Secrets of the Millionaire Mind - Wealth File 14

Harv says wealthy people have more supportive money habits than poor people. They've trained themselves to do things with their money that will bring in more money. Poor people have trained themselves to do things with their money that will erode their money and cause them financial distress.

• They were never taught in school how to earn, keep and grow their money. So they're out here fumbling without a clue about how to mange their money profitably.

• The conditioning they got from a young age. People who have a scarcity mindset are less likely to be wealthy than those with an abundance mindset.

Myles Munroe says we've been placed on this earth to manage the resources god has entrusted to us. If we manage these resources well and grow them, we will receive more resources to manage, and therefore our wealth will grow. If we fail to manage them well, we will suffer the consequences of mismanagement, which are poverty and destitution. Maybe not that extreme, but you get the point, right?

Managing your money well is the real path to financial freedom. You've  got to start where you are, with what you have. In the Richest Man in Babylon,  we learned that to be financially independent we need to spend less than you earn. You must learn to live on 70% of what you earn. Put away 10% for your savings and investments, and use 20% to settle your debts.

Jim Rohn says poor people spend their earnings and then save what's left, which is usually nothing. Whereas rich people save their money first, and then spend what's left. Pay yourself first is the philosophy of the rich. While the philosophy of the poor is to pay everyone else first, which is why poor people have nothing left at the end of the month. Harv suggests you put away 10% of your net income in a Financial Freedom Account. You leave it, don't touch it, just let it grow. This is your retirement nest egg.

Which means that you must also put 10% of your net income into a play account. This account is designed to help you enjoy the fruits of your labor... have some fun... reward yourself a little. Do something nice for yourself or your spouse, or your kids.

If all you do is save and never get to splurge on yourself a little, you will be unfulfilled and eventually sabotage yourself. On the other hand, if all you do is spend without saving and investing, you will feel guilty and won't have as much fun. This what people refer to as retail therapy. You blow your money, feel guilty about it, and then blow even more money to try and make yourself feel better. And then you feel even more guilty, as a result you blow even more money hoping it will make your guilt disappear, but it never does. And before you know it, you're in a dip pit of debt from which you can't pull yourself out. Money mismanagement is a vicious cycle, and it is terribly hard to overcome.

You need to feed both the yin and yang within yourself. You need to save, invest and pay off your debts, while also giving yourself 10% to enjoy life.

According to Harv, the play account is also designed to strengthen your receiving muscle. When you receive from yourself, responsibly and without guilt, you will create room to achieve much more from the universe.

Using this principle , Harv believes you can become financially independent even on a small income. But if you mismanage your money, you can't become financially free, even on a huge income.

This is what it takes to succeed.

Either you manage your money,

or the debt collectors will manage you

(And this is not fun. Trust me. I know).