The rules of money slides a

The Rules of Money

© 2012 Wealth Education Foundation

How To Get Rich and Stay Rich

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Name That Celebrity!

How much? Approx. $100 MillionBankruptcy

Never paid attention to his money or money managers.It just disappeared.

After finding he had no money left, he found out he owed the IRS $13 Million to IRS.Possible jail time.

Free Willie! Willie Aide!

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Name That Celebrity!

How much? Approx. $200 Million

Huge Posse, Massive Spending SpreesDivorce

Couldn’t Pay His $860,000 Jewelry Bill

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Name That Celebrity!

How much? Approx. $40 Million$20 Million to buy the town of Braselton, GA

Sold it a few years later for $1 MillionKimmy-Wood? Really?!

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Name That Celebrity!

How much? Approx. $300 MillionMansions, Cars, Tigers, Jewelry, Posse

$13 Million to IRS$9 Million to Divorce$9 Million Legal FeesUnethical Managers

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Name That Celebrity!

How much? Approx. $?00’s Millions$400 Million in debt when he died

$35 Million in improvements to Neverland Ranch

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What Does “Rich” Mean?

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Does Money Equal Happiness?

• NO– Scientifically proven!

• But money problems make everything hard– #1 cause of divorce– Depression– Inability to make choices– Life’s hardships become overwhelming

• Money security eliminates many causes of unhappiness– You can make the choice to have financial security

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Where Do Millionaires Come From?

• Most millionaires did NOT inherit or win their money– 80% of Americans worth at least $5 million grew up in middle-class or lesser

households– 33% of millionaires are entrepreneurs– A small fraction of millionaires are sports or entertainment figures

• There are rules for accumulating wealth– Money works in a certain way. If you don’t get it, you’ll never have money– The rules are easy to learn… following the rules CONSISTENTLY is hard!

• How much you make definitely matters – More important is what you do with what you make– More education equals more income and less unemployment

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You decide. Here are some facts…

∙ Average Yearly Income in the United States (over age 25) High School drop out - $20,321 High School Graduate - $26,505 Bachelor’s Degree - $43,143 Master’s Degree - $52,390 Doctorate Degree (Phd) - $70,853 Professional Degree - $82,473

(MD, JD) Overall - $32,140

∙ Unemployment rate is approximately 8.3% 13% unemployment rate for those with no college degree 3% for those with a college degree Those with no degree are unemployed 25% longer

How Important Is Education?

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The Rules of Money

• Most of your money is not yours… not really.

• Mandatory expenses will suck most of your money into a black hole!– Rent, Electricity, Water, Heat, Gas, Car, etc., etc.

• 10% to 20% of all the money you make must be kept for you!

• You need to have some of what you want also– Understand the decisions you make– There are causes and consequences for each decision you make… do you know

what they are?

• If you have organized your finances in such a way that the Rules are automatically handled, you can probably afford to do things you want to do a reasonable amount of the time.

Rule 1: A portion of all the money you make is yours to keep

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The Rules of MoneyRule 2: Make your money work hard for you,

while you work hard for money.

• The KEY to getting rich is INVESTING!– Markets (Stocks, Bonds)– Real Estate

• Home ownership (Watch out for the trap… extra expenses!)• Later on, rental properties.

• What if someone handed you a bag of money every year?– Investing is like handing yourself a bag of money. It just shows up.– Don’t forget the risks, but don’t let fear stop you.

• Investing is about the Time Value of Money (TVM)– How much Money, how much Time, what is your Rate of Return?– Time is the most important of the three. Rate of Return once you have a lot.– NOTE: Debt is TVM being used against you to make someone else rich.

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The Rules of Money

• The more money you have, the more important your investment decisions become.

• Figuring out if you’re getting good advice is HARD!

• Rate of Return increases in importance as funds grow in size.

• Is the person you’re talking to an expert?– Get multiple opinions before forming your own!

• If it all goes wrong, start again!– Life happens – Never give up!

Rule 3: Get good advice.

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1. A portion of all the money you make is yours to keep  2. Make your money work hard for you, while you work hard for money  3. Get good advice

now What?

The Rules of Money

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The 3 Account system for following…

The Rules of Money!

Putting It All Together

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Checking Account

Savings Account Investment Account(s)

Life Expenses.

10% Minimum

3 Accounts for Organizing Your Life Using The Rules of Money

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3 Accounts for Organizing Your Life Using The Rules of Money

Your Life(Checking Account)

Emergency Money = 6 months Life Expenses This keeps emergencies from

throwing you off track.

InvestmentsRule #2: “Make your money work hard for you, while you work hard for money.”

Rule #3: “Get good advice.”

Money comes in… paychecks, bonuses, gifts, etc. Life is expensive! Most of your money

disappears into a black hole.

Life Expenses.(Don’t let them get so large that you can’t follow Rule #1. Have a budget!)

Rent, water, heat, electricity, car, gas,

insurance, food, movies, trips, repairs, television,

restaurants, presents, clothes, shoes… and on

and on and on!

Money Goes Out…

Don’t forget Rule #1! “A portion of all the money you make is yours to keep.” (At least 10%)

Account #1

Account #2 Account # 3

Savings Account

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The Rules of Money

1. A portion of all the money you make is yours to keep  2. Make your money work hard for you, while you work hard for money  3. Get good advice

Make it Automatic!

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The Rules of Money

1. A portion of all the money you make is yours to keep  2. Make your money work hard for you, while you work hard for money  3. Get good advice

Make The Choice to Make it Happen!

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The Rules of Money

1. A portion of all the money you make is yours to keep  2. Make your money work hard for you, while you work hard for money  3. Get good advice

Make The Choice to Make it Happen!