Hey folks, in my PPR I said I wanted to put some ideas in here about money - so here they are!
First, let me just state that these are MY rules and they are how I have accumulated my wealth - they might help you, they might not. I would gladly welcome any and all suggestions from people about how they have done things.
So, money. It’s a fickle thing and by no means important at all. However, it does create opportunity and luxury. So let’s dive into Elliott’s three rules of money.
1. You will never be rich working a 9-5
I found this out early on in life and I’m glad I did. We as humans love homeostasis - we do this with money as well. We will always accommodate our lifestyle to our income, when I was 22 and earning £20k a year I though I was rich, I spent every penny. Now I’m older, earning a greater sum than that and I spend every penny lol. How is it that no matter how many pay rises I get I’m still rarely looking at money in my account at the end of the month? Homeostasis.
However, with my extra income from my business I use this to invest, save and multiply my wealth. If you want to increase your wealth then you’re going to need to get a second job or become a bit entrepreneurial. That way you can dedicate all of your extra income to wealth driving behaviour without impacting your lifestyle.
2. If you can’t afford 5, you can’t afford it
This rule I put in place to help me make large purchasing decisions, or luxury items. If I want to buy something and I can’t afford to buy 5 of them (or replace them several times), I can’t afford it - it’s above my pay grade. This has worked wonders because it makes me become a bit more of a penny pincher and only truly treat myself when I know I can actually afford it.
the most obvious win here is that it takes away all credit from my purchasing decisions, the only thing I have on credit is my house and my car (that’s a story for another day - I appreciate that my 19 plate Merc may well contradict this rule but I will tell you more about this in time).
so if you’re thinking about buying something luxurious or expensive, ask yourself ‘can I afford 5 of them?’.
examples of things I haven’t bought because I can’t afford 5? The latest smart phones, a humidor (just got one on sale that was 1/5th the price it usually is!), a PlayStation pro, a new TV for my gym and an Apple TV for my gym to connect my iPad. I can afford 1 of all these things right now but I can’t afford 5, so I’m not having any of them. Do I need any of them? Nope. So I’m not suffering in anyway.
Have a think about the things you’ve bought recently, can you afford 5 of them?
3. Never leave ice cream in the fridge
I always frame this rule like this at school with the kids but actually it helps to make a lot of sense. Most people can’t leave nice food hanging around. If you put a tub of Ben and Jerries in my freezer - I’m gonna eat it. All. Rapidly. Because the temptation is too great.
The same goes with money, if you can get access to it, you will spend it.
That’s why at the start of each month I pay 10% of my wages into an investment app, 5% into an isa that’s fixed and in my wife’s name (so I can’t see it) and then make an over payment on my mortgage.
I cannot get to any of that money to waste it or spend it on luxuries. It’s working hard for me earning interest and value through the stock exchange. I do of course have an emergency fund I can get hold of so I’m not completely blocking my access to money if the boiler dies for example.
I used to use quite a sophisticated platform for my stock trading but now I just use Wealth Simple, a really easy app that assesses your risk and invests for you. Remember, all investments need at least 5 years to see a sizeable return.
Those are Elliott’s 3 rules for money. By following them it stops me spending money on things I don’t really need too often and saving money that’s working hard for my future.
I hope this has helped!