“Money is nothing more than a reflection of your creativity, your capacity to focus, and your ability to add value and receive back.” – Tony Robbins from “Money: Master the Game.”
Money is an essential aspect of our lives. Whether we want to buy something or get any service, we need money. Money improves the quality of life and brings financial freedom. So, its important to know how to handle our money better. The book “Money: Master the Game” is all about money, and it is written by Tony Robbins. Tony Robbins is an American author, coach, and a very popular motivational speaker. He is an author of several best-sellers like ‘Awaken the giant within,’ ‘Unlimited Power’ etc.
He wrote this book based on extensive research and one-on-one interviews with more than 50 of the world’s best financial experts. In this book, the author offers seven simple steps to create financial freedom in life, which can be helpful to any person from any income group. These steps can help anyone create financial success and abundance in life.
This book is a great read and offers several lessons on money and abundance.
Here are 5 lessons that are derived from this book.
1. Don’t underestimate the power of compounding: Compounding is a great way to grow money. Here is an example from the life of Benjamin Franklin, which demonstrates this. When he died in 1790, he left $1000 to the cities of Boston and Philadelphia. He left a will stating that this money had to be invested and not touched for 100 years. After that time had passed, half a million dollars were drawn from the account, and the rest was left untouched for another 100 years. After this, the original sum had transformed into $6.5 million.
This is the power of compounding. So, let your money work for you. Don’t keep it idle doing nothing. With the power of compounding, even a small sum of money can grow into a huge amount over a period of time.
2. Save money: Many people spend their incomes on expenses, loans, insurance, taxes. Very few people systematically save. But savings are important to grow the money. If there are no savings, there is no channel outlet for the money to grow. So, before you even start spending your money, save a percentage of your income. Ideally, we should be saving at least 10% of our income. If it is not possible, start with 5% of income and gradually increase the saving %. Think of savings like your freedom fund.
If needed, cut down your unwanted expenses and allocate the money for savings. Don’t forget that these savings bring you financial freedom.
3. Do your research: Before you invest your money in the market, do your thorough research. Don’t believe the myths of investment or blindly follow others. Don’t fall for quick rich schemes no matter how tempting and attractive they are. Try studying how successful investors approached investment and how they grew their investments. Your strong research will help you invest your money better.
It is better to research first and then invest rather than investing in haste and then regretting it. So, take time to study the market and investments before you invest.
4. Have financial goals: To achieve something in life, we first need to know what it is that we want. So, what are your financial goals? Do you want to clear your loans? Do you want to have a better lifestyle? Do you want to achieve total financial freedom where you have enough money to do anything you want in life? Be clear on what you want to accomplish and be realistic. Once you know your goal, think of ways to achieve your goal. Having a clear goal will help you understand how much money to earn, how much to save, how much to invest etc.
5. Diversify your investments: Investing money is a great way to grow money. But diversify your investments. Don’t keep all your money in one place because markets are subject to risk, and we don’t want to risk everything we have by keeping it in one place. So, diversify your investments. How to diversify?
Here are 3 areas where you need to invest your money.
1. Security: This is the category where you take the least risk while investing your money. Fixed Deposits and bonds from PSUs and Government fall under this bucket. These investments don’t offer you great returns but don’t carry any risk too. You can be sure that your money will stay safe and yields some amount of returns.
2. Growth: In this category, you take higher risks while investing. Either you make a great amount of money or lose a great amount of money from this category’s investments. Investment in stocks falls in this category. Investment of this type is subjected to market volatility.
3. Dreams: This is the bucket where you put some of the profit, which you earn from the first two areas, to fulfill your dreams. At the end of the day, the purpose of money is to live a better life and fulfill dreams. So, having this bucket is important.
This is how you can diversify your investments. The amount of financial risk you can take while investing depends on your goals and your ability. It also depends on your age and the stage of your life. If you have just started your career, you might be able to take higher risks. If you have college-going children and would like to support college education, your risk appetite will be small. So, think about what works best for your life and then invest appropriately.
These are the 5 lessons drawn from this book.
This book offers many more lessons and real-life examples of financial wisdom, which makes it an interesting and worthy read. We need to manage our money as wisely as we earn money. When managed rightly, money can bring us financial freedom and gives us the luxury to live life as we want.
“The secret to wealth is simple: Find a way to do more for others than anyone else does. Become more valuable. Do more. Give more. Be more. Serve more.” – Tony Robbins from “Money: Master the game.”
Wish you prosperity and abundance!