[PDF]The Rules Of Money

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THE

RULES

OF

MONEY

EXPANDED EDITION

$

How to Make It and
How to Hold on to It


RICHARD TEMPLAR

The author of the international best-seller Ibt Rule! of Work











THE

RULES OF
MONEY


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THE


RULES OF
MONEY

How to Make It and
How to Hold on to It

Expanded Edition

RICHARD TEMPLAR


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©2012 by Pearson Education. Inc.

Publishing as FT Press

Upper Saddle River, New Jersey 07458

Authorized adaptation from the original UK edition, entitled The Rules of Wealth,
Second Edition, by Richard Templar, published by Pearson Education Limited,
©Pearson Education 2012.

This U.S. adaptation is published by Pearson Education, Inc..

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Printed in the United States of America
First Printing January 2012

ISBN-10: 0-13-290781-X
ISBN-13: 978-0-13-290781-1

Pearson Education LTD.

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The Library of Congress Cataloging-in-Publication Data
Templar. Richard. 1950-2006.

The rules of money: how to make it and how to hold on to it / Richard Templar. —
Expanded ed.
p. cm.

ISBN 978-0-13-290781-1 (pbk.: alk. paper)

1. Wealth. 2. Finance. Personal. 3. Money. 4. Success. I. Title.

HC110.W4T46 2012
332.024—dc23

2011045649


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Contents


Acknowledgments.x

Introduction.xi

Parti Thinking Wealthy.2

1 Anybody Can Be Wealthy—You Just Need to Apply

Yourself.4

2 Decide on Your Definition of Wealth.6

3 Set Your Objectives.8

4 Keep It Under Your Hat . 10

5 Most People Are Too Lazy to Be Wealthy. 12

6 Get a Reality Check. 14

7 Understand Your Money Beliefs and Where They

Come From . 16

8 Understand That Wealth Is a Consequence.

Not a Reward . 18

9 Decide What You Want Money For .20

10 Understand That Money Begets Money.22

11 Calculate the Net Return .24

12 If You See Money as the Solution. You'll Find It

Becomes the Problem.26

13 You Can Make Lots of Money. You Can Enjoy Your Job.

and You Can Sleep Nights .28

14 Don't Make Money by Being Bad .30

15 Money and Happiness—Understand Their

Relationship .32

16 Know the Difference Between Price and Value.34

17 Know How the Wealthy Think.36

18 Don't Envy What Others Have.38

19 It's Harder to Manage Yourself Than It Is to

Manage Your Money.40


CONTENTS v

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Part II Getting Wealthy.42

20 You've Got to Know Where You Are Before You Start.44

21 You've Got to Have a Plan .46

22 Get Your Finances Under Control.48

23 Insurance Pays Someone, and Odds Are It's Not You ....50

24 Only by Looking Wealthy Can You Become Wealthy.52

25 Speculate to Accumulate (No. This Isn't Gambling).54

26 Decide Your Attitude to Risk .56

27 Think Through the Alternatives to Taking a Risk .58

28 If You Don't Trust Someone. Don't Do Business

With Them.60

29 It's Never Too Late to Start Getting Wealthy .62

30 Start Saving Young (or Teach Your Kids This One If It's

Too Late for You).64

31 Understand That Your Financial Needs Change at

Different Stages of Your Life .66

32 You Have to Work Hard to Get Rich Enough Not to

Have to Work Hard.68

33 Learn the Art of Deal Making .70

34 Learn the Art of Negotiating .72

35 Small Economies Won't Make You Wealthy but

They Will Make You Miserable.74

36 Real Wealth Comes from Deals Not Fees.76

37 Understand That Working for Others Won't

Necessarily Make You Rich—but It Might .78

38 Don't Waste Time Procrastinating—Make Money

Decisions Quickly.80

39 Work as If You Didn’t Need the Money.82

40 Spend Less Than You Earn .84

41 Don't Borrow Money—Unless You Really. Really

Have To.86

42 Consider Consolidating Debts.88

43 Cultivate a Skill and It'll Repay You Over and

Over Again.90

44 Pay Off Your Loans and Debts as a Priority.92

45 Don't Be Too Busy Earning a Living to Make

Some Money.94


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46 Save in Big Chunks—or Should You? .96

47 Don’t Rent; Buy.98

48 Understand What Investing Really Means. 100

49 Build a Bit of Capital. Then Invest It Wisely. 102

50 Understand That Property, in the Long Run,

Will Not Outpace Shares . 104

51 Master the Art of Selling . 106

52 See Yourself as Others Do. 108

53 Don't Believe You Can Always Win. 110

54 Don’t Pick Stocks Yourself If You Don’t Know

What You’re Doing . 112

55 Understand How the Stock Market Really Works. 114

56 Only Buy Shares (or Anything) You Can Understand .... 116

57 Use Your Head. 118

58 By All Means. Use the Investment Professionals

(but Don’t Be Used by Them). 120

59 If You Are Going to Get Financial Advice. Pay for It. 122

60 Don’t Fiddle. 124

61 Think Long Term. 126

62 Have a Set Time of Day to Work on Your Wealth

Strategy. 128

63 Pay Attention to Detail . 130

64 Create New Income Streams . 132

65 Learn to Play "What If?”. 134

66 Control Spending Impulses. 136

67 Don’t Answer Ads That Promise Get-Rich-Quick

Schemes—It Won’t Be You Who Gets Rich Quick. 138

68 There Are No Secrets. 140

69 Don’t Just Read This—Do Something . 142

Part III Get Even Wealthier .144

70 Carry Out a Finance Health Check Regularly . 146

71 Get Some Money Mentors. 148

72 Play Your Hunches. 150

73 Don’t Sit Back . 152

CONTENTS vii

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74 Get Someone to Do the Stuff You Can't . 154

75 Know Yourself—Solo. Duo. or Team Player . 156

76 Look for the Hidden Asset/Opportunity. 158

77 Don't Try to Get Rich Too Quickly. 160

78 Always Ask What's In It for Them. 162

79 Make Your Money Work for You . 164

80 Know When to Let Go of Investments . 166

81 Know Your Own Style. 168

82 Know Why You Should Be Able to Read a

Balance Sheet—and How. 170

83 Be One Step Ahead of Your Tax Collector. 172

84 Learn How to Make Your Assets Work for You . 174

85 Don't Ever Believe You're Only Worth What You

Are Being Paid . 176

86 Don't Follow the Same Route as Everyone Else. 178

Part IV Staying Wealthy.180

87 Shop for Quality . 182

88 Check the Small Print . 184

89 Don't Spend It Before You've Got It. 186

90 Put Something Aside for Your Old Age—No.

More Than That! . 188

91 Put Something Aside for Emergencies/Rainy Days—

the Contingency Fund . 190

92 You Paid What for It? How to Shop Around . 192

93 Never Borrow Money from Friends or Family

(but You Can Allow Them to Invest) . 194

94 Don't Surrender Equity . 196

95 Know When to Stop . 198


viii THE RULES OF MONEY

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PartV Sharing Your Wealth.200

96 Use Your Wealth Wisely.202

97 Never Lend Money to Friends or Family Unless You

Are Prepared to Write It Off.204

98 Don’t Lend. Take Equities .206

99 You Really. Really Can't Take It with You.208

100 Know When/How to Say No—and Yes.210

101 Find Ways to Give People Money Without Them

Feeling They Are in Your Debt.212

102 Don't Over-Protect Your Children from the Valuable

Experience of Poverty .214

103 Know How to Choose Charities/Good Causes.216

104 Spend Your Own Money Because No One Will Spend

It as Wisely as You .218

105 Take Responsibility Before You Take Advice .220

106 Once You've Got It. Don't Flaunt It.222

107 What's Next? Pacts with the Devil?.224


CONTENTS ix

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Acknowledgments


I would like to thank Dan Clayden, director of Clayden
Associates—Independent Financial Advisers (www. clayden
associates.co.uk) who was so kind as to go through a draft
of this book in the early stages and put me right on a few
things and is one of the best financial advisers I have ever met
professionally.

I would also like to dedicate this book to my delightful father-
in-law who manages his money in a kind, generous, honest and
moral way and still manages to make it work for him efficiently
and expertly. Fie is an example to all of us. He is a Rules Player
par excellence.


THE RULES OF MONEY


x


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Introduction


There’s an old saying “Money, money, money—it’s all they can
think about.” Unlikely to be true of course, given that hardly
anybody thinks about money itself (unless they happen to be a
coin collector). The reason we all pursue and desire and fiercely
protect money is because of what we can do with it.

And no, of course money can’t buy you love or happiness.
Although it can buy a good deal of pleasure—and remove a lot
of unhappiness. But it can buy you plenty of other things. Over
the years I’ve identified the ten things which people most seem
to want to spend their money on:

1 Security: A home of your own and enough money in the
bank to support you in the way you want, plus a bit in hand
for emergencies, and a big enough pension to ensure a
comfortable retirement.

2 Comfort: A warm and spacious house, a big car, someone
to clean or mow the lawns or do the laundry or mind the
kids, and good quality medical care whenever you want it.

3 Luxuries: Exotic vacationss, fine wines, meals at top-class
restaurants, expensive clothes, the best seats at sports events
or opera or whatever you enjoy.

4 Mobility: First-class train seats and plane tickets, trips on
cruise ships, chauffeur-driven cars wherever you are in the
world.

5 Status: Prestigious invitations, access to important people
and exclusive clubs, and perhaps even gratifying deference
from others.


INTRODUCTION xi

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6 Influence: As a generous donor of substantial sums, you
can make sure that your views and wishes are listened to
and taken seriously.

7 Freedom: Not being dependent on employers, bosses,
creditors, clients, customers. Not being a slave to the
calendar, diary, or clock. Knowing you won’t have to be a
burden on your children.

8 Leisure: Time to do the things you want, go where you
want, meet who you want, when you want.

9 Popularity: Being able to entertain friends, acquaintances,
and contacts frequently and generously does wonders for
your social life.

10 Philanthropy: Being able to make regular and substantial
donations gives you the satisfaction of helping people,
supporting organizations, and furthering causes you
believe in.

Seems a reasonable enough list to me. And whether it’s some
or all those things that you’d like more of, you need to know
how to go about generating greater wealth—which means you
need to know what it is that separates the wealthy from the
not-so-wealthy. So, what you need to know is what principles,
and what behaviors the rich have, that you don’t (yet). Some of
them you will realize that you know, but don’t do. None of this
is actually rocket science; it’s about understanding and then
doing. I’ve studied a lot of wealthy people, and it’s clear to me
that there are some fundamental common principles followed
by almost all. The bulk of the Rules in this book fall into that
category. Then there are also some principles which some rich
people swear by, but not all. I’ve included some of those too for
good measure, just in case you too are one of the people they do
the trick for.

Security, comfort, luxuries, mobility, status, influence, free¬
dom, leisure, popularity, philanthropy—that’s all some people
think about. They may not be everything; they may not even

xii THE RULES OF MONEY

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guarantee a happy life, but they’re a pretty good basis to build
happiness on.

I’ve tried to set out in this book the most important Rules that
can help you achieve these ten things. All of them purport to be
about accumulating money, and of course in a sense they are,
but at heart they’re about money only as a means to an end. A
means to achieve those ten ends.

Of course I don’t claim that these hundred or so Rules are the
only means to these particular ends. You may encounter others
along the way that you find helpful. If so, please do feel free to
share them. You can email me at Richard. Templar @richard-
templar.co.uk.

Richard Templar


INTRODUCTION xiii


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PARTI


THINKING

WEALTHY


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Money is a concept. You can’t really see or touch it (unless you
are holding a gold bar in your hand). You can only do that with
some physical symbol of it like stock certificates or a check. Bits
of paper, yes, but bits of paper with enormous power.

The concept of money comes with a lot of baggage to most of
us. We have an inherent belief that it is good or bad and that
wanting it is good or bad. That loving it is good or bad. That
spending it is good or bad.

What I am going to suggest in the first few Rules is that
maybe, just maybe, how we think about wealth might be hold¬
ing us back from having wealth. If, in our heart, we believe
(even subconsciously) that money is a bad thing and having lots
and lots of it is a really bad thing, then chances are we might be
undermining our own efforts, unwittingly, to get lots of it.

I am also going to get you to look at how much effort you are
prepared to put into making money. It’s a bit like a sport—the
more you practice, the better you become. Likewise you can’t
make money while being lazy. You’ve got to put in some work
here, you know.

You’ve also got to know pretty intimately what you want, why
you want it, how you think you are going to get it, what you are
going to do with it after you’ve got it—stuff like that. No one
said this was going to be easy....


THINKING WEALTHY 3


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RULE 1


Anybody Can Be Wealthy—You Just
Need to Apply Yourself


The lovely thing about money is that it really doesn’t discrimi¬
nate. It doesn’t care what color or race you are, what class you
are, what your parents did, or even who you think you are. Each
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