The 5 Rules of Money That Will Change Your Life Forever

I grew up in a traditional immigrant family that was taught to climb up a corporate ladder, go to university, get a good job and be frugal for 40 years so that I could retire when I was 60 instead of 65. Now as a CPA, I've worked with plenty of high net worth individuals and in addition to mentors and people that I met along the way, I really changed the way that I see money and broken out of these bad money beliefs that I didn't even realize that I had. When you change the way you see things, the things that you see change and I hope that by you watching this video, you get a takeaway that helps you feel the same way about money. If you're new here, my name is Alice, I'm a charter professional accountant and on my channel I help you make money, save money and invest money. So before we get into it, please hit the like button, subscribe to the channel, join my newsletter if you want to hear more from me and let's get started. The first rule is seeing money, your own money as a resource that can help you earn more money. I remember when I was younger, I would hear this phrase, does this person know the value of a dollar? And I would hear this from other people, friends, friends, parents, family knows the value of a dollar is considered mature and well raised. And what this usually means or implies is that a person who knows the value of a dollar doesn't spend everything that they make. And I think that's true to a certain extent, but I think the real value of a dollar is understanding how to turn that $1 into $2 and then turning that $2 into $4. It's not necessarily saying, Hey, let's hang on to this $1 for the rest of my life and into the grave. Having your own money and knowing how to grow it with confidence is one of the most liberating feelings in the world because money, when you see it as a resource rather than something from a point of scarcity has so many use cases. It can be invested into assets like stocks, bonds or real estate. These investments, they yield returns in the form of dividends, interest, appreciation, and over time, these returns can be reinvested, which leads to exponential growth or what people call compound interest. Money can also be invested back into yourself learning so that you become a more valuable person to other people and thereby increasing your own earning potential. Money can serve as collateral or down payment for loans, which in turn can be used to invest in opportunities that will generate you a higher return than the interest or the cost of borrowing. And this brings me to my next point, which is leverage. Leverage is how people amass great sums of wealth without being generationally wealthy. The definition of leverage is other people's money. Now we're all raised to believe that debt is bad, but this is not necessarily true. Debt is not always bad. There are some types of debt that are bad. Consumer debt is bad. If you're in a snowball of credit card debt that you've spent on personal expenses, furniture, luxury, designer things, first class travel that wasn't incurred to earn income, I would say that's bad. But debt used to earn income, usually the interest can be deducted for tax purposes. And if you use it responsibly or you find an accountant that can guide you to use it responsibly can really help you grow your net worth. So for example, a business in order to grow, they usually need funding. And that funding is usually in the form of equity. So other people's money or debt. So bank loans in order to grow in scale. Now I know a lot of entrepreneurs also bootstrap businesses as well, and that's lower risk and totally okay. It does take longer. I have seen people run very successful bootstrap companies, but it's just a slower process because you're only able to reinvest the profits that you make. Now on the investing side, if you're investing your money with other people in a pool of money and you have greater capital, it usually allows you to unlock better opportunities. And that's how a lot of wealthy people make money, right? They pool their money with other wealthy people to invest in bigger deals and bigger opportunities that not everyone has access to. If you are purchasing real estate, the mortgage, the bank loan, that in itself is a form of leverage. Rental income is also a form of leverage as well. And this is how people make money with real estate. If you want to know the difference between investing in real estate and stocks, make sure you check out my video up top here. I go deep into different examples across North America compared to the S&P 500 and my conclusion on which one is better. So make sure you check out that video. But ultimately when it comes to leverage, it's to understand that nobody really breaks the poverty cycle without taking risks and relying on leverage or other people's money. The third rule is that your internal narrative about money dictates your external narrative. Most people's internal narrative about money is completely fear-based. And a lot of this is just the talk inside your own head. So I was out the other day and I overheard a parent talking to his teenage son and I heard that sort of language being used around their kid. So remember that what you put out there is what you attract back and mindset is really important when it comes to money. So if you are in an environment or you grew up in an environment where you like to complain or be around people that like to complain, that like to blame other people, that like to blame the government, that can't take responsibility for your own actions, you think money doesn't grow on trees, you know, you're always told growing up that we can't have that, we can't afford to do that, who do you think you are, that people are out there to rip you off, that rich people are evil or mean, a lot of people have these thoughts that they've picked up. And again, like what you think and what you put out there is what you attract back. And on a regular basis, I talk to so many people, specifically clients from my agency, and I can tell that they're scared to push for higher prices. People are scared to ask their boss for a raise. People are scared to walk away from a deal, even if they know that they're accepting less than they deserve. Always act and cultivate from a place of abundance, not scarcity when it comes to money. Otherwise, even if you do end up making money, chances are you're still going to self-sabotage if you still have these beliefs in your mind. The fourth golden rule of money is that you have to spend money to make money. You have to spend to make, that's just life. If you're not willing to spend money to make money, you're never going to have money. Now, some people think that spending money to make money is risky and yes, there is risk involved. And how I see it in terms of mitigating risk is to keep personal expenses and living expenses as low as possible. Because if you have a pretty heavy personal lifestyle to feed, you purchase all of these things that are finance and you can barely afford to pay them off. How are you going to take financial risks on top of that? I really prefer keeping personal expenses low and I like to leave room in my decisions when it comes to expenses so that I can take risks. And I think it's far better to learn to live more frugally and simply today so that you have the ability to take on more risk. And if you're not comfortable with taking risks, you don't know how to take calculated risks, then start small. Start small and build confidence over time. Confidence is gained when you act in accordance to the promises that you tell yourself. And once you get over the initial fear of taking risks and you've experienced it for yourself, you'll come out a much stronger person and much more confident. A part of learning how to take calculated risks is to not let yourself wipe out with one bad decision. A lot of wealthy people invest in deals and not every single deal is going to make them money. The same thing goes for stocks. It's very normal. Sometimes zooming out and having a bigger picture perspective when it comes to making financial decisions can help. Rather than be fixated on one decision, all the things that could potentially go wrong if this one thing goes wrong. And the last golden rule when it comes to money specifically is that you become who you spend time with, who you listen to, and who you take advice from. I always let other people's actions show me whether they're a person worthy of me respecting their opinion because a lot of people can talk. It's very easy to talk and give advice in this world. Anyone can talk, anyone can dream, anyone can criticize, anyone can blame, but it's not easy to take action and to self-actualize. That's the hard part. A lot of people say and think that they want to be rich or they want to make a lot of money. Maybe they think they do, but a lot of people, what they really want is to be comfortable and to be respected. Not everyone necessarily wants to be an entrepreneur. Not everyone wants to make millions of dollars. If you want to make money, you have to go through a period where you are disliked, you are misunderstood, maybe even made fun of. And it's important when you're going through this period to make friends and connect with people that are like-minded and when possible, build connections with people of influence that have money. Networking up, offering to help them in some way, paying for advice, asking for mentorship. Not everyone is going to reciprocate, but it's always better than not trying at all. If you liked this video today, make sure you check out my video where I talk about the top high income skills that you should learn in your twenties. And these are skills that all the top leaders, the biggest people in the world have. So check out that video out there. Let me know down in the comments what golden rules you have around money and I'll see you guys in the next video. Until next time.