MONEY Master the Game: 7 Simple Steps to Financial Freedom (13 page)

At 3%, there’s an image of a pair of sneakers—because that’s all you’ll be able to afford if you save only 3%! At 4%, there’s a bicycle. It goes all the way up to 14%, where there’s a luxury car and the clear message that life is great! That’s a big difference!

Now 60% of larger companies are offering plans like Save More Tomorrow. Find out if yours does, and if not, show this book to the HR department and see if you can get one put in place.

Of course, you’ll still need to go out and actually “earn” your raise—your boss isn’t likely to hand it to you just because you’ve asked nicely. But once you do, you’re free to earmark the full amount of the raise, or just a portion, depending on your circumstances. In some cases, if you work for a matching company, your employer
will help to effectively double your contribution—and you’ll be well on your way soon enough. In fact, below is a link to an online Save More Tomorrow calculator that will allow you to see the impact on your own financial future:
www.nytimes.com/interactive/2010/03/24/your-money/one-pct-more-calculator.html
.

If your employer doesn’t offer the plan, you can set one up with America’s Best 401k, and many other 401(k) systems. You could start out with 5% (although I would encourage you to start with no less than 10%, if at all feasible) automatically going into your Freedom Fund, and then commit to 3% more every time you get a raise. Go online or make one phone call, and it will be happening for you. You could do this today and lock in your future in the most painless way possible. There’s no excuse for you not to do it! You can even go to our app, where we’ve prewritten an email that you can send to your boss or head of HR so you can put this process to work for you right away. How’s that for easy? Do it
right
now!

But what if you’re self-employed
? What if you own your own business, and you feel like you need to put every cent into it? Believe me, you’ll find a way. What if there was a new tax that came out, and you had to pay 10% more, or even 15% more to the government? You’d hate it! You’d scream bloody murder! But you’d find a way to pay it. So think of this percentage as a tax you “get to pay”—because the money doesn’t go to Uncle Sam but to your family and future self! Or think of yourself as a vendor who’s got to be paid first. If it has to be done, you’ll do it. But in this case, it’s something you’re setting aside that is yours and your family’s to keep forever, right? And remember, you want to automate it.
That’s the whole secret: earn more, spend less, and automate it.

LIKE LETTERS OF FIRE ACROSS THE SKY

As a young man, I came across George Samuel Clason’s classic 1926 book
The Richest Man in Babylon,
which offered commonsense financial advice told through ancient parables. I recommend it to everyone. Over the years, one passage has stayed with me:
“ ‘A part of all I earn is mine to keep.’
Say it in the
morning when you first arise. Say it at noon. Say it at night. Say it each hour of every day. Say it to yourself until the words stand out like letters of fire across the sky. Impress yourself with the idea. Fill yourself with the thought. Then take whatever portion seems wise. Let it be not less than one-tenth and lay it by. Arrange your other expenditures to do this if necessary. But lay that portion first.”

No one would have remembered the Good Samaritan if he’d only had good intentions. He had money as well.

—MARGARET THATCHER

Lay that portion first, my friend. And then
act on it
! It doesn’t matter what the number is, just get started. Ideally, it shouldn’t be less than 10%. But as time goes by, make the number mean something.

THE NEXT STEP

Now that you’ve set up an automated investment plan—your Freedom Fund, your new money machine—there may be two questions burning in your mind: First, where do I put this money? And second, how much am I going to need to achieve financial security or freedom? We’re going to answer both of those questions clearly. And the answers are going to come from the best financial achievers in the world.

But first we need to understand what you’re really investing for. What’s behind your personal desire for financial freedom? And what does wealth really mean
to you?
What are you really after? So let’s take a quick moment—just a few pages—to look at how
you
are going to master money.

CHAPTER 1.4

MONEY MASTERY: IT’S TIME TO BREAK THROUGH

Gratitude is the sign of noble souls.

—AESOP

Money is one of the ways we can turn the dreams we have into the reality we live. Without enough money, or a true scarcity of it, life can feel miserable. But when you have money in your pocket, does everything automatically get better? I think we all know the answer.

Money can’t change who we are. All it does is magnify our true natures. If you’re mean and selfish, you have more to be mean and selfish with. If you’re grateful and loving, you have more to appreciate and give.

Take a moment and think back to the financial meltdown of 2008. Trillions of dollars of stock and home values evaporated into thin air. Millions of jobs were lost in a matter of months. What did you experience? How did it hit you? How did it affect your family? How about your friends? Some of us reacted with fear, some with anger, some with resignation, some with resolve. All these responses were not about money but about
us.
These events shined a light on what money really means to us. What power we give it. Whether we let money control us, or whether we take control of it.

YOUR MONEY OR YOUR LIFE

One of the most powerful examples I know from that time is a gentleman named Adolf Merckle. In 2007 he was the 94th richest man in the world, and the richest man in Germany, with a net worth of $12 billion. He owned the largest pharmaceutical company in Europe, and then he expanded his empire into manufacturing and construction. He was proud of what he’d accomplished. He was also something of a speculator.

In 2008 he decided to make a bet in the stock market. He was so certain that Volkswagen was going down, he decided to short the company. Just one
problem: Porsche made a move to buy Volkswagen, and the stock price shot up, not down. Almost overnight, Merckle lost nearly three-quarters of a billion dollars on that single gamble.

To make matters worse, he desperately needed some cash to pay off a huge loan. But in 2008, banks weren’t loaning money to anyone: not you, not me, not billionaires—not even other banks.

So what did Merckle do? Search for new financing? Cut his expenses? Sell some companies at a loss? No. When he realized he’d lost a total of $3 billion and was no longer the richest man in Germany, that he had failed his family, he wrote a suicide note and walked in front of a speeding train.

That’s right. He killed himself.

In a tragic irony, his family discovered only a few days later that the loans he sought had come through, and his companies were saved.

Did Adolf Merckle die because of money? Or did he die because of what money
meant
to him? For Merckle, money was an identity. It was a source of significance. The loss of his status as the richest man in Germany was too much to bear, and he felt like a failure—even though there was still $9 billion left in his pocket!

You might be thinking, “
What a waste.
” But it may be a little too easy for us to judge this man. How often have we attached our identity—or our future prospects—to money at some level? Probably more than we’d all like to admit.

THE BILLIONAIRE WHO WANTS TO DIE BROKE

On the other hand, there are people like Chuck Feeney, an Irish-American from Elizabeth, New Jersey, and a self-made billionaire. Have you ever tried to get through an airport, anywhere in the world, and found yourself lured into a room full of shiny bottles of liquor and perfume and other tax-free luxury items? Duty Free Shopping (DFS). That’s Chuck Feeney’s idea. He started with nothing in 1960 and ended up with a sales empire worth $7.5 billion.

At one point,
Forbes
had listed him, like Merckle, as one of the richest men in the world. But Feeney was so humble, you would never have known it. Most of his life, he didn’t own a car or a home. He flew coach and wore
a plastic watch. Like Merckle, his bank account was dwindling—right now he’s in his 80s, and Feeney has just over $1 million left to his name. But the big difference between him and Merckle is that instead of trying to hold on to every last penny, Chuck Feeney
gave
away all his money.

This is a guy who, for the last 30 years, has made it his mission to take this vehicle called money and use it to change lives everywhere. His philanthropy reaches all over the world, from helping to create peace in Northern Ireland, to fighting AIDS in South Africa, to educating kids in Chicago.

The most amazing thing about Feeney is that he did it all anonymously. Feeney wanted no credit. In fact, only recently has word gotten out that he’s the man behind all these incredible projects. And he’s still going! Chuck Feeney says his goal is to bounce the last check he writes.

Obviously money meant very different things for Adolf Merckle and Chuck Feeney. What does money
really
mean to you? Do you use money, or does money use you? Like I’ve said from the beginning: if you don’t master money, at some level, it’s going to master you.

THE ULTIMATE GOAL: GIVING BACK

For me, money was always out of reach as a child. It was always a source of stress because there was never enough of it. I remember having to knock on the neighbor’s door to ask for food for my brother and sister and me.

Then, on Thanksgiving Day when I was 11 years old, something happened that changed my life forever. As usual, there was no food in the house, and my parents were fighting. Then I heard someone knocking at the front door. I opened it a crack and saw a man standing on the steps with grocery bags filled with enough food for a big Thanksgiving dinner. I could hardly believe it.

My father always said that nobody gave a damn about anybody. But all of a sudden someone I didn’t know, who wasn’t asking for anything in return, was looking out for us. It made me think, “Does this mean that strangers care?” And I decided that if strangers care about me and my family, I care about them! “What am I going to do?” I promised myself that day, I was going to find a way, somehow, someday, to give back and pay it forward. So, when I was 17, I saved my money from working nights as a janitor and went
out on Thanksgiving and fed two families. It was one of the most moving experiences of my life. It lifted my spirit to see faces turned from despair to joy. Truly, it was as much a gift to me as it was to them. I didn’t tell anybody what I was doing, but the next year, I fed four families. Then eight. I wasn’t doing it for Brownie points, but after eight, I thought, “Man, I could use some help.” So I enlisted some friends, and they got into it too. It grew and grew. Now my foundation feeds 2 million people every year in 36 countries, through our International Basket Brigades. Would I have known the joy of giving if it wasn’t for that terrible Thanksgiving when I was 11? Who knows? Some would call it luck or fate or plain old good fortune. I see the hand of God in it; I call it grace.

Here’s what I know: I learned the joy of giving, and it had nothing to do with money. Money is simply a vehicle for trying to meet our needs, and not just our financial needs. Much of our life is guided by the beliefs we develop over the course of time; the story we create about what life’s about, how we’re supposed to be, what we’re supposed to do or give. Ultimately, what’s going to make us happy or fulfilled. Everyone has a different “happy.” Some people find happiness pleasing others, while others find happiness in power and domination. Others define their happy as a billion dollars. Some think the way to happiness and a meaningful life is to get closer to God and give up everything material. Still others think the ultimate idea of happiness is freedom.

Whatever emotion you’re after, whatever vehicle you pursue—building a business, getting married, raising a family, traveling the world—whatever you think your nirvana is, I have found it’s only an attempt by your brain to meet one or more of six human needs.

These six basic needs make us tick. They drive all human behavior and are universal. They are the force behind the crazy things (other) people do and the great things we do. We all have the same six needs, but how we value those needs, and in what order, determines the direction of our life.

Why are the six human needs so important to understand? Well, if you’re going to build wealth, you’ve got to know what you’re really after—what you’re building it for. Are you looking for wealth to feel certain and secure? Are you chasing wealth to feel special and unique? Or are you looking to
have a sense of contribution—you want to do things for others in a way you’ve never been able to do before? Or maybe all of the above?