Learn How to Play – and Win – the Money Game

“If I lost it all tomorrow and had to start all over, I would be a millionaire again within two years.”

I used to proclaim that statement above with great pride.  Not only did I swell with superiority when I said it, but I proved it. Twice.

You might be thinking I’m sharing that experience with you to illustrate the mental side of the prosperity equation, or perhaps it’s a flex to demonstrate my cred in the prosperity arena. While I love a flex as much as the next Neanderthal, I’m sharing that story to instantiate to you a hard lesson I learned through the process.  Unfortunately, the tutorial was on what a dumb fucking moron (DFM) I was.  Please. Don’t be a DFM.  I was dumb enough for the both of us. 

Recently I made the following post on my social media channels:

True or False?  If money can solve your problems, you don't have any real problems.

About 60 percent of the people replying selected false.  As the prosperity teacher, I marked their answers wrong. Because I believe you can always manifest more money with the right idea. This means that no one actually has a money shortage; what they really suffer from is an idea shortage.  Therefore, if you have a problem that can be solved with more money, it simply means that you haven’t developed the necessary idea to make the perceived problem go away.

You already know that money is not the sole determinator of prosperity.  But the better choices and problem solving that money can provide you is such a vital element of the journey toward prosperity, I felt you would immensely benefit from an essay on how the money game works, and what it takes for you to win it.  Coming from the poverty consciousness of my early years, once I discovered how to earn large amounts of money, I foolishly assumed I had the money game figured out. But that was exactly what the people who run the game want me (and you) to think.

Just as rats don't know that someone built the maze, most of us don’t realize that money is a game.  But it is.  A very complex game which is rigged against you by a long list of villains:

• Banks
• Credit Card Companies
• Financial Planning Firms
• Cable Networks
• Investment Advisors
• Governments
• Insurance Carriers
• Mobile Payment Apps
• Financial Publishing Houses

These institutions are branded and positioned in a way that makes them appear to be your trusted allies and advisors in your prosperity journey. But most have a vested interest in ripping you off, keeping you in debt, operating as another worker cog in the collective.

• You might train yourself how to get by on five hours sleep and pursue the grinder/hustle/coffee is for closers routines that are mainstays on many podcasts today. You’ll still probably end up unhappy, unhealthy, and unwealthy.
• You could discover the right crypto shitcoin at the exact right time, ride it to the moon, and sell just before it craters. You’ll still probably end up unhappy, unhealthy, and unwealthy.
• You may even hit the pick-six in the lotto or inherit a fortune from a rich relative. You’ll still probably end up unhappy, unhealthy, and unwealthy.

The problem that all the scenarios above share is they are all predicated on the same bad premise: That the money game was designed so you can win it.  It’s exactly the opposite. You’re playing a money game against the institutions that created the rules so that you would lose.  They change those rules at their whim, and you don’t even know what they are.

It's time you learn how to play and win the money game. 

Before we get to specifics, remember these two vital instructions:

• Always question the source. (Including me. Especially me. I was expelled from high school FFS! What could I possibly know about wealth building that the financial geniuses on CNBC don’t?)
• Always question the premise.

I’ve never watched more than ten minutes of financial cable networks and haven’t read an investing publication in years.  (Full disclosure: back when I was broke, I read the WSJ, Forbes, Fortune and Investor’s Business Daily religiously.)

I couldn’t care less where the Dow, NASDAQ or S&P 500 is at, and if my very life depended on it, could not tell you the difference between a bear market, a bull market, or a seafood market.  Not only is that data irrelevant to me, but I believe it’s often dangerous.  The source of most of that data is the bad actors above.  The premise of most of that data is that it’s being provided to help you make sound financial decisions for your highest good. And we certainly know that’s bullshit.

The money ecosystem is infested with a high percentage of predatory people and institutions. Even many of the well-meaning people are ignorant of how the game is played themselves and are simply disseminating the herd thinking mind viruses they’ve been infected with.

A friend recently asked me if Rich Dad Poor Dad was my number one go-to book about growing wealth.  The poor bloke was almost traumatized when I replied that book wouldn’t make my top 100 money manuscripts.  I didn’t have a rich dad to model myself after.  In fact, I came thiiis close to titling my next book, No Dad, Poor Mom. Not to throw shade on Kawasaki, but to call attention to the fact that what you’re reading here are the lessons I’ve learned in the real world: selling dope in middle school, starting and exiting companies, waiting tables at Red Lobster, serving as a strategic advisor to some of the brightest CEOs and founders on Earth, having my restaurant seized by the tax authorities, and producing more than $23 billion in revenues for myself, clients, and protégées.

My journey from washing dishes in a pancake house to earning a spot in the wealthiest one percent of the world had a lot of potholes, speed bumps, and detours along the way, but it provided some fascinating insights on how the money game is played by the people who win it. Allow me to take you behind the curtain and reveal how to protect yourself against the bad guys, create some positive financial movement forward, and end up where you’re meant to be: healthy, happy, and prosperous.

Like most worthy endeavors, building your financial freedom is less about mysterious secrets and more about disciplined, common sense behaviors.  So, let’s not overthink this.  Let’s begin with seven simple yet profound premises I’m going to build my case around:

1. Your goal is to wake up each morning wealthier than when you went to sleep.
2. You don’t have to be an investor or insider to grow your wealth, just financially literate.
3. An employee can create wealth, but I believe entrepreneurs can do it bigger, easier, and faster.
4. Don’t seek financial advice from broke people.
5. You never go broke from the deal you didn’t do.
6. Either you’re using leverage, or someone is using you for leverage.
7. Don’t be a DFM.

Like I advised you earlier, don’t be afraid to question a premise. I believe the seven above will withstand the scrutiny and ground you in a strong financial foundation.  To win the money game requires you understand a few simple but extremely significant wealth building concepts.  Let’s run through them…

Prosperity Begins by Knowing the Truth.

Begin by knowing some of your metrics and one of the most important ones is your net worth.  Which, if you’re like most people, is likely negative.  You might have high levels of debt, be upside down on your car, and not have any financial assets working for you.  Whatever it is, it is, but you need to know the truth.

Please don’t be too discouraged if you are in a negative state. It’s not about where you start but where you end up. Just facing the truth and developing awareness of your current situation will put you ahead of virtually 70 percent of the population. (Most of those people posting pics of their new ride or luxurious vacation on your social media feed are doing it with debt and are still in denial.)  A huge part of the battle is already won because you’re lowering your level of ignorance.  And this is a textbook case of how knowledge can become power as you use this information in this post on getting out of debt.

Beat Your Burn Rate.

You’ve heard to spend less than what you earn at least a million times and know it’s true. So why don’t 90 percent of people practice this?  Because they allow themselves to be brainwashed into an instant gratification lifestyle. If you’re spending everything you’re taking in, you’re going to get exposed at some point by a job loss, personal emergency, or economic meltdown of some kind.  This won’t have a happy ending.

Worse, if you’re like most people and spend more than you earn, financing the excess with debt, you’re building your own prison. This situation has an even unhappier ending.  You’re receiving hundreds of messages daily, designed to seduce you into buying shit you don’t need, or things you may need, but wouldn’t be prudent to buy in your current financial situation. Be willing to sacrifice early to luxuriate later. Discipline creates freedom.

Think about your wealth creation activities with a similar philosophy to the one that venture capital and angel investors use.  Two important metrics they look at first are the “burn rate” and the “runway.”  The burn rate simply means the regular monthly expenses: the amount of money that is burned through each month to keep the doors open.  The runway is the length of time before the venture will run out of money and shut down. For a simple example, let’s suppose you have a company funded with $200,000 to begin.  The amount of your rent, payroll, taxes, travel, etc. is $10,000 a month.  With that burn rate, your runway would be 20 months.

Now apply those concepts to you and your personal finances.  Mentally picture yourself as a company, You, Inc.

You have a certain financial footprint required to live each month.  This includes expenses such as your rent or mortgage, maintenance fees, groceries, auto upkeep, and utilities.  Make sure you include things that occur only occasionally or annually like health care, gym memberships, insurance, and income taxes.  And don’t forget about expenditures that aren’t essential, but you’re making anyway, like cable or streaming services, hobbies, and vacations.

Take the time to do this right. Progress won’t begin until you’re dealing with the reality how you live.  Then you need to calculate how much you owe.  Every credit card balance, installment plan, amount outstanding on your home and car, etc.  This is another area where progress won’t happen unless you’re telling yourself the truth. (I fought taking the time to list what my own credit card debt was, figuring I knew the ballpark amount was almost 100k.  That thought was depressing enough that I didn’t want to pick the scab any deeper. Imagine the jolt when I finally did the math and discovered I had $180k in credit card balances. Most of which were at interest rates around 30%.)

Beating your burn rate means you reach the point where you take in more money each month than you let out.  If you’re spending as much or more than what you earn, it must stop now.  (If you’re not willing to make this change, no need to read further.)  Either take on a part-time job or business to produce some extra income or make the hard decisions of what you can eliminate to reduce your burn rate.

The goal is to get your burn rate to the point where you have some money left for investing in wealth-producing platforms. Think of this fund as your retirement or financial freedom investment pool – to be secure, and work for you when you sleep.  Because this pool must not only protect you from a financial calamity, but more importantly, also be building your wealth.

The speed with which your investment pool is building your worth is important as well. Your wealth needs to appreciate greater than the rate of inflation created by the financially illiterate people who govern us.  Do not trust your financial security to your government. That’s like hiring Hannibal Lecter to do your grocery shopping and finding out you’re the entrée.  Most public policy in finance is created by people who hold degrees in economics but know nothing about building wealth.  They’re upside down on their BMW leases, financed their dining room sets and are saddled with credit card debt.  The laws they propose come from the lobbyists hired by the banks, credit card companies, financial publishers, etc.

You Work for Money, or Money Works for You.

It sounds simplistic, but the previous sentence may be the most profound statement ever written on creating prosperity.  You may want to print it out and post it above your computer or on your bathroom mirror.

Taking this to the next level, for the most part, broke people work for money and wealthy people have money work for them. You must take a percentage of your income and put it to work making money. This means you’re unleashing the awesome power of leverage.

Don’t look for loopholes and don’t make excuses.  People all the time tell me things like, “I can’t get by on 100 percent of what I make, how can I survive on 90 percent?”  Don’t be a DFM.  In the world of creating wealth, there’s an important philosophy to live by: When you make hard decisions, you create an easy life.  If you make easy decisions, you’ll end up with a hard life. 

The non-leveraged model is simple; it’s what most of the world does.  They trade hours for money.  Thus, their earning power is restricted by how many hours of productive work they can physically produce.  In terms of creating wealth, this is the very worst strategy to employ, no matter how rewarding the hourly rate may be.  A pilot earns an extremely lucrative hourly rate, but she can be out earned by any 16-year-old who understands leverage and has a Shopify account.

The leveraged model looks simple as well, but when you look under the hood, it is quite profound.  Because leverage allows you to transcend the limitations of space and time...

You can leverage your money.   You might only put down $200,000 and buy a $1 million apartment building which would leverage your earning power.  You can leverage your labor. Instead of mowing ten lawns a day, you can hire 10 workers who each mow ten lawns a day, again leveraging your earning power.  You can leverage your time and effort.  If you join a direct selling company and sponsor and train a dozen people, then teach them how to duplicate your results, you can build an organization which produces thousands of hours of productivity every week.  There are some limitations to these models because you still are dependent on others.  You’ll need people willing to loan you money, work for you, or who believe in your leadership abilities.  Nevertheless, anytime you can apply leverage, you’re much better off than the non-leverage model of trading hours for money.

Even when you can’t access leverage by the models above, you can still use other approaches.  You might drive for a ride share company, trading hours for money.  But if you set aside a certain percentage of that money and put it to work through leverage, you’re on your way to escaping the trading hours for money trap. Remember: you work for money or money works for you.  Choose wisely. 

Convert Income into Capital.

This is where we get into the officially sexy part of prosperity building.  Because the sexiest part isn’t earning but unleashing the power of leverage with your earnings.  There’s a reason we call it capitalism, not “workism.”  Even if you’re a brain surgeon earning $10,000 an hour, if that’s all you’re doing, you’re still trapped in the trading hours for money trap.  Leverage is a superpower for building prosperity because now your money can earn money, even when you’re sleeping.

Generate Steady Gains to Unleash Compounding.

Your initial goal is to beat your burn rate, you invest the surplus, then that capital starts producing gains, which you then reinvest into creating more and larger gains, using the principle of compounding.  Now you’re leveraging your leverage.  This is when you create an ongoing cycle of increasing wealth which allows you to achieve the perfect outcome: waking up every morning wealthier than you were when you went to sleep the night before.

Utilize Smart Debt, Avoid DFM Debt.

If you borrow $400,000 and use it to buy an income producing property that provides positive cash flow while increasing your net worth, you’re a genius.  If you borrow $400 to upgrade your TV to a new OLED model, you’re a DFM.  And you don’t want to be a DFM.

Peace,

- RG

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