That Millionaire next door

Guest post by Samuel G. Njenga

Believe it or not, one of the most important indicators of whether you can become a financially free is how you think. Yes, a large part of financial success begins with your mind.

What are your thoughts about money and wealth? Do you think like the wealthy millionaire next door?

Millionaires are not afraid to take risks

Many of us fear change and would rather settle on the easy path - the path of least resistance. This path will never lead to wealth. Millionaires are millionaires because they do things differently from most people. They are willing to take risks (calculated ones) and responsibility for whatever the outcome.

Millionaires are positive thinkers

This does not mean that they deny that things can go wrong. It just means that by default they expect things to work out. Millionaires are realistic positive thinkers.

When they create a plan, they anticipate what might go wrong and develop a strategy for coping should that plan go south. This way they decrease their level of failure. And their high success level reinforces their assumed expectations that things will work out in the end.

Millionaires cope well with failure

Failure is an inevitable stumbling block on the road to success. Every millionaire has failed at some point, and because they play with high stakes, they've probably had some very big failures. A case in point is one Donald Trump who was 900 million in debt at some point.

However, the difference between millionaires and most people is that they don't dwell on their failures. Instead, they accept them as part of life and make a point of learning from them.

They are creators, not victims

Millionaires don't passively sit around accepting whatever happens to them. If they're not happy with their current financial situation, they take action. For example, when they lose, it's highly doubtful that they spend all their energy dwelling on how much money they lost and how they'd never get it back. Instead, they are most likely thinking, "What do I need to do to right now to create enough money to be a millionaire again?"

Millionaires are leaders

A follower doesn't typically come up with a million dollar business idea. And if they do, chances are they won't act on it. Millionaires think like pioneers. Their minds are always open to the next great opportunity they can turn into a reality. And once they have an idea, they effectively harness the energies to materialize it.

If you want to be a millionaire, you should begin thinking like one. Your mentality colors your entire perspective of the world. And once you begin seeing possibilities where you once saw dead ends, you'll be surprised at how much abundance there really is to go around.

Note: We will get practical in this journey to financial education. For now we are just dealing with basic but very important concepts. For practical lessons, we will also be relating to the Kenyan scenario(s) so as not to sound theoretical. Just to caution readers that the we have a bias to real estate and most of the topics will revolve around it in future. However, other important topics like financial planning, chamas (Investment groups), Life insurance, leveraging on borrowing amongst others will be covered in due course.

In the next post, we look at activating that financial genius in you.

How to create wealth and attain financial freedom

Stop mismanaging your money well

The century old book by George S. Clason © 1929 The Richest Man in Babylon points out these secrets to offer yourself ability to increase your networth and have money work for you:

1. Pay ‘yourself first’, put away at least 10% of your income consistently. "What have you to show for your earnings of the past month? What of past year? You pay to everyone but yourself! A part of all you earn is yours to keep. And it should be no less that a tenth no matter how little you earn." Open a separate bank account designated your Financial Freedom Account (Read T. Hav Eker's Secrets of the Millionaire Mind).  The job of this account is to build a golden goose that lays golden eggs called passive income. And when do you get to spend the money? Never! It is never spent-only invested. Eventually, you get to spend the income from the investments (the eggs), and never the principal (the goose) itself. In this way, it always keeps growing and you can never go broke. So,
2. Act today, start saving not less than 10% of every dollar you receive (after taxes) to this account.
3. Invest your savings where it’ll earn more money safely - use it for buying assets and investments to create passive-income streams. Re-invest the earnings to get more earnings. Increase your ability to earn  and multiply your income sources.
4. Control your expenditure (live on less than you earn, at most 60-70% of your income – Budget and track your expenses).
5. Guard your savings from loss - do not invest in areas you are not familiar with, or have no wise guidance in doing so.
6. Make of thy dwelling a profitable investment - owning the house you live in is a plus to your net worth
7. Insure your future income

When to take action

Time to start taking action towards a wealth goal is now. Why now? Because;

}  You spend an enormous amount of time thinking about money if you do not have it

}  Newton's First Law of Motion applies: A body in rest remains so and a body in motion tend to remain in motion, unless, it is acted upon by an unbalanced force. Nothing will change in how you manage your money if nothing changes!

}  Just like other natural laws, there are certain laws that govern acquisition of money and property (wealth)

}  To produce effect (result) there must be a  cause (law of cause and effect)

}  Financial success is not a result of entirely dependent on Environment, Talent, Hard-work, Thrift/ frugal rather it depends on doing things in a certain way – following the laws that govern acquisition of wealth.

}  If you set for yourself a SMART Goal, God has already given you potential to achieve it.  On the contrary, if you aim at nothing, you will achieve it.

It does not matter whether you have a lot of money (which is good), or have nothing. Until you show you can handle what you've got, you won't get any more! You must acquire habits and skills of managing a small amount of money before you can have a large amount. Remember, we are creatures of habit, and therefore the habit of managing your money is more important than the amount. Either you control money, or it will control you. To control money, you must manage it well. 

Our next post will delve more on personal financial management.

Money and wealth: As a man thinketh

Why we need to get money and wealth

}  We exist in 3 realms at same point: Body, mind and spirit

}  Full expression of all three is important, none is less important than the other

}  Expression by the 3 requires material (money)

1. Body- good food, clothes, recreation (rest) & shelter
2. Mind- needs learning, observation, fellowship, captivation, objects of art
3. Spirit – need to express love through giving, worship to God, ministry to others

Why we need to recondition our minds for wealth

}  How you think affects how you act, and the results you get (cause and effect)

}  Financial success begins with your mind (As a man thinketh in his heart, so is he. Prov. 23:7)

}  God has given potential at birth in the mind – to create, manage and grow things that you desire (incl. wealth).

}  Our upbringing, belief system, culture, shapes how we think about money 

}  We learn how to think through observation, hearing & doing

In his book, Secrets of the Millionaire Mind: Think Rich to GetRich!, T. Harv Eker lists seventeen ways in which the financial blueprints of the rich differ from those of the poor and the middle-class. According to him:

1. Rich people believe: “I create my life.” Poor people believe: “Life happens to me.”
2. Rich people play the money game to win. Poor people play the money game to not lose.
3. Rich people are committed to being rich. Poor people want to be rich.
4. Rich people think big. Poor people think small.
5. Rich people focus on opportunities. Poor people focus on obstacles.
6. Rich people admire other rich and successful people. Poor people resent rich and successful people.
7. Rich people associate with positive, successful people. Poor people associate with negative or unsuccessful people.
8. Rich people are willing to promote themselves and their value. Poor people think negatively about selling and promotion.
9. Rich people are bigger than their problems. Poor people are smaller than their problems.
10. Rich people are excellent receivers. Poor people are poor receivers.
11. Rich people choose to get paid based on results. Poor people choose to get paid based on time.
12. Rich people think “both”. Poor people think “either/or”.
13. Rich people focus on their net worth. Poor people focus on their working income.
14. Rich people manage their money well. Poor people mismanage their money well.
15. Rich people have their money work hard for them. Poor people work hard for their money.
16. Rich people act in spite of fear. Poor people let fear stop them.
17. Rich people constantly learn and grow. Poor people think they already know

The Top 10 Distinctions Between Millionaires and the Middle Class book by Keith Cameroon Smith points out:

1. Millionaires think long-term. The middle class thinks short-term.
2. Millionaires talk about ideas. The middle class talks about things and people.
3. Millionaires embrace change. The middle class is threatened by change.
4. Millionaires take calculated risks. The middle class is afraid to take risks.
5. Millionaires continually learn and grow. The middle class thinks learning ended with school.
6. Millionaires work for profits. The middle class works for wages. 
7. Millionaires believe they must be generous. The middle class believes it can’t afford to give.
8. Millionaires have multiple sources of income. The middle class has only one or two.
9. Millionaires focus on increasing their wealth. The middle class focuses on increasing its paychecks.
10. Millionaires ask themselves empowering questions. Middle-class people ask themselves disempowering questions.

Notice the similarity of these distinctions with those by Harv T. Eker.