7 Secrets of the Rich

I am a Money Magnet! We are Money Magnets!

This article by Dyan Ramos about the secrets of rich people had been circulating in the internet a few months back.  I got a copy from my cousin and I can't believe that I forgot to share it with you guys.  It was sitting on my "to do list" for quite some time now.  I'm glad to finally be posting it here for everyone to read and learn from.  I will be personally reading this article from time to time to remind me of the secrets of the rich!  I hope you guys will pick up a lot of things from this as well.

In summary, Dyan Ramos enumerated the following as the Secrets of the Rich:
1. Rich people believe failures are an essential part of growth and success.
2. Rich people are not the smartest, they just have better money management skills.
3. Rich people value the spirit and culture of sharing.
4. Rich people use the art and science of leverage in business.
5. Rich people think long-term.
6. Rich people prioritize financial education.
7. Rich people find mentors that they could model and learn from.

Read the full article after the jump.

7 Secrets of the Rich
by: Dyan Ramos

The following are list of things that were probably not taught to many of us in childhood. Things that we regret not knowing from the start, yet we will appreciate once we start practising them now. I listed them down based on my experience mingling with businesspeople & experienced financial coaches themselves. Friends, enjoy the "7 Secrets of the Rich' :

1) Rich people believe failures are essential part of growth and success. It is not a few times when we have been conditioned not to make mistakes -- whether at home, school or work. Most of us grew up "afraid to fail" because we're used to have it accompanied by a punishment. The worst is people in our past used these failures and mistakes against us, that made us go for the safer sail. Notice therefore that 90% of Filipinos would go for job security (afraid to take risks) rather than aim for perfection in business . Because we're afraid of the unknown and the unfamiliar, we'd rather not talk about money and instead go on with our mediocre life expecting everyday to be the same at the office. Yet, when you think of the most successful and the wealthiest people on earth, none of them talked about a perfect journey while in the process of getting rich. Nanay Socorro of National Bookstore, Mr Henry Sy & Mr. John Gokongwei Jr. each had his/her own version of downfalls & failures before they made it to the top. The big secret therefore is to strengthen your tolerance to failure, and to get yourself educated to lower the risk especially in doing business and investing. In today's information age, almost all questions about life have their answers somewhere. Take advantage of the information technologies like the internet, wireless communication etc. to get answers and to pacify your doubts.

2) Rich people are not the smartest, they just have better money managemement habits. The wealthiest of men (most of them from childhood) practice proper handling of finances and allocating their income into different purposes (e.g. 50% of income goes to Necessities, 10% goes to Charity or Give Account). The discipline to stick to the habit is already within their being as they have been practising it for many years. They are also skilled in differentiating Assets from Liabilities, and in handling their Financial Statements. They know for instance that Assets are properties that put money INTO their pockets while Liabilities are things that take money OUT of their pockets. A house may be an Asset if it is being rented & you get monthly cashflow from your tenants, while it can also be a Liability if you are living on it & paying monthly dues for its mortgage. Same with a car, if you use it for business, it is an Asset; yet, if you bought it for personal use & leisure it becomes a Liability. The wealthy are skilled in updating their financial statements, means they're taking account of every peso & every centavo. For ordinary Filipinos to have access on how to start writing a financial statement, the rich recommend getting a mentor who can teach you the basics of personal & business finance. You'll discover that it really is just simple math, you don't need to be a wizard in order to become financially successful.

3) Rich people value the spirit & culture of sharing. In a world where most people think scarcity, the rich believe that resources are abundant and that the world is overflowing with opportunities. While the poor practice the infamous "crab mentality" habit (pulling down whoever's on top), the rich like the idea of seeing everyone succeed in business & life. You may have witnessed this among the circles of Chinese businessmen where they push each other to become richer because by then, their own businesses improve as well (i.e. they get more potential investors, people have more purchasing power, the economy gets stronger) . These Chinese businessmen protect themselves by protecting others first. The wealthy recommend an average person to practice sharing everyday -- share information, ideas, opportunities and resources to others so that once wealth is in his hands, he is ready to grow it. If one wants to be successful and truly wealthy, it is crucial that he gives up attachment to money and material wealth. The most valuable factor in your journey to becoming financially free is the mindset. It's not about how much you have now, but how ready you are for future wealth. Share what you have -- be a generous giver and an excellent receiver as well. Feel like you are already wealthy by having the "abundance mentality". The world is full of blessings & opportunities if you just look around & seek for them.
4) Rich people use the art and science of leverage in business. Leverage means using OPR or "Other People's Resouces" (i.e. time, money, talent, skills) to speed up one's growth in business and in life. It is indeed never new to the wealthy to define an authentic business as that with atleast 500 people working for the owner or with the owner as partners. It's just natural (a universal rule), nobody gets successful in life by doing it alone. That's why 90% of small business owners fail in the first 5 years due to mismanagement as backed up by DTI. Small businesses, specifically traditional ones, find it hard to expand with just a few workers because their income reaches a certain limit. The owner of a small business usually runs out of money or energy after a few years of operation. It lacks a system, and the power of leverage. Yet, take a look at what Mark Zuckerberg did with Facebook. As the youngest billionaire quoted by Forbes magazine, he reaches out to billions of Facebook users worldwide and leverage on them & and his system to earn $150 million annually from his advertisers. It means he can leave the business operation to his workers & the system while earning (a great example of "people & system working for him, and NOT him working for the business"). There are thousands and thousands of business ideas being created every hour at different places in the world. Yet, they are not being executed because of lack of knowledge on systems and the use of leverage.

5) Rich people think long-term. While the poor spend for their present lifestyle, the rich think long-term by buying Assets (e.g. real estate properties, businesses) that could generate passive income (income without work) and eventually give them time to enjoy their wealth. The reason most employees remain broke is that they buy Liabilities (e.g. a car, a house under years of mortgage) that take money out of their pocket. While the poor and middle class spend for now, the richest of people believe that the secret to long-term wealth is to "delay gratification". Thus, they add more to their passive income generators (e.g. buy more properties, invest more on paper assets & businesses) so that in the future they could enjoy their wealth. They know for a fact that Financial Freedom means having not only the money but BOTH the money & the time. Lots of people nowadays may find excessive cash is not really that hard to earn, but how many of us can really enjoy these cash? How many can take vacations for the whole year & come back to find their income still flowing or even getting stronger? Not a lot I could guess. Like what my mentors would always say "better work your ass off for the first 5 years & enjoy wealth for the rest of your life THAN work easy all your life without ever having a chance to enjoy what you've worked for." Yet as crazy as it may sound, statistics show that most Filipinos would rather stick to job security than start a business full time. There must be something wrong somewhere with the way we were raised and the values that were instilled in most of us.
6) Rich people prioritize financial education. One of the biggest myths in business believed by many is that a huge capital (let's say, 20 million pesos) should be available before you can do business to enjoy the success of business tycoons like Mr. Henry Sy. Ofcourse capital plays a role in business, but it shouldn't be the first priority. If you talk to any of the wealthy people living today, they will tell you the same thing -- focus on your financial education first. Get yourself educated in matters of business. There are thousands of books written about leadership, success and getting rich (e.g. "Secrets of the Millionaire Mind" by T. Harv Eker & "Rich Dad, Poor Dad" by Robert Kiyosaki are highly recommended). These authors gave us a chance to access the minds of the wealthy & what made them successful. There are also seminars & workshops being held by financial gurus & financial education advocates. Their aim is to make it available for ordinary people the secrets & the values practised by the wealthy. Take advantage of these opportunities. David Bach, an American author once said "financial education needs to become a part of our national curriculum and scoring systems so that it’s not just the rich kids that learn about money... it’s all of us."

7) Rich people find mentors that they could model and learn from. This is perhaps the most important of all the 7 secrets mentioned above. Because without a mentor, somebody won't know where & how to start. If you do not have a "rich dad" to model, the rich recommend that you search for virtual mentors (i.e famous authors & inspirational speakers) or find a group from which you could learn BOTH the mindset and the skill set to be able to make it successful in business. Remember to look for mentors who have the experience and a good track record that prove their success. One of the great things about having mentors & coaches is that you can leverage on their past failures & experiences. Means, you do not have to undergo the same trials & downfalls because what your mentors present to you is already the proven road. Friends, family members & colleagues who aren't experienced in business don't count. Why listen to these people while deciding for something when they haven't even proven to be financially free themselves? This is insane, yet most Filipinos are guilty of this. Environment, no doubt, plays the most influence in a person's decision. If you want to get ahead of the business game & in life, surround yourself with people who can build you up & people you can model. True enough, if you want to learn yoga, you find a yoga coach. And if you want to learn business, you find a business coach. It's pure simple logic.

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  1. Issa said,

    I wonder.. who's your financial coach? Mind sharing?

    on November 28, 2010 at 1:55 AM  

  2. Hi Issa!

    Thanks for the comment.

    I really don't have a financial coach. I read a lot of books (so the authors I guess are my coaches) and with my masteral degree I feel confident I can do it on my own ^^

    As for mentors in business, I have my relatives to thank. ^^

    on November 28, 2010 at 11:52 PM  

  3. issa said,

    'been here again.. Perhaps looking for more money-magneting tips..

    Keep it up, coach. :)

    on February 5, 2011 at 7:10 PM