Oh man. Oh man. What a book.
I’m getting ahead of myself. Ok, let’s start again. This post is dedicated to a book I read recently, entitled ‘The Rules of Wealth’ by Richard Templar. It’s an international bestseller for a reason – it’s SO good. I loved that:
- It’s divided into short, 2-page articles each explaining one ‘rule’
- The ‘rules’ are comprehensive yet digestible
- It’s conversational and easy to read
- It includes moral and ethical values that I believe in (including a reminder that you can’t take money to the grave, so don’t hold money too tightly)
- It challenges my personal finance approach – more on this below
There are 107 rules plus 10 more in the edition I bought (2015 edition), divided into the following sections:
- Thinking wealthy
- Getting wealthy
- Getting even wealthier
- Staying wealthy
- Sharing your wealth
- The rules of other people’s wealth (+10 rules here)
Here are some of the rules that made me think. Think of it as a sneak peek into the book before you buy it yourself 🙂
Rule 7 – Understand your money beliefs and where they come from
Many of us have negative connotations about money, including myself. Sometimes I don’t think I ‘deserve’ to be rich if compared to hardworking Pakcik Leman the security officer who needs the money to feed/clothe/school his 10 children.
I also struggle with having money and remaining ‘spiritually pure’ (his words, not mine). There’s an unspoken understanding among the human rights circle (where I used to belong) and society in general that to be wealthy, one must be evil. The wealthy got wealthy by profiting off many people and not giving a shit about them, full stop. Therefore, by wanting to be wealthy, I am evil by extension too.
There are also people who are like, ‘I don’t care about money, I just want to do what I love!’ as if monetary rewards will somehow downgrade their love for their craft/hobby/lifestyle. It’s not… mutually exclusive… you know…
This book made me realise that I just want ‘just enough’ kind of wealth. I want my life to be comfortable and I want to have enough to support people I love and donate to whomever I want. Beyond that, money has no use for me, it’s not like I want a private yacht collection or whatever. I refuse to be shamed for wanting money to get this life. I covered this feeling in full in my [Personal] How it feels like to constantly obsess over money article.
Rule 14 – Don’t make money by being bad
Richard Templar stressed that all the money in the world couldn’t buy a restful, conscience-free life. I love this point, it’s hard not to. One can be wealthy without taking advantage of other people or ruining the environment.
Rule 24 – Only by looking wealthy you can become wealthy
Note: he said looking wealthy not looking flashy. This means well-cut, good-quality clothes.
I used to be okay with my ‘don’t care’ style, but he has a point. Looking wealthy changes how people treat you, whether we like it or not. It’s a subtle – but important – shift in perception that will invite wealth into your life. You will feel more at ease with the rich crowd (and pick their brains), get treated better by the service industry, and overall exude more confidence.
This is a major reason why I’ve been focusing on fashion lately. I still tend to under-dress, but progress is there. Some of you might disagree with this rule, that’s fine too. I’m still experimenting with this rule myself.
Rule 32 – You have to work hard to get rich enough not to have to work hard
Why rich people have so much free time one? – Me, until 2016.
The rich’s leisure time was paid for well in advance when they worked hard in the beginning. It’s not that they don’t work hard. It’s because they did. Gamechanger. Boom. Mental explosion.
Rule 58 – By all means, use the investment professionals (but don’t be used by them)
This part is more relevant for stocks/shares/unit trust/mutual funds. Everyone knows they should invest but overwhelmed by the options. I’m just going to quote and paraphrase him on this because it’s damn good advice: ‘If you want help to put your money in the markets without putting too much in someone else’s pockets, keep it simple’.
How to be simple:
- Diversified funds with low fees
That’s it. The sad thing is, in Malaysia, most investment professionals will use you. Many unit trust/mutual funds in Malaysia offered by private financial institutions have high fees, it’s revolting. When it comes to unit trusts alone, there are way too many options and way too many fees. The average entry fee in Malaysia is 5-6% (this is NOT including management fee, a few more %!).
If you’re intimidated by investing but don’t know what to invest in, use these two options:
- Amanah Saham Nasional Berhad – 0% sales and management fees;
please correct if wrongEdit: was wrong. Fixed price has no sales fee, but the variable price one imposes up to 5% sales fee. (credit to reader py for pointing it out)
- FundSupermart (I have a Private Retirement Scheme fund there) – 1-2% management fee + 1.75% sales charge (+ extra fees for specific funds)
I know there are a shit ton of funds to choose from. If you can’t get ASNB for whatever reason, there’s a fund selector tool from Fundsupermart that I quite like (note: not sponsored to say this).
Insert your preferences, if there are still too many options to choose from then just eenie meenie minie more from the final list. Seriously, economists and fund managers make wrong calls all the time too, it’s not worth worrying too much about which fund is the best for you because no one knows, no one has a crystal ball. Pick the one with the least fees for your risk appetite.
Rule 62 – Have a set time of day to work on your wealth strategy
Richard Templar said that happy, wealthy individuals follow these four principles:
- Set targets and get on with it (they don’t procrastinate too much)
- Don’t tinker too much (if the investment plan is in action, don’t disturb it)
- Work on financial planning every day
- Able to take breaks and have a life (and be interesting)
I’m not perfect, and sometimes I itch to break principle #2, but I’m on the right track 🙂
P/s- Still have to keep Rule 80 in mind – Know when to let go of investments.
Rule 79 – Make your money work for you
This includes things like:
- Not letting money sitting idly in bank account if it can generate income somewhere else
- Actively search for better rates, always
- Continuously make money passively in any way you can with what you have, whether through your assets (cars, houses) or plain cash
By setting money to work, it will keep growing instead of losing value via inflation. This rule made me happy – most of my money is generating more money as we speak, I have very little in my bank account. I talked about this in my passive income guide.
Rule 90 – Put something aside for your old age – no, more than that!
I think of my old age an awful lot and it always gives me a bit of anxiety. I can’t help it.
Will money help then? I have no idea, maybe yes, maybe not. I’d like to keep the yes option open anyway in case I need it.
I wrote about the type of retirement I want to have in ways to retire article.
Rule 97 – Never lend money to friends or family unless you are prepared to write it off
Agree. 100%. A good relationship is worth more than any amount of money in the world. I never want to lose someone over something as boring as money. When I was younger, I didn’t follow this rule and it just made me resentful. I hated the feeling.
This goes well with Rule 101 – Find ways to give people money without them feeling they are in your debt.
P/s – obviously don’t let people take advantage of your generosity either.
Rule 99 – You really, really can’t take it with you
So spend it for life experiences. As long as you’re still generating profits from investments AND have multiple sources of incomes, you’ll be good.
Pair this with Rule 104 – Spend your own money because no one can spend it as wisely as you. Another mental explosion. Of course I deserve to spend my own money, duh Suraya.
New Rule 3 under The Rules of other people’s wealth (available in 2015 edition) – Other people’s money belongs to them
This was a hard one to swallow. Sometimes I make judgments on how others spend their money and think ‘I can spend it better/more effectively’. My new motto now is:
It’s. Not. My. Money. I. Have. No. Say.
They want to spend it on clothes? Go ahead. On ponies? Sure. On $100-per-spoon caviar? Enjoy.
Do what you want with your money. Give it all away. Burn it. Whatever. I’m going to try and be Switzerland about this and be super neutral.
Please buy the book 🙂
What do you think of the rules in the sneak peak above? Agree or disagree? Do you have any other personal finance books to recommend? Comment below!