How to master money

You have what it takes to add massive value to the world – and to make money for yourself. The key is to identify your expertise, maximise its worth, and invest the proceeds wiselyPaul McKenna
Would you like to double your money, starting today? Let’s begin exploring your hidden wealth (those ideas and resources that are already available to you but up until now you haven’t thought of as “money makers”) with this same simple exercise . . .

1. If you woke up one morning in a place where you knew no one, with £100 in your pocket, how long would it take you to double your money, and how would you do it? To help you in exploring this further, think through your answers to the following questions:

–– What are you an expert at? What do you know (or would enjoy knowing) more about than most people?
–– What are your skills and abilities? What do you do (or could you do) better than most people?
–– What have you accomplished up to this point in your life that other people respect or admire you for?
–– What things do you have that other people would love to have?
–– What do you currently do for free that people will pay you for?

2. Once you’ve doubled your money, how long would it take you to double it again (ie, from £200 to £400)? How would you do that? The more often you do this exercise, the less dependent you will become on money as the source of your wealth. When I asked this question of some of the rich thinkers, their answers were intriguing.

–– Peter Jones said that he would find products that he could buy and then sell them like a street trader. It wouldn’t matter what the products were, because he’d be doing it to accumulate enough money to invest in other things that he could be more passionate about and that would have uniqueness, and greater scope and impact.
–– The young property magnate Nick Candy’s answer was extremely bold. He said that he would find the richest entrepreneur in town and say to him: “Invest £1 million in me and I will give you a 20 per cent return within a year.”

The point of the exercise is to demonstrate that we all have the capacity to create money using nothing but the ideas in our heads and the skills in our personal arsenal. This is one of the most important ideas you will learn on your path to riches: You are your own money! When you really realise this, you will never have to worry about “not having enough in the bank to be safe”. Your true riches don’t lie inside a bank, but rather live freely inside your mind.

Creating value

Once you master the art of creating and adding value, you simply need to learn to exchange that value appropriately. This is another area where rich thinkers do things just a little bit differently. Exchanging time for money is ultimately a limited game. No matter how you charge, there are only 24 billable hours in a day. But when you learn to charge for the value you are creating, there are no limits to how much you can earn.

For example, what do you think is a reasonable mark-up on a product or service? Ten per cent? Fifty per cent? A hundred per cent? Could you justify a 4,000 per cent mark-up?

A friend of mine is a very successful salesman. I remember being astounded by a deal he once did where software that cost his company around £200,000 to research and develop and less than £50 to manufacture was sold for more than £10 million. When I asked him how he justified such an enormous difference between the cost and the price, he said: “I knew from the research we had done that using our software would save the company nearly £50 million. After some negotiation, we settled on a payment of approximately 20 per cent of their benefit.”

Grow rich while you sleep

As you become more and more skilled at spotting opportunities to add value and exchange that value for money, you will begin to accumulate reserves of cash. If you use that “extra” money wisely, you can create a lifetime of financial abundance without having to keep working harder, longer or even more smartly.

When the BlackBerry was first introduced, a friend of mine demonstrated how he could keep track of how much money he was making while sitting at dinner. Although he started his life working in a factory, he now travels the world and has made millions.

Another friend, who loved to cook, saved and saved until she had enough of a down payment to start a restaurant. For the first few years she worked there every day and loved it.

Now, she’s opened two more restaurants and works only a couple of days a week. Meanwhile, the restaurants have made her financially independent.

This is perhaps the ultimate ‘secret’ to making money: don’t put yourself to work for money when you can put money to work for you!

The way you do this is by investing your time, energy and money in what are called “profit-generating assets”.

What is a profit-generating asset? Anything you own that makes you money, whether or not you show up to work. This could be a rental property or a piece of intellectual property; a business, product or invention; an effective employee or even an effective brand.

This is also one of the fundamental differences between how rich thinkers and poor thinkers spend their money:

–– Rich thinkers spend their money on assets – things that will make them more money in the future.
–– Poor thinkers spend their money on expenses and liabilities – necessities that cost them money now and pointless things that seem fun at the time but will cost them more money in the future.

This is also the crucial difference between using a job to make money and using an asset – the asset will continue to make you money long after you’ve stopped working. And these days, with the internet continuing to shrink the global market, creating and/or investing in profit-generating assets is easier than ever.

Creating a financial snapshot

1. Make a list of any current or potential profit-generating assets you currently own. It’s OK if you don’t have many, but here are some of the commonly overlooked ones. Examples: My computer – I can use it to start an internet-based business.

My home – I could rent out a room or create a home office.

My telephone – I can use it to make sales calls and negotiate deals.

2. Now, make a list of your current liabilities. Examples: Car payments. Time share. Anything you own that is difficult and/or expensive to maintain.

3. Are your current spending patterns those of a rich thinker or a poor thinker? Evaluate any money you spend from now on according to these criteria.

4. Brainstorm at least 20 ways to either increase your profit-generating asset column or decrease your liability column in the next month.

5. Take action on your best ideas!

Money-making mastery

If you aren’t yet getting excited about doubling your money and creating profit-generating assets, the chances are it’s because at some level you don’t yet believe that you have what it takes to add massive value to the world and, in doing so, make a lot of money.

Until you really begin to see yourself as someone capable of making a difference, it will be difficult for you to make any real impact on your net worth. This exercise will help you to accelerate the process . . .

An expert at making money

1. Think of something you already do well. It could be a hobby, a sport, or even something to do with your current job or occupation. When you imagine it, notice the location of the image you make. Where do you picture it – in front of you, to the left or right?

2. Next, notice the size of the image – is it life-size, larger than life, or smaller? Does it have much colour? Is it bright or dim?

3. Now, stop for a moment and imagine what it would look like if you had the ability to make money easily. What do you imagine, and, more importantly, where is the image located? In front of you, to the left or right?

4. In a moment I’d like you to move the picture of you making money and put it exactly where the picture of you doing something extremely well was located. Make it the same size and brightness too.

Some people like to just slide one image across to where the other was, other people like to imagine an elastic band on the back of the image of making money that is attached to the horizon, so the image shoots off and then snaps back into the position where the image of doing something well was located.

However you choose to do it, do it now . . .

5. In the future, each time you think about making money, take a moment to make sure your new picture is firmly in place.

The millionaire mindset

The retail billionaire Sir Philip Green told me how he once bought 2,000 shops without even going to see them.

When I asked him how he found the confidence to do something so seemingly risky, he surprised me by saying, “I don’t do risk. I do what I call ‘educated risk’. In that instance, I didn’t need to see the shops. I had downsided the deal and knew it was worth it. Essentially, I did my homework and then bet on my own judgment.” He also told me: “Whenever I have faced a setback I have dusted myself down and got on with the rest of my life because I believed in myself.”