| Real Life Strategies for Building Wealth

It doesn’t cease to intrigue me how sometimes destiny intervenes in our lives and sends us a glimpse of something that may not be entirely unexpected but is still striking in its assurance. I am not going to bore you with further profound and woolly statements – I know that most of you are practical, educated and short of time people; so the faster I move to the point the higher the chance I keep your attention.

Now, my faithful readers have noticed that the focus of The Money Principle has been changing somewhat – from more general money management and debt (negative wealth) busting to accumulation, investing and building sufficient income so that in five years’ time I won’t have to work if I don’t want to. There is a very good reason for that and it is not that I have very low boredom threshold – I am fifty, guys, so I have just entered my Autumn! In accord with my beliefs I am entering the Autumn of my life with hardly any debt (well, this will be completely gone in couple of months but you will hear separately about it) and focusing on accumulation.

Couple of weeks ago we published a series of article setting out the principles of calculating how much we need, then publishing our number and finally John developed and offered to our readers a nifty calculator.

The next day, I was checking out what is happening on Budgets are Sexy – I do this, you know, I love the site. I read the first sentence of the most recent post and it stated that ‘most personal finance is BS’. I read it again! It hadn’t changed. ‘Interesting’ – I thought – ‘J$ has never done anything like that before and honestly it doesn’t sound like him.’ So I looked again.

Then I realised that I am reading a guest post by someone called Adrian; not only that – Adrian has a blog (7million7years) which is fine and Adrian is actually Adrian J. Cartwood who had just co-published a personal finance book. ‘Help’ – I am thinking – ‘not another one!’ Does the world really need another personal finance book?

By now you, my readers, have probably noticed that my reaction was entirely in line with the first sentence of Adrian’s guest post – although I probably won’t put it in exactly the same terms (after all, I am a lady J) I do despair from reading the same personal finance mantras over and over again: spend less than you earn; save as much as you can; and the main thing, build an emergency fund to last you an eternity, lock it in safe 100 miles away and throw the key away.

I was naturally intrigued!

First I went on Adrian’s blog; and why hide it – I liked what I read there very much, it sang to me. The next thing I knew I was on Amazon Kindle doing the ‘one click’ thing. Three days later I had managed to finish Adrian’s book (despite all demands on my time lately) and it was a strange experience. Reading Share Your Number was like talking to a close friend – there were no surprises but this didn’t annoy me. Because it confirmed most of what I have felt for some time now and a lot of what I have been discussing on The Money Principle.

What is this book about?

The main premise of the book is something I have also been telling you about: it is not that your money is about your life, but your life is about your money. Once he got this one out of the way, Adrian, from experience no less, argues more or less the following:

  1. If we set up a number (an amount of money we really think we need to be able to live the life we want to live) and a time to get there it can be done. It does need action but anyone who acts can get there.
  2. To be able to work out ‘our number’ we need to create a very specific picture of the life we wish to lead. Part of this can be done by finding our life’s purpose – apart from acting as an anchor for imagining the life we want this also creates a very strong desire to have this life. In brief, working out what is our life’s purpose is good for the calculation and for our motivation. (As a side note, when John and I wrote about our enough we forgot to mention that we had worked out our life’s purpose and it is not to bathe in champagne.)
  3. There is a (relatively) simple way to work out your number – get as much information as you can about how much the life style you desire will cost today and then you can multiply the annual number by 20 – what you get is your number. Of course you can be more specific but this can also do.
  4. This number may seem scary at first but don’t be alarmed – think of this thing as a mountain. This way very simple pointers emerge: a) you can make the mountain less steep (the number less scary) if you increase the time; or b) you can put some more steam into the whole thing.
  5. Don’t focus on debt; focus on making money and increasing your cash flow.
  6. Don’t simply save – invest; and invest cleverly. You can get high ROI but the risk increases proportionately.
  7. Don’t keep ‘dead money’ around. Yes, you heard right – this plentiful emergency fund is ‘dead money’. Emergencies are very rare and most people reporting an emergency also say it needed up to $2,000 (let’s say £1,500) to sort it out.

Apart from these key messages, and they really speak to me, I liked the fact that Adrian’s approach is not about cold logic and pure maths; he talks about mentality, and feelings and shares imaginative ways that can help us figure ourselves out. The book contains helpful examples, tools that people trying this approach have developed etc.

And the main thing: the guy did it! He started $30K in debt, with a business losing money (loads of it) and made seven million in seven years.

You want to have a go? What are you waiting for: get the book, change your thinking, re-adjust your feelings, decide on a number and go for it! You will never know what you are capable of if you don’t even try.