) is not to make you live poorly by denying yourself stuff all the time. The point is to make you more rational about the things you buy. To get your thinking on a higher level so you can get to a higher plane.
You know, it’s not possible to get back a 100% of your money. It’s not possible to only spend money on the good stuff. You need food, clothes, comfortable temperature at home… I get it. These things cost money. But just imagine how great it will be if you could maybe get 10% of your money to return to you! That’s what creating a river of gold is all about.
Robert Kiyosaki… oh boy I’m quoting the dude a lot, aren’t I? And I don’t even like him!
Robert Kiyosaki says “the rich buy assets, the poor buy liabilities”. (Assets are things that put money in your pocket, like stocks or cash deposits or rental properties, while liabilities are things that get money out of your pocket, like cell phones or internet or a car – things that don’t pay you back.) He says that’s the main difference between the rich and the poor. And he says that middle-class people buy liabilities thinking they are assets while they are not.
Why do “the poor” (whatever he means by that) buy liabilities? Well gosh, let me tell you right now – “the poor” buy liabilities because they NEED them. A house is a liability. A car is a liability. Clothes are liabilities. So is it any wonder that poor people spend a big percent of their money on liabilities? No. Let’s not judge them, okay?
It’s easy to buy assets when you already have the liabilities you need like a laptop or a cell phone or a car or a house. But if you are born without them, you have have to buy them yourself.
Say you got two persons, Ana and Maria, who both make 1000€ a month. Ana’s parents haven’t bought her a car or a laptop, so Ana saves 300€ a month to buy these “liabilities” herself. That leaves Ana with just 700€ to spend, or to use them and create rivers of gold.
Maria on the other hand has both a car and a laptop, so she is free to spend the whole 1000€ as she sees fit. Maria doesn’t buy liabilities because she doesn’t need to – she already has them. So she has the whole 1000€ to spend or use them to create rivers of gold. (That’s the funny thing about money – the more you have, the more you have. And the easier it becomes to get more.)
Of course, I’m not saying you should use that, or anything else, as an excuse to buy stupid stuff. Some liabilities are things you actually need, like a laptop. But other liabilities are just JUNK.
But, even if you really do need a laptop, since you know that a laptop is a liability, if you’re smart, you won’t buy the most expensive laptop – you’ll buy second hand or get a cheaper model. Then you will have some money left to pour into your river of gold.
Also, there are two kinds of liabilities:
1) liabilities that take the money out of you ONCE, like a laptop
2) liabilities that take the money out of you REPEATEDLY, like a car or a house
Unless you are one of those people from the lowest plane, you know that you should always buy only stuff you can afford with your own money (and not with credit).
Okay, that’s true, but there’s more to it. Sometimes when you’re buying something, just because you have the money to pay for it in cash doesn’t mean you can afford it. The best example is a car. Paying the cash value of the car is just the beginning of a very long road of monthly payments – maintenance, insurance, repairs, gas. The same is true for owning a house or buying a pure-bred cat. The down-payment is just the beginning, and then you have to allocate a monthly allowance for that liability in your budget. So think smart!
Owning liabilities sounds like quite a burden, right? It is. And now, compare to that a RIVER OF GOLD. If you are smart with your money and try to buy stuff that will pay you back, you won’t have to make “monthly allowance” for it. Quite the opposite – the stuff will pay YOU back. A river of gold doesn’t need maintenance, it doesn’t need you to put money in it every month. And even if it doesn’t bring you too much gain, at least you won’t be at a loss!