10 money secrets you need to learn

If you want to organize your finances or get money to achieve big financial dreams, books are certainly the main resources you can turn to in order to learn money secrets.

So today we’re going to talk about secrets contained in both personal development and finance books.

If you are willing to put these lessons into practice, they will certainly change your life!

1 – Consider the worst that can happen

It may seem strange that the first tip in an article on money secrets says that you should consider the worst.

But it’s true, and it will be clear in your mind after our explanation:

This tip comes from a finance book (The Psychology of Money) and also from a personal development book (How to Avoid Worry and Start Living).

We know that most of our worries and stress are caused by money or the lack of it.

And when we talk about money secrets, these worries do indeed serve to protect us, but they also often limit us.

As a result, the following questions may arise:

• I can invest in this business idea, but what if it doesn’t work out?
• What if I lose all the money?
• What happens if I borrow money and can’t pay it back?

Whenever this type of doubt arises in your mind, it is essential that you consider the following:

What is the worst-case scenario?

In other words, what is the worst that can happen if you do a certain thing?

According to the author of the book “How to Avoid Worry and Start Living”, the things we think are bad are actually not so bad.

Understanding this will mean that when you are faced with this type of doubt, you can calm down and understand that the worst-case scenario is not as bad as you think.

In other words, even if everything goes wrong in your plans, you’ll be able to live with the situation.

To apply this example of money secrets, always analyze the situation.

For example, you have the idea of opening a language school with a totally innovative method for teaching other languages.

In the best-case scenario, your investment is effective and in just one year the school grows and gains several students.

However, in the worst-case scenario, all the money invested is lost because the language school hasn’t been able to stand out from its competitors.

The next step may seem strange, but it’s important:

Think of the worst-case scenario as if it had already happened

In this case, two things could happen: you spent all the money you had trying to open the language school.

As a result, it took you 4 months to get a job in your previous field and to support your family during this time, you had to take out a loan.

Talking about money secrets, in this case, the concern is valid because, in the worst case scenario, you would have major problems such as debts.

On the other hand, if you have structured a good emergency fund, you have the money to deal with the situation for 4 months and return to your area with less money, but debt-free.

However, you can see that in this case, the worst-case scenario is not so dire.

It would be possible to deal with the situation without getting into debt, so your worry and stress are not so valid.

In this sense, after accepting the worst-case scenario, calmly devote your time and energy to solving the problem.

If you’re planning to start a business, it’s essential to have an emergency fund to deal with the worst-case scenario.

As a result, you avoid debt due to a bad decision and simply not knowing money secrets.

On the other hand, it’s worth considering why your idea didn’t work out.

Perhaps it was a lack of bureaucratic knowledge about opening the school, a lack of marketing experience, difficulty finding a good location.

There are many reasons why a business doesn’t work out. Try to think of the most common ones and come up with solutions for each one.

Remember that one of the worst characteristics of worry is that it destroys the ability to concentrate.

So when we worry, it prevents us from focusing on the solution and considering the situation calmly.

Money secrets – 2 Sunk cost fallacy

Let’s think we’re climbing a mountain.

But when we get halfway up, we realize that we’ve climbed the wrong mountain.

In fact, the right mountain is the one next to you, but to climb it you have to get off, rest and make a plan to take a different route this time.

Together, we discussed it and came to a conclusion: let’s stay on the mountain we’re on, after all, we’ve worked hard to get halfway up it.

So as not to throw all our effort in the garbage can, we continue on the mountain, even though we realize it’s not the right one.

This is due to a psychological phenomenon called the sunk cost fallacy.

In this way, we place more value on energy and money that cannot be lost in any way.

As a result, we fail to consider the energy and money that we will lose in the future if we insist on going down the wrong mountain path.

In other words, one of the money secrets is to stop valuing and focusing on the past.

We must consider the future!

Practical example of the sunk cost fallacy

Unfortunately, Mr. Jones didn’t have the opportunity to go to university.

At the age of 35, he missed studying, especially as it limits his area of expertise in the company where he works.

Halfway through, he realized that he was on the wrong mountain, so why would he stay on it?

Why does Mr. Jones stay in a job where he doesn’t feel 100% fulfilled?

Why doesn’t he decide to go to university now, even though his mind insists that he’s “too old for that”?

The sunk cost fallacy is one of the most dangerous cognitive biases we fall victim to.

Therefore, one of the money secrets is to let go of this fallacy.

Note that we are not saying that you should go down a path without preparing for the worst-case scenario.

In fact, we’re showing you that when you’re ready, you can ignore the cost and decide to climb a new mountain.

3 – The difference between assets and liabilities

The book that deals very well with the difference between the two concepts is Rich Dad, Poor Dad.

According to Rich Dad, an asset is something that puts money in your pocket and a liability is something that takes money out of your pocket.

Although it’s an extremely simple lesson, it’s very relevant because according to Rich Dad:

Getting rich is simple, just buy assets.

In the book, Robert Kiyosaki says that assets are everything that generates income for you.

With this, we can consider investments in fixed and variable income as money secrets.

Liabilities, on the other hand, are expenses that only take money out of your pocket, such as your car, house and weekend outings with friends.

The author points out that the rich work first to buy assets.

And once these assets generate enough income, the rich buy everything they’ve ever dreamed of.

But the poor and people on low incomes always think about buying everything they’ve ever dreamed of, without bothering to invest in assets.

In other words, these people are driven by consumerism, always opt for liabilities and often find themselves in debt.

They depend on money and live in the so-called “rat race”.

An interesting point about this public is that as their income increases, their spending increases in the same proportion.

So, for rich people, money works for them, but for poor people, they have to sacrifice in order to have money.

Money secrets – 4 Automate

When we talk about automation, we mean making sure your bills are paid automatically.

But you might think:

I don’t need that, I know how to organize my finances and I’m disciplined, I’ll never have a problem with that!

People are getting busier every day.

Everything captures our attention, whether it’s our cell phone, social media, work or family.

All the distractions take us away from the main things we should be doing, like paying rent and keeping up with our credit card bills.

A recent study by WalletHub indicates that people forget as the main reason for missing a credit card payment.

Funny thing: people don’t stop paying their bill because they don’t have the money, but simply because they forgot.

We’ve also heard this from big banks like JPMorgan Chase and Wells Fargo. 

They’re saying that credit card customers are slightly more delinquent than usual in their payments. 

So one example of the money secrets would be to automate.

The problem of relying on memory

You may try to remember on your own or add reminders to your cell phone.

But what if your memory fails you, and you’re in an important meeting when you receive the reminder?

In the second case, you’ll simply remove the notification from your phone, get on with your life and realize you’ve forgotten to pay the bill when you have to pay the fines and interest rates as well.

For loans and credit cards, the amount you pay for late payments is extremely high.

Now think:

Why burden your mind with yet another worry and run the risk of paying a fine if it can be automated?

And automation isn’t just about making sure your bills are paid on time.

When we talk about investing and saving for vacations, for example, this simply won’t happen if you don’t make it automatic.

Every month we can give ourselves an excuse not to save money and if you allow yourself to keep doing that, you’re unlikely to achieve your dreams.

Money secrets – 5 Making more money and becoming a risk comes at a cost

Have you ever noticed that everything in life has a price, but not everyone is willing to pay it?

Many people want to earn a lot of money, be their own boss and have a successful business, but that’s not enough.

Many have the same dreams, but want to achieve them quickly and easily.

Quickly because these people aren’t willing to start again.

What’s more, we say it easily because they don’t want to sacrifice parts of their lives to achieve their dreams.

Let’s think about an individual who wants to become a millionaire.

Of course, it would be incredible to be a millionaire, to be able to live a quiet life without depending on work.

But after some thought, this individual is likely to give up.

They understand that it takes a lot of work and effort.

Hours of the day would be dedicated to two things only: work and study to improve the work.

They would have to work twice as hard and use their free time to learn new techniques, take courses and read books.

This is one of the money secrets:

For many years, this individual would continue to have the same standard of living and would struggle to achieve their goal, while devoting themselves to other important things such as family and friends.

The price of becoming a millionaire is high! Are you willing to pay for it?

When we think of other plans like becoming a doctor or a lawyer, we understand that it takes years of hard work and a lot of study.

But why do we want to think differently when it comes to money?

We expect it to be easy, quick and painless.

With this in mind, when we think about starting a business, we don’t consider that we’re doing it for the first time.

Most of us have never started a business or learned about it at school.

Most of us come from humble families who weren’t taught about finance either.

That’s why we’ve always had problems dealing with our salary and don’t know the money secrets.

This is exactly why many who start a business, after a few failures, simply give up in the middle of the process.

In this way, the economy or competition are always seen as the culprits, which is often not true.

When we don’t understand the cost of starting a new business and trying to change our financial reality, it’s easy to blame external things.

So, before you start anything, find out what price you have to pay for it and whether you’re willing to pay it.

With this in mind, you won’t give up after a few setbacks, and you’ll understand that the process takes longer than you expected.

And during this time, you may have to sacrifice time with family and friends, but it will be worth it!

6 – Getting rich young or investing for the long term?

You’ve probably heard the following phrase when it comes to money secrets:

If you save and invest $5 a day over 40 years, you’ll have $1,000,000.

Whether this is true or not, when you hear or read it, you get a strange and conflicting feeling:

First of all, you get excited, thinking: wow, I really can become a millionaire someday, and what’s more, without having to invest a lot of money.

On the other hand, after a brief moment of excitement, you’d be upset to realize that you would be a millionaire, but you wouldn’t have the strength to make the most of the money.

If you’re 20, you’d retire at 60, and if you’re 35, you’d be a 75-year-old millionaire. Is it worth it?

Get rich quick – money secrets

In The Millionaire Fastlane, the author talks about how to get rich quickly.

In other words, you’ll be able to earn a lot of money and retire at a young age.

Well, certainly, when you hear the hype about getting rich quickly, it makes you more wary of fraud and scams.

However, it’s interesting to understand the author’s concept of “quickly”.

He says that if you create a business and work on it for 5 or 10 years, with a positive result, you can become rich.

After these few years of effort and after achieving success, you will never depend on work again.

This is what the author calls getting rich quickly, not in a few months or a year.

And when you compare it to 40 years, getting rich in 10 years is really fast.

Overall, you have two options:

Work hard for 10 years to get rich quickly by making big investments.

Following this example of money secrets requires a lot of sacrifice.

Secondly, the option is to continue with your long-term investment for 30 or 40 years.

Although the author of the book says that this isn’t ideal precisely because you won’t get rich quickly, it can be a good alternative for those who don’t want to build up a huge net worth and shoulder all the responsibilities.

It’s about the idea again:

Analyze the price you are willing to pay

If you would simply like to have a quiet life when you are 60, you can continue with your long-term plans, bearing in mind that interest only works its magic at the end of the period.

For example, 90% of the wealth of Warren Buffett, one of the greatest investors of all time, was accumulated after 50 years through investments.

This investor’s main secret is time, given that he has been investing since he was just a boy.

An interesting tip when talking about money secrets for those who want to follow the path of long-term investments is:

Adjust the amount of money invested as inflation changes.

When we look at the evolution of inflation rates in the USA, we can see the following from 1960 to 2022:

The average inflation rate was 3.8% per year, and in total, the price increase during the period was 903.96%. 

To put it simply, a product that cost US$100 in 1960 is now priced at US$1,003.96.

So, if you want to reach US$1,000,000 by working for 40 years, always remember that in 2060, 1 million dollars won’t be worth the same as it is today. You’ll need more money!

The key is to always keep an eye on inflation, so if the increase is 1%, increase the amount you’re investing too.

Money secrets – 7 Think big

You’ve probably met someone who calls themselves a realist.

When they see someone committed to achieving a big dream, they make a point of bringing them back to reality.

For example, if you talk to them about your dream of retiring in 10 years, they’ll say:

With the salary you get today? That’s impossible! 

And if you talk to them about your intention to start a business, they’ll tell you that it won’t work, that the competition is too great.

So you give up on sharing your dreams with them.

The big problem is that people who hide behind the idea of “being realistic” can’t even dream of their own lives.

They are good, reliable people, they study and find a job in a good company, but they don’t dare to consider one day having a million dollars in their bank account or driving a nice Mercedes.

Here’s the next example of money secrets:

If you don’t dream it, you certainly won’t achieve it!

If you don’t allow yourself to dream big, you don’t have the ability to see what’s possible, but you only see what’s in front of you. Nothing else.

This is exactly what David Schwartz, author of the book The Magic of Thinking Big, says.

Millionaire mindset vs. poor mindset

For example, in the book Secrets Of The Millionaire Mind, the author talks about people who are millionaires and also about people with a poor mentality.

One of the main characteristics of a millionaire would be to see opportunities rather than obstacles.

For example, a person with a poor mentality sees an old house and says:

“That old house is in terrible shape. The most I could get by selling it is $50,000”.

This person understands that selling the house could be a huge problem in their life, so whatever a buyer offers, they will accept to get rid of the house.

On the other hand, the millionaire sees an opportunity and this is one of the money secrets.

So they think about the land around the house and how to improve it.

So she decides to plant trees and take care of both the outside and the inside of the house.

As a result, she builds a yard and does some renovations in the living room and bedrooms.

In this way, the millionaire can sell the house for double or triple its original value.

See what is it or see what is possible

Note that I’m not saying that all you have to do is think big and everything will be solved, and you’ll have a lot of money simply through the power of thought.

That doesn’t work!

I’d like you to understand that thinking big should be your first step.

You’ll probably have to take another 100 steps to reach your goal, but you have to take the first one.

For example, if you currently earn US$1,000 a month, you could set yourself a big goal of earning US$10,000.

Once you have this goal in mind, it’s time to take action.

What will you do to increase your salary so much? What steps do you have to take to achieve your goal?

Once you’ve set your goal, you have two options when it comes to money secrets:

Change your behavior or keep complaining because you have such a low salary.

The first alternative is the best, because you’ll start to live differently and seek out more and more knowledge.

Always keep in mind that you will first become the great person you want to become.

After that, you will do the things that a great person does in order to have the things that the great person has.

Most people believe that the opposite is true:

First, I need the $10,000 salary to start doing the things that people with that salary do.

But in fact, it’s important to first become a person who has that salary by working hard and valuing knowledge, in order to finally enjoy the good fruits of your labor.

Important lessons about goals – money secrets

Still on the subject of thinking big and the need to set good goals, here’s what I need to tell you:

When you start setting big goals, you realize that they’re not that big.

And the problems you thought were impossible to deal with can actually be solved with dedication and effort.

So keep in mind that a big goal can be achieved more easily than you think.

Secondly, the path becomes even easier when you try to work together with other people with goals similar to yours.

Here, I’m referring both to the need to work towards your goals together with your partner and with professionals who work in the same field as you (when starting a business, for example).

There is a piece on the blog about the book “Smart couples get rich together”.

In this content, one of the money secrets is that: 

The more the couple pool their incomes, the more efficient the planning will be for achieving big financial dreams.

Taking the scenario of starting a business, you don’t have to pool your income with someone else, but you can partner up to make your dream possible.

As a result, your weaknesses will be overcome through your coworker’s strengths and vice versa.

8 – Money equals vital energy

Vick Robin, author of the book “Your money or your life”, says that we believe the following:

Our work is the sustenance of our life.

However, the reality is that work becomes our life.

We don’t just spend 40 hours a week at work, as we have to prepare to go to the company and face traffic for at least an hour a day.

We think about our work even after hours, as well as on our days off.

So I can say: our whole life is designed around work, and we work exclusively to make money.

So you might think: Wow, I’m selling my life for money. Haven’t I discovered the money secrets yet?

What’s really worthwhile is to start thinking of money as vital energy in order to become aware of how you spend it.

The most effective way to avoid impulse spending

You’ve probably already used every possible technique to avoid impulse spending:

You’ve sorted your money into categories, made a wishlist, read dozens of finance books, watched hundreds of videos and promised the heavens you’d never spend your money foolishly again.

But to no avail, and you may even think that there is no more solution.

But that’s not true! There is a solution and that solution is to bear in mind that a product is not worth just US$100, but almost 14 hours of work.

Is it worth working almost two days to buy a certain product?

Considering money as vital energy is exactly that, starting to see prices not in dollars or euros, but in hours or weeks of your life.

No, this isn’t one of the money secrets (feeling guilty about every product you buy).

It helps you understand the real value of your money and learn to use it wisely.

This way, instead of buying a multitude of unnecessary items, you’ll work towards buying what you really need and want.

How do I know how much I earn for each hour of energy in my life?

The traditional way of calculating would be like this:

I work 160 hours a month (8 hours a day, for 5 days a week).

So, if I get paid UM$1,000, I simply divide my salary by the number of hours I work, giving me a total of US$6.25.

However, this figure doesn’t represent how much you earn for every hour of energy in your life, because other factors have to be taken into account.

If I add the 1 hour a day you spend in traffic, the figure changes:

1,000 ÷ 180 hours = US$5.5.

Note that I’m being generous, considering that you only spend 1 hour a day getting to and from work.

As well as time, one of the money secrets is to factor in the money you use for everything related to work.

For example, transportation costs, food and medical costs due to work-related stress.

Look at every expense you have that is work-related to understand the real value of your life’s energy hours.

That’s the key! Certainly, no one wants to waste years of their life by insisting on spending money inappropriately.

9 – Create your own luck

I believe in the power of luck.

But depending on your definition of what luck is, you may have the wrong understanding of the above sentence.

For example, if you believe that luck is about obtaining a reward under unlikely conditions, you may consider that only a lucky person can become rich.

Then perhaps that lucky person will receive a million-dollar inheritance from a distant relative.

But when I say that I believe in luck, the concept is different:

Luck is the result of many actions.

Example of two different conceptions of luck – money secrets

Let’s assume that two individuals are looking for an investment property to buy.

The first believes that luck is getting a reward under unlikely conditions, so he doesn’t try very hard and only visits 10 apartments.

The second individual believes that luck is the result of many actions.

With this in mind, he visits 100 apartments.

Who do you think will be lucky in this case?

Certainly the second person, even though it seems that he simply found the perfect property and bought it, without having to put in much effort.

It’s obvious, but we have a hard time understanding that the more actions you take, the greater your chances of achieving your dreams.

In other words, people who take action are luckier because they create their own luck, which is the next example of money secrets.

This lesson helps you to get out of your comfort zone and also to understand that it’s okay if some actions aren’t 100% effective.

One of the world’s greatest investors (Warren Buffett) participated in more than 400 different companies during his life, but the most significant gains came from only 10 of them.

This shows us that we can be wrong most of the time and still be successful.

Success is possible because you will insist on continuing to act until you get the best results.

When that happens, many outsiders will say that you were lucky, when, in fact, you created your own luck.

Money secrets – 10 It’s not just about money

Finally, understand that you may start this journey thinking about making a lot of money, but then you’ll understand that it goes far beyond simply having a full bank account.

You start working twice as hard every day to have a lot of money, but you realize that you’re sitting all day and your body and brain are weakening.

So you look for alternatives to improve your quality of life, start exercising and eating properly.

So you find a sport you love and stop eating fast food every day.

You also realize that in order to get the most out of your time at work, you need to take care of your sleeping health.

So you decide to sleep for the right amount of time and to value the organization and cleanliness of your environment in order to have a peaceful night’s sleep.

Little by little, your whole life gets back on track because you start cultivating the habits that really matter.

This is one of the main money secrets, because you give up bad things like smoking and drinking alcohol, you start dressing differently and behaving correctly, because you know the importance of the first impression on communication when meeting new business partners.

The years go by, and you continue to improve, until one day you see that you have achieved your financial goals.

However, the person at the finish line is not the same.

The complete transformation you can have along the way is much more important than money and has little to do with money.

Champions and losers have goals. What differentiates them are their daily habits.

If you want to change your financial reality, change your life!

Daniel 2 de May de 2024