In my first post I briefly alluded to the 3 stages of money: I call them Making Money 101, 201, and 301.
Starting next week, I’m going to write one post a week on each of these stages …
First, though, let me tee up how I think about making money … serious money … say, $7 million in 7 years.
Making that sort of money – for most of us who don’t inherit, win, steal, speculate, gamble our way to that much moolah – is a long journey …
It’s not so bad when you consider that 99% of people can’t SAVE their way to $1,000,000 in 20 years … but, my point is that it’s still a journey that takes quite some time.
So, if you were to go on a long journey (besides taking a change of shorts) what would you need?
Three things …
1. A destination
You would need to know where you’re going … for a short, local journey, you probably need an address … for a long, global-scale journey, a country and city would be a nice start.
2. A map and compass
If it’s a local journey, you will probably need a street map … although, very simple instructions from somebody who knows the way will probably do.
But, if it’s a global-scale journey, the trip will most likely be broken down into stages for you by your travel agent, and you will need a series of ‘planes, trains, automobiles’ maps, telling you how to get from HERE to THERE.
Also, it would be a good idea to have a compass to tell which way is UP when you read the maps!
3. The Rules of the Road
Now, it would be nice to get to where you’re going without being arrested. If it’s a local journey, you can probably use common sense (although, it’s still best not to jaywalk).
But, if it’s a global scale journey, the rules may be totally different at different stages of the journey (you DO know that the Brits drive on the other side of the road, don’t you?).
Well, making money is a journey as well … therefore, you need …
… three things:
1. A destination
When it comes to money, your destination is in two parts (a) HOW MUCH you need, and (b) WHEN you need it. The when is usually in terms of WHEN you stop working, but it need not be; and the HOW MUCH is determined by how well you want to live when you get there (1 star? 5 star? In between?).
2. A map and compass
Your map will be the three stages of your financial journey (getting debt free and starting a savings plan; ramping up both your income and your investments; keeping your money once you get wherever ‘there’ is for you) and we will cover all of that over the coming weeks.
Your compass will be your Investment Net Worth (we’ll discuss the difference between this and your ordinary, old ‘net worth’ later this week).
3. The Rules of the Road
Like every good ‘rule book’ the Rules of the Finance ‘road’ is a thick one! I’ll be giving you many of these rules over the coming weeks and months in the cyber-pages of this blog; an example of a Financial Rule is the 20% rule of investing in your own home …
… there are many, many more. By learning these Financial Rules, you can shave YEARS off the time it takes you to get rich.
This blog is here to show you how!
