The Foundation of Wealth Building
Financial freedom is a goal that anyone today can achieve, of course, provided we have the courage to pursue the life we truly desire. As a famous saying goes: “It is not the difficulty that makes us give up, but rather that we give up, which makes it seem so difficult.”
If we keep the laws of money in mind, we will find that our financial situation is steadily improving. Nothing can stop a mindset that aligns with the times. This applies to everyone’s life. Nothing can prevent us from enjoying the right we are born with—prosperity. A life of dignity and financial ease aligns with our natural laws. As long as we don’t give up, nothing can prevent us from reaching this goal.
Making a Dream Album
To achieve financial freedom, we must have motivation. Therefore, the first thing we must do is come up with 10 reasons (wishes) why we want to become wealthy, and write them down. This will be the driving force for our actions.
Next, from these 10 reasons for wanting to become wealthy, select the top 3. Don’t set yourself too many goals, as that might be unrealistic. Human desires are endless, and we need to distinguish between primary and secondary goals—to clarify which ones are the most important. Once the goals are set, we must find ways to achieve them.
One method taught by Money to Jia is to use a Dream Album and a Dream Piggy Bank: the Dream Album is used to collect photos related to your wishes, which are then pasted into the album.
Looking at the Album Every Day
The act of thinking through pictures and imagining the scenarios where you achieve your wishes is called “visualization.”
Preparing a Dream Piggy Bank
Prepare a separate piggy bank for each dream, and write your dream on it. Once the piggy banks are ready, put every penny you save into them.
When Jia doubted whether the Dream Album would be effective, Money said: “Curiosity is good, but it must never hinder your actions. Too many people hesitate in their actions simply because they feel they haven’t fully understood the matter. Putting it into practice is far more useful than pure thinking.”
When we question whether this visualization is just a “pipe dream,” we need to know that “successful people are successful because they always dream of the day they succeed, constantly imagining the circumstances when they have achieved their dreams. Of course, people cannot remain stuck in the dream.”
“Learning is the process of recognizing new concepts and new ideas. If people always consider problems using the same way of thinking, they will always get the same results. Don’t jump to conclusions before you have tried it.”
“People without imagination find it difficult to achieve great things. The more energy we put into something, the greater the possibility of success. But most people put their energy into things they don’t like, instead of imagining what they hope to gain.”
Don’t adopt a mindset of ’let’s just try it’; take concrete action! If you only adopt a ’let’s just try it’ mindset, you will end up in failure, and we will achieve nothing. ‘Trying’ is merely an excuse; we have not done it, yet we have already prepared an escape route for ourselves. There is no option to ’test’; there are only two choices—to do it or not to do it."
Success Journal
When we do something, we need sufficient self-confidence. Our level of confidence determines whether we believe in our ability and whether we believe in ourselves. If we fundamentally don’t believe we can do it, we won’t even start, and if we don’t start, we will gain nothing.
Therefore, we need to keep a “Success Journal.” The “Success Journal” is similar to a diary; you record all the things you have successfully done in it. Write down at least 5 personal achievements every day, no matter how small. The main purpose of doing this is to help us boost our self-confidence.
At first, we might find it difficult, and we might ask ourselves, “Does this or that really count as an achievement?” In this case, our answer should be affirmative. Being overly confident is much better than being insufficiently confident.
When we encounter problems:
a. Still stick to your idea. Everyone can do this when things are normal. It is only when real difficulties arise that the truth is revealed. Only a few people can firmly implement their plans without wavering. The very successful people even have the ability to perform exceptionally when things are at their hardest.
b. When things are progressing smoothly. Even when everything is going very smoothly, you must firmly and unwaveringly implement your plan.
c. The 72-Hour Rule. When we decide to do something, we must complete it within 72 hours, otherwise, we are likely to never do it again.
“How much money a person earns is linked to their self-confidence. Furthermore, whether their experiences are focused within their scope of ability or placed beyond their reach is also very important. Without a Success Journal, we won’t think about in which areas we are suited to earn money.”
Often, our inability to act stems from a psychological fear. Fear always appears when we imagine how things might go wrong. The more we think about the possibility of failure, the more afraid we become. But when we look at our Success Journal, we notice the successful things, and naturally, we think about how to do them."
Earning and Saving Money
When Money encouraged Jia to bravely earn money, he told the story of a young boy named Darryl. Darryl became a millionaire at the age of 17 through personal effort, making him a role model for Jia.
In Darryl’s story, a businessman gave Darryl (Jia’s role model) advice on how to earn money:
- Figure out what you like, and then figure out how to earn money from it.
- Solve a problem for others, and you will earn a lot of money.
- Focus your energy on what you know, what you can do, and what you possess.
- Before buying something, ask yourself, “Is this really necessary?”
Mr. Jin, when guiding Jia not to spend all the money she had immediately, told the story of a goose that lays golden eggs:
A goose raised by a farmer laid a golden egg every day. The farmer was very greedy and hoped the goose would lay at least two golden eggs every day. In a fit of pique, he killed the goose, and from then on, he never received another golden egg. The goose is the principal (the capital), and the golden egg is the interest (the return). The farmer’s biggest mistake was “killing” his “goose.”
Expenditure and income are directly proportional; the higher the income, the higher the expenditure, unless you learn to allocate your assets reasonably and learn to manage your spending according to your income.
Advice for Those in Debt
a. Destroy all credit cards. Spending money using a credit card costs more than spending cash.
b. Pay the minimum installment amount within the allowed limit. The higher the installment amount, the less living money you have left each month. Often, people underestimate how high their living expenses are, and they might take out new loans to pay off old ones when a major expense occurs.
c. For consumer loans. For loans related to daily goods (like TV loans) other than housing, it is best not to apply for them initially. If you must apply, save half of the money remaining after deducting living expenses, and use the other half to pay the consumer loan.
Fund Allocation
The author suggests that we can divide our income into Daily Expenses (10%) + Dream Goals (40%) + Golden Goose Account (50%). This means we can save 50% of our income, and this money should not be easily touched. It is like the goose mentioned earlier, which lays golden eggs, allowing money to generate more money.
Of the remaining 50%, besides the 10% needed for daily life, the remaining 40% is saved to achieve the dreams we want, such as buying a phone as a reward or going on a trip, etc. This amount is up to you to manage and plan; remember to allocate it reasonably.
Golden Goose: From the story of the golden egg, the “Goose” refers to the money (the savings value), and the “Golden Egg” refers to the interest (the return).
Never kill your goose, and don’t use all your money to pay off loans, leaving you with nothing. Having nothing is not our goal; our goal is to achieve the initial 3 wishes or accumulate the savings.
Passive Income
Investment Notes:
- Invest money in safe places.
- The money should lay many “golden eggs” (choose high interest rates, with the highest dividends coming from stocks).
- Investment should be simple and clear, easy to operate.
The 72 Rule:
Divide 72 by the annual profit percentage of the investment, and the resulting number is the number of years required for that money to double.
Divide 72 by a certain inflation rate, and you can find out how many years it will take for the money to halve in value.
When the market declines, losses only occur when you actually sell the fund.
A fund has a metric—the fluctuation rate (or volatility): a low fluctuation rate means high safety and more stable profit growth. Funds generally last 5 to 10 years. Since the market always has ups and downs, but the overall trend is upward, you can check the market after 5 or 10 years.
72 / Rate of Return = Time to Double 72 / Inflation Rate = Time to Halve (Depreciation) 115 Rule: 115 / Rate of Return = Time to Double (Twice)