Laws of Money (6 to 10)

6. The Law of Abundance

We live in an abundant universe in which there is sufficient money for all who really want it, and who are willing to obey the laws governing its acquisition. There is no real shortage. You can have virtually all you want and need.

We live in a generous universe and we are surrounded, on all sides, by blessings and opportunities to acquire all we truly desire. Your attitude of, either, abundance or scarcity toward money will have a major impact on whether you become rich or not.

1st Corollary
People become wealthy because they decide to be wealthy.
They believe they have the ability to become wealthy. Because they believe this completely, they act accordingly. They consistently do the things that turn their beliefs into reality.

2nd Corollary
People are poor because they have not yet decided to become rich.
"Why aren't you rich already?"
This is an important question you need to ask yourself.

However you answer this question will reveal a lot about yourself.
Your answers will expose your self-limiting beliefs, your doubts, your fears, your favorite excuses, your rationalizations, and your justifications.

Write down all the reasons you can think of. Go over your answers, one by one, with someone who knows you well, and ask them for their opinions. You may be surprised to find that your reasons are mostly excuses that you have fallen in love with. Whatever your reasons, or excuses, you can now get rid of them.

The world is full of hundreds and thousands of people who have had far more difficulties to overcome than you could ever imagine, and they've gone on to be successful anyway.
And so can you.


7. The Law of Exchange

Money is the medium through which people exchange their labor, in the production of goods and services, for the good and services of others.

Before there was money, there was barter. People exchange goods and services, directly, for goods and services without the medium of money. As civilizations grew and barter became clumsy, people found that they can exchange their goods and services into a medium like coins which they can exchange for the goods and services of others thereby making the whole process more efficient.

Today, we go to work and exchange our work for money which we, then, use to purchase the results of the work of other people.

1st Corollary
Money is a measure of the value that people place on goods and services.
It's only what a person will pay that determines the value of something. Goods and Services do not have a value separate and apart from what someone is willing to pay for them.

All value is, therefore, subjective and based on the thoughts, feelings, attitudes, and opinions of the prospective purchaser at the moment of the buying decision.

2nd Corollary
Your labor is viewed as a factor of production, or a cost by others.
We each have the tendency to look upon the sweat of our brow, or our work, as something special because it is so intensely personal, it came from us, and is an expression of what we are as a person.

However, as far as others are concerned, our labor is just a cost. As intelligent consumers, employers, or customers, we all want the very most for the very least, no matter whose labor is involved. For this reason, you cannot place an objective or fixed value on your own labor.
It is only what other people are going to pay for your labor in a competitive market, that determines what you earn or what you are worth in financial terms.

3rd Corollary
The amount of money that you earn is the measure of the value that others place on your contribution. The way the market for labor of any kind works is simple.
You will always paid in direct proportion to 3 factors
The Work you do
How well you do it
The difficulty of replacing you

How much you are paid would be in direct proportion to the quality and quantity of your contribution in comparison with the contributions of others, combined with the value that other people place on your contributions.

4th Corollary
Money is an Effect, not a Cause.
Your work or contribution to the value of a product or service is the cause.
And the wage, salary, or earnings that you receive is the effect.

If you wish to increase the effect, the money, you have to increase the cause, the value that you put in.

5th Corollary
To Increase the amount of money you are getting out,
you must increase the value of the work that you are putting in.

To earn more money, you must add more value.
You must increase your knowledge, or increase your skill, or improve your work habits , or work longer and harder hours, or work more creatively, or do something that enables you to get greater leverage and results from your efforts. Sometimes you have to do all of these together.

The highest paid people in our society, are those who are continually improving on one more of these areas, to add greater value to the work they are doing.


8. The Law of Capital

Your most valuable asset, in terms of cashflow, is your physical and mental capital - your earning ability. You may not even be aware that, unless you are wealthy already, your ability to work is the most valuable asset that you have. By utilizing your earning ability into its fullest, you can bring thousands of money each year into your life.

By applying your earning ability to the production of valuable goods and services, you can generate sufficient money to pay all the things that you want in life.
The amount of money you are paid today is a direct measure of the extent, to which you have developed your earning ability so far.

1st Corollary
Your most precious resource is your time.

Your time is really all you have to sell. How much time you put in, and how much of yourself you put in to that time, largely determines your earning ability.

Poor Time Management is one of the major reasons of poor productivity and under-achievement in every industry.

2nd Corollary
Time and Money can be, either spent or invested.

To a certain degree, your time and money are interchangeable.
If you spend them, they're gone forever. You cannot get them back.
They become sunk cause, or lost cause in your life.

On the other hand, you can invest them, in which case, you get a return on them that can go on and on. As you invest your time or your money in becoming more knowledgeable and better skilled, you increase your value. By increasing you ability to get results for yourself and others, you increase your earning ability - your personal cashflow, sometimes, for the rest of your career.

One of the smartest things that you can do is to invest at 10% of your income every month, back into yourself on personal and professional development, on becoming better on the most important things that you do.

There's nothing that could give you a bigger and better "Bang!" for your bark than reinvesting some of your time and money back into your capability to earn even more. All wealthy and successful people have learned this sooner or later, and all poor and unhappy people are still trying to figure it out.

3rd Corollary
One of the bes investments of your time and money is to increase your earning ability.

The purpose of corporate strategic planning is to increase Return on Equity (ROE).
This requires organizing and re-organizing corporate activities so that the companies earn enough higher return on the capital invested in the organization.

In your work life, your personal equity is your mental and emotional capital. You job, then, is to earn highest possible return on your human capital, to increase your Return on Energy.
Identify the things that you do in your work, that represent the highest value uses of your time. Focus more and more of your time on doing those things that represent the greatest contribution you can make, to the most important results that you can achieve.

Continually look for ways to increase your Return on Energy.


9. The Law of Time-Perspective

The most successful people in any society are those who take longest time period in the consideration when making their day to day decisions. The higher a person rises in any society, the longer is the time perspective or time horizon of that person.

People at the highest social and economic levels, make decisions or sacrifices today that may not pay-off for many years, sometimes, not even in their life times.

People with long time perspectives are willing to pay the price of success for a long, long time before they achieve it. They think about the consequences of their financial choices and decisions in terms of what they might mean in 5, 10, 15, and even 20 years from now.

People at the lowest levels of our society, unfortunately, have the shortest time perspectives.
They focus, primarily, on Immediate Gratification, and often engage in financial behaviors that are, virtually, guaranteed to lead to indebtedness, poverty, and financial problems in the long term, and, usually, in the short term as well.

You begin to move up socially and financially from the very day that you begin thinking about what you are doing in terms of the possible long-term consequences of your actions. As you begin thinking longer term, and organizing your financial life and priorities with your future goals and ambitions in mind, the quality of your decisions improve and your life starts to become better, almost, immediately.

1st Corollary
Delayed Gratification is the key to financial success.

Your ability to practice self-mastery, self-control, and self-denial to sacrifice in the short-term, so that you can enjoy greater rewards in the long-term, is the starting point of developing a long time perspective.

This attitude is essential to financial achievement of any kind.

2nd Corollary
Self-Discipline is the most important quality for assuring long-term success.

Self-Discipline is the ability to make yourself do what you should do,
when you should do it, whether you feel like it or not - Edward Hubbard.

Your ability do discipline yourself to pay the price of your success in advance, and continue paying it, is the true mark of the wining human being

3rd Corollary
Sacrifice in the short-time, is the price you pay for security in the long-term.

The keyword here is Sacrifice. When you resist the temptations to do things that are fun and easy, and instead, discipline yourself to do things that are hard and necessary, you develop in yourself the kind of character that virtually guarantees you a a better life in the future.

When you continually invest your time and money in improving yourself, rather than frittering it away and title socializing or watching television, you are putting yourself on the side of the angels. You are virtually guaranteeing your future.


10. The Law of Saving

Financial Freedom comes to the person who saves 10% or more of his income throughout his lifetime. One of the smartest things that you can do is to develop a habit of saving a part of your salary every single paycheck. Individuals, families, and even societies are stable and prosperous to the degree to which they have high savings rates.

Savings today are what guarantee the security and possibilities of tomorrow.

1st Corollary
Pay Yourself First! (The richest man in Babylon - G. Closon)

Begin today to save 10% of your income off the top and never touch it.
This becomes your fund for long term financial accumulation and you'll never use it for any other reason except to ensure your financial future.

When you pay yourself and force your self to live on the other 90%, you'll soon be accustomed to it. You are a creature of habit. When you regularly put away 10% of your income, you soon become very comfortable. You soon develop a habit of living on the other 90%.
Many people start by saving 10% of their income and then move to saving 15%, 20%, and even more! And... their financial lives change dramatically as a result. So will yours.

2nd Corollary
You can take advantage of tax-deferred savings and investment plans.

Because of high tax rate, money saved or invested without incurring taxes accumulates at a rate of 30%-40% faster than money that is subject to taxation. So you should investment in company pension and retirement plans, 401k plans, IRAs, investment accounts, stock option programs, education, and whatever else has been approved by the IRS for long-term financial accumulation.

Begin today to put away 10% of your income. Set up a special account for this purpose and treat your contributions with the same respect that you do your rent or mortgage payments each month. You never miss them!

If your in debt today and 10% is too much for you. Start by saving 1% of your income and living on the other 99%. When you become comfortable living on 99% of your income, increase your savings rate to 2%. Overtime, work the rate up to 10, 15 or even 20% of your income, and your financial success is guaranteed.