You must have heard the old saying ‘money makes money’ – okay, so if that’s true then does it apply when you have limited financial resources? Does it apply when you are just starting out and rely on the fact that since you are investing money and as a result – you will make money? Do we truly understand what it means to ‘making your money work for you’?
It’s more of a mindset then your current circumstances. Having the right mindset can get you out of the rat race.
Let me share a great story here;
There was a young boy who was interested in learning how money worked and how he could become rich one day. In his quest to look for knowledge he consulted his dad who was a school teacher. His dad did not know much about the mechanics of ‘how money actually worked’ and ‘how to become rich’, so he couldn’t offer him much help. The boy started observing the rich and one day he went up to a nearby factory and sought to meet the man who owned it. Luckily, the owner knew his dad and agreed to help the boy out. The rich man offered the boy work at the factory over the weekends for 20 cents/hour which was half the going rate. Since the boy was keen to learn – he accepted the offer. When he accepted the offer, the rich man told the boy; this is your first lesson. When you see an opportunity in business – grab it. The boy truly appreciated the advice as now the 20 cents/hour felt well justified for the advice he received in return. The boy continued to work and when another week went by, the rich man asked for the boy and told him to work for him for 10 cents/hour or he would not get any advice. The boy felt cheated at first but anticipating what was to come next in return – accepted the offer. The rich man then revealed the second lesson to the boy; more money is not a solution to people’s problems, with more money comes higher spending and their situation will never change. Weeks went by and the boy worked very hard looking forward to a pay raise. However this time when he sat down with the rich man – he was offered to work for free. This really shook the boy as having to miss out on his football games and working without a pay did not make any sense, but he anticipated more advice from the man so he agreed. The man then told the boy that ‘education is not a solution to poverty’. People with higher education and degrees are conditioned to count beans and work for their masters. They are paid to raise prices and cut costs. Their education does not teach them how to be fair and lower prices to benefit the consumer.
The boy had now learned how rich people make their money work, rather than working for money.
This is a true story of Robert Kiyosaki, an American business tycoon and author of a best selling book “Rich Dad Poor Dad” in which he explains the cold reality of how capitalism works, and how profit seeking is actually a ‘survival of the fittest’ game.
Stop Putting In The Hours
The same factors come in to play when trading. Often people with formal school education have been taught to work for money – not to make money work for them. Trading could be a hard nut to crack. A typical example of the school educated mindset is when traders try to take on every possible trade – so they trade constantly. What they are doing is – they are trying to put in the hours thinking the conventional equation; more hours = more productivity, however they end up losing all their money or simply don’t make enough to match the profits of smart traders who take on their trades with ample planning and consideration. There are many a traders out there who only take a few trades in a year but make more money than all the traders put together in a city. They may have huge financial leverage to ride on – to be able to take on only a few big trades – but the point here is – it’s the mindset that counts.
By working hard you can pay your bills, however by working smart you can liberate yourself from the rat race
Learning how to make money work for you is a lifetime study. People who go to colleges to learn a skill end up doing their 9-5s for the rest of their lives with a three week holiday a year and endless sleepless nights worrying about their bills. It’s not their fault. They were never taught the subject of making their money work for them. Our country or society needs teachers, doctors, engineers and pilots so therefore they have an important role to play. However it’s human nature to spend more as you earn more, so for the majority of the people who earn good salaries their life remains a rat race, clinging to the illusion of job security and looking forward to their three week vacation each year. People’s lives are then controlled by the two emotions ‘fear and greed‘ for the rest of their lives. Fear of not being able to pay their bills and mortgages and greed to keep on spending more and more as their income grows.