Winning the Money Game: Strategies for achieving financial freedom: Book Notes

This post has my personal notes from the book Winning the Money Game: Strategies for achieving financial freedom by Sean Seah.

1. It is not possible to earn huge amounts of money, in an extremely short amount of time with little or no effort. 

2. The advantage of having enough money is that it frees up your time to do what you really want to do.  We often spend our lives making a living but in that process we often lose our lives because we lose valuable time which we could have spent doing the things we love and being with the people you truly love.

3. Money is a game. Before understanding what the game is all about, it is important to have an open mind and accept that we do not know all about money. The next thing is that having knowledge is not enough. You have to take action.

4. The key features of the Money Game can be remembered using the following mnemonic:

G=Game Plan
A=Administration, Allocation, Assurance
M=Make money
E= Employ your money to work for you
R=Release money

5. The key features of the Game Plan can be remembered using the following mnemonic(PLAN):

P=Purpose of the money game. The purpose of the money game is to become financially free, not rich. Money is for making things happen, for giving us freedom to do what we want and love to do. So rather than trying to become rich, we need to first become financially free. What does financial freedom mean? Financial freedom= Monthly residual passive income is greater or equal to monthly basic expenses.What does financial abundance or being rich mean? Financial abundance= Monthly residual passive income is greater or equal to monthly desired lifestyle expenses.

L=Laws of the game. The laws of the game are as follows: There is no free lunch in this world. There must be work done before there is income earned. The income received is proportional to the value provided. To increase income one can work longer hours, upgrade yourself by having better qualifications and skills so that people perceive you can give better value or serve multiple people at the same time. But doing these things means you have to still personally work. You can also build a system where others do most of the work for you and you just have to check them regularly. This greatly frees up your time and still you can make a lot of money. This system means you have a business which fits into these criteria. The other method is to invest your money in a business like the above and earn money when the business makes money.

A=Aspiration. Aspiration means that you should have definite goals which you want to achieve within a defined time period. It does not mean you want to keep up with the Joneses. It is something personal and what gives your life meaning. You need to have definite goals for health, wealth, relationships and your self as money is not everything. Just having goals is not enough. You need to be specific as to how you really want your life to be and visualise it. You can create a vision book filled with pictures of all your dreams. Such visualisation keeps us enthusiastic and energised( a powerful state) and also activates and attracts things so that your visualizations can become a reality. You then need to calculate how much money is needed for you to live your dream lifestyle.

N=Now. We cannot live in the future or the past. We can only live in the now. So we have to clearly know where we are NOW. Calculate your net worth. Net worth= Value of things you own-value of things you owe. Calculate your financial freedom gap: Financial freedom gap =Monthly basic needs-monthly passive income. The aim is to make your financial freedom gap zero or negative.

6. The key features of administration, allocation and assurance are as follows:

The key features of administration can be remembered as the following mnemonic(TRI):

Track and record: income and expenses
Review and plan: review how you can optimise your income and expenses
Implement: Implement the plan you have made after your review.

The key features of allocation are:

  • Pay yourself first– at least 10% of your income
  • Give some money to charity: 10% of your income
  • Invest in your education: 10% of your income
  • Enjoy: 10% of your income
  • Pay others: 60% of your income

The above is just a guideline. If you pay yourself more and get educated cheaply and enjoy in ways that don’t require you to spend money, you can save a lot more.

Remember to have the necessary insurance. That is assurance.

7. We should aim to make money from SLEEPY businesses:

S= Safe= What is the worst case scenario? Can I stomach the worst case? The worst case scenario should not cost you very much.
L=Leverage= Must I do it alone? Can I increase my value using leverage on technology or people? You should be able to increase value through leverage.
E=Employees Zilch= Do I need to employ people for my business? You should not need any employees.
E=Exciting= Am I excited about providing this value to to other people? The business should excite you.
P=Part-time= Can I start this business part-time? Does it provide me with the flexibility? The business should have flexibility not to disrupt your lifestyle too much.
Y=You are free= Can you eventually leave the business for it to run on its own? Yes, the income is residual once you set it up.

8. How to start an Information Business( a SLEEPY business)?

The three steps in the information business are:

A. Create the information product. To create a good information product , you need to know what you are good at. The KEYS will help you do that:

  • K=Knowledge base=specialised knowledge that you have from studying, work or experience.
  • E=Enthusiasm= what you love to do, your hobbies and what you want to learn
  • Y=Yearning= things that you desire to do
  • S=Strengths/Spiritual Gifts=what you are naturally good at, you innate gifts

The information product that you create should be wanted by other people. Why would others want to buy an information product from you? The SCREAM mnemonic will help you with this:

  • S=Simplified information
  • C=Cost savings
  • R=Renewal=bringing the information to today’s context
  • E=Effective
  • A= Analogical or allegorical= telling stories or analogies to make things easier.
  • M=Motivating

The information product should have an introduction, main content and conclusion. Use both emotions and logic while creating your product. Use a lot of stories. Show how they can personally benefit. Some questions that can help are:

  • What is the desired outcome I want for my readers?
  • What must I provide so that they can reach this outcome?
  • How can I arrange this material so that it makes sense?
  • How I make it enticing for them to continue reading?

B. Publish the information product. People learn in three ways: visual( looking), auditory( hearing) or kinesthetic( experiencing by participation). A e-book, audio-book and seminar or tuition are some examples.

C. Market the information product. We have to sell the product. Selling is part of everything in life. To sell a product, you have to have confidence in your product and why people would want it. Some methods of marketing are:

  • Marketing through your publisher
  • Facebook advertising
  • Giving free talks
  • Word of mouth
  • E-mail campaign
  • Contributing free articles to newspapers
  • Contributing good answers to forums
  • Blogging
  • Flyers
  • Purchasing a list

9.  How to start an internet business?

The advantages of starting an internet business are that you have a 24 hour shop, small start-up cost, and you don’t even need your own product. The three steps to start an internet business are:

  • Choose a value you provide: Information products, Physical products or other people’s products(affiliate marketing). Use google search or clickbank.com or other websites to link you up with products that have affiliate programs.
  • Create your web-shop: This is your web-site. Once people reach your website, they should want to browse around and click on links in your website and buy stuff from these sites.
  • Market your web-shop: Some ways to promote your website are:
  1. Create your own affiliate program
  2. Use Alexa
  3. Use Amazon
  4. Submit articles through article directories
  5. Use paid banners
  6. Use blogs
  7. Use traditional classified ads.
  8. Use e-bay, ezines, google groups, Facebook groups, yahoo groups
  9. Use Facebook pay-per-click, google pay-per-click
  10. Develop joint ventures with other websites
  11. Use podcasting
  12. Use YouTube videos and google videos
  13. Leverage on RSS and content syndication
  14. Leverage of search engine optimisation
  15. Use teleconferences
  16. Encourage word of mouth through friends
  17. Use viral marketing
  18. Use webinars

10. The third sleepy business is wave three network marketing, where everything is done through the web. I have always been skeptical of network marketing but there may be some legitimate network marketing businesses which needs to be researched well before you get into it.

11. Investing: The key things in investing are as follows:

  • Understand the power of compound interest.
  • Buy index funds or good stocks( high return on investment, rising EPS, no huge debts/fixed costs or falling price. Calculate reasonable intrinsic value. Sell when the market is hot, business is becoming absolute or when there is better investment.Look at main street, financial websites( like morningstar), financial news sites( like CNN Money) and guru sites( like gurufocus.com) for ideas.
  •  Milk the stock market using options.( we shall explore this in a different post)
  • Alternative investments: Real estate, land, gold, etc.

12. Release money: Give some money regularly to charities or others in need.

13. Three final tips: Leverage on People, Focus on Goals, Pray to God.

 

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