When it comes to money, most people shy away from discussing it and avoid anything related to such discussions and I have to admit I was one of them. I grew up in a culture that taught us to be generous and kind – we were brought up with the idol Hatem al Taii, who slaughtered his own horse to feed his guests – but to talk about money is taboo.
So I have spent the last three years learning from the most successful and financially free people in the world about the meaning of money. I wanted to know whether there were laws that govern this concept and can help people become rich, even financially free.
Through many books, courses and video research, I reached the point where I could put together the five most important laws to help people change their thoughts about money. Not only that, but show how to apply these rules to create a better financial life.
First things first. Money is the means by which people exchange material, services and expertise. Before money was invented, people used to exchange items and works for what they wanted. I still remember my grandmother’s stories how, only100 years ago, they would buy what they needed with the eggs they produced on their farm.
So if money is a means of exchange, we can think of it as a vehicle that allows us to get what want. It helps us travel wherever we want and gives the blessing of being able to help our families, loved ones and anyone in need. Let me be absolutely clear, money does not buy happiness, but I assure you that it can buy each and every thing or experience that will make you feel happy, it will allow you to give to others in abundance and fulfil one of our most important needs – a sense of contribution.
The first thing to remember is never feel ashamed or shy away from talking about money. Secondly, what you are about to read next is for those who are seeking financial independence and freedom and have the motivation to achieve it.
Here are the top 5 laws that I learned about money
1 – The Law of Losing
This rule is the most repeated all over the world and it was said by the most important and famous investor in the world Warren Buffet who says: “NEVER LOSE MONEY”. The rule simply explains itself; whatever amount of money you have, you must understand where to put it, how to use it and where to spend it.
Understanding this rule will allow you to think twice before buying the next thing. So whatever you do, wherever you are, you must know how not to spend your money. Which essentially means not spending on things that are not going to be of benefit to your future.
Fancy things that you really don’t need while you are building your financial freedom are simply money wasters.
2 – The Law of Saving
This law goes back ages and ages, and is mentioned in George Clason’s book, The Richest Man in Babylon, where it says that you must save one tenth of your earnings.
Put this money in a safe place. It is not to be spent on everyday things, neither is it emergency money or for splashing out on a gift for your girlfriend or boyfriend. It is money put aside for your future and in the following laws you will find what use this money has.
I also learned a twist on this law from the greatest sales trainer and real estate guru Grant Cardone, that you should save the same amount that you are taxed by the government on your income. This could be between 20 and 40% depending on your salary or how much you generate.
You might be thinking “Grant is crazy! If I put aside 40% of my income to save how am I supposed to live on the remaining 20%?” The main trick is that this level of living is going to be the temporary preparatory phase that will take towards the freedom you want in your life.
Think about it. Do you get a Play Station, play your favourite games on it, and then you pay? Or must you pay for it first to enjoy it? When you play the game of money, you goal is to buy your financial freedom, and for that you must become disciplined about how you live your life.
3 – The Law of Investing
Here in this law, you will automatically understand what you can do with the saved money from applying the second law. Investing means putting your money to work when you are not working. Money sitting around will be lost no matter what you try to do to protect it.
Remember the story of Pablo Escobar? He was losing millions of dollars a year because of rat infestations in the warehouses he stored it in and from burying it underground.
Banks are no place to store money either. Bank fees are becoming higher and if you want to wait for your money to double in a bank you’ll be waiting about seven hundred years.
So the law of investing is about getting a job for your money so it can generate more money, and you must know that money’s purpose in life to be working to create more money, recreate and expand.
This law however has two sub-rules which are very important to keep in mind and they are both with a big N-never in them:
- Never invest in a market you do not know or do not understand.
- Never invest with anyone who does not know how or has not become wealthy.
Another point to talk about is growth investment. You should allocate some of your savings to your growth; personally, mentally, professionally, and spiritually. This type of investment is vital at any stage of life. We were taught this saying as children: “Seek knowledge from cradle to grave”.
Invest in books, video programs, audios, seminars, webinars, coaching, skill learning, spiritual healing. The ROI (Return on Investment) of these investments is going to be bigger than any other investment you will ever make, because this will be a skill, experience or information that can help you change the course of the actions you take in your life and it will remain with you as long as you live.
4 – The Law of the Master
A master is someone who has gathered knowledge and experience in an area, sector or industry and is able to generate his wealth out of it. And this law means that you must find those masters of their trade, create, or participate to their cause and use your money to allow them to pay a profit on it.
It is the law of the master and I say again, MASTER, because you must remember that any individual or a company that have not mastered their industry can cause you to lose money which will break the first law.
The master or the expert in their field knows exactly how to use any amount of money going to his business to generate more money. When you put your money there they will have more opportunity to create more and generate more, and pay you part of that, earning a profit on your investment.
Another point is that the ‘master’ company over time can grow in revenue and assets which means your share of your investment will go higher. This means at any moment you decide to sell your share or your company gets sold to a bigger group, your share will grow in value and you can get even a higher ROI.
5 – The Law of the Bank
This law is a twist from an idea I learned from Grant Cardone. To explain the meaning of the law first, it is about where to invest your money. Because the previous laws say never invest in a market you do not understand and never invest in people who are not masters. So where to invest then?
To answer your question I want to go to your bank and ask what happens to your money when it is deposited in your account. The most probable answer is that the bank will transform it into digits and then allocate it to the bank’s investments in assets. It is still your money, you can still take it, but the bank will use the value to invest for themselves.
Ask your banker another question: what kind of loan would they immediately approve if you asked for one? Here I will speculate the answer would be “to buy a property”. Here’s what I learned from Grant Cardone. He says: “A bank will give you money to buy a house, even a 100% cover the cost, and will not loan you money to invest in their own stock”. You can see from this statement what the banks believe in when they do their investments. You can absolutely do the same and apply that same rule into your life.
I say it again and will always repeat it, my investments are only in solid things that I know will still be here 50 to 100 years from now.
I hope this take on the laws of money are useful for you on your journey to financial freedom. If you have any comment or feedback, please share. Let us start talk more about money and learn how we can generate it, save it, invest it, give it and live our lives free of any financial worry or stress.
Photo by Karolina Grabowska.