The 5 Lessons a Millionaire Taught Me by Richard Paul Evans is an inspirational account and reminder of how to be financially free. The book is broken down into 5 key principles. Here is a summary of the principles in the book
Decide to Be Wealthy Do you want a lifetime of financial success? Or do you want to be the first person on your block with the new iPad 2? Very rarely will those two things go together. Simply put, you have to want financial success. You have to want freedom from debt and, eventually, freedom from work. More importantly, you have to want them more than the trappings of affluence often seen in the world. You can either “live rich” or be rich. Almost no one can really do both.
Take Responsibility for Your Money Know how much money you have. Be aware of where every dollar goes – and why it’s going there. Once you start asking yourself the why when it comes to every dollar you spend, you begin to see how much of your money is wasted on things that are not helpful with where you want to be going. This is painful self-analysis for many people. You have to move from blaming others for you not getting ahead to looking at all of the choices you’re making. Often, that’s an ugly picture.
Keep a Portion of Everything You Earn The simplest way in which people do this is withdrawing a bit of each paycheque for their retirement fund. That’s a good start, but it goes deeper than that. For example, many people are hooked on a chain of making car payments, then eventually trading in that car for another car on loan and making payments on that car. Instead, keep a portion of each paycheque for the next car you’ll have to buy. Instead of paying interest to the car dealership on each and every loan payment, you can keep all of that interest money for yourself and even earn a bit more from the interest on your savings account where you keep that money. It’s all about saving a little bit at a time so that you have a big mountain later on. It’s about spending less than you earn each pay period and actually conserving the rest.
Little Things Do Matter There is a lot of money to be mined from the little changes you can make in your life. For example, If you try buying some generic items and raw ingredients at the grocery store, you’ll spend significantly less on food and household supplies, again, without inconveniencing your life. Make enough of these little changes and you’ll have the money to do things like setting aside money each month for your next car. Then, when you write a cheque for that car, you don’t have a car payment to make and can channel that money forward into something else. It builds on itself like an avalanche rolling down the mountain. The philosophy behind this is that long-term freedom and power are far more valuable than momentary fleeting pleasures.
Give Back Evans makes a good case for charity here, but not so much in the form of writing a cheque to some group and forgetting about it. You should give to the things you care about in life. Get involved in your community. Choose charities that are addressing problems that have touched your life. Helping to solve a problem you’ve faced in your life – and which continues to trouble others – isn’t just about handing over money. It’s about truly doing something of meaning with your life.