Introduction

Money is not the most important thing in your life but when you have money it's easier to remember that.

On November 7, 1998 the space shuttle Discovery was on final approach bringing back astronaut hero John Glenn. While this was the second space flight for Glenn it was the fifth space shuttle mission for Commander Curtis L. Brown. Without the presence of Glenn the landing would have gone unnoticed by most Americans. Space travel has become routine because first dreamers and then scientists and engineers imagined, discovered, built upon and mastered a series of individually trivial principles.

The same method that put men on the moon can be used to reach your financial goals. Dream of the possibilities, imagine and decide your destination, and build upon a series of individually trivial principles.

Warren Buffet and Bill Gates, two of the richest people in America, participated in a program at the University of Washington. The program, which aired on PBS, was called "Buffet and Gates on Success." They each spoke about what they thought were the key elements in their enormous financial success. Buffet said it was "rationality," understanding things as they really are and not as we would like them to be or how other people see them. Gates said "managing time," always focusing on and doing what was most important and valuable.

Their statements encapsulate the formula for achieving prosperity: identify what is important and focus on and work toward what is valuable and understand how things work.

Both men viewed things objectively when others were exuberant or fatalistic, and they did what was most important. They didn't do everything, only what was important.

A recent survey of more than 2,000 adults by the American Association of Retired Persons (AARP) found that one-third had no desire to become wealthy. Eighty percent of both groups, the wealth seekers and the wealth avoiders, were concerned that money would make them greedy. Seventy-five percent believed that wealth promotes insensitivity. At the same time, seventy-four percent viewed money as a way to provide for their families. The wealth seekers saw it as a way to achieve their values and not as a measure of success.

The average person would like to be rich although they don't expect to become rich. They wouldn't mind it of course, but they know not to expect it. In between what we would like and what we expect are the things that we are doing. This just means that we understand that what we are doing does not lead to wealth.

In the same way, we don't expect to become muscle-bound by pushing our luck and jogging our memory. Professional and amateur athletes start with the basics of good health and then give it a little extra. They continually practice their sport, exercise, and care for their bodies. They study and understand their bodies. They count their calories, their laps and their repetitions. They pay a great deal of attention to their coach. They endure a great deal of pain.

You certainly don't need to do all of that just to be healthy, especially as a major part of being healthy, for most people, is the avoidance of physical pain and not the pursuit or endurance of pain.

In the same way, you shouldn't have to constantly think and worry about your money to be financially secure. Financial security means not having to worry about money.

The average person does not count every calorie or every penny. You don't need to budget to be financially healthy. You don't need to know what each turn of the economy will bring. You don't need to be constantly hunting for the best investment or the cheapest way of doing everything. Like Gates and Buffet, you will need to understand what value is. Value is simply cost minus benefits.

You will also need to obtain a certain level of financial literacy, whether you intend to work with an advisor or manage your finances yourself. One of the most important lessons to learn is the Law of Compensation. There is no such thing as a free lunch. There is a price to pay for financial success, but the price of failure is even higher. If you work with a professional advisor or coach, they will expect to be paid one way or another, but you should understand what you're getting and what you're paying.

If you manage your finances yourself, you'll need to invest the time to learn and understand the multiple aspects of money. In either case, you need to receive value for your time and money.

Can Money Buy Happiness?

Bill Gates and Warren Buffet always seemed to be pretty happy whenever I've seen them on TV. If they're not, I'm sure there are a number of people that would like to shake them by their collars and ask them what's wrong with them. The happiest, most content person whom I have seen was Mother Theresa of Calcutta. She controlled, or at least influenced, a great deal of money. She, like Gates and Buffet, used money as a tool to create what, for them, was happiness. Each of them, in their own way, attained prosperity by understanding how things work, focusing on what was uniquely important to them and working toward their dreams.

Wealth is an abundance of material possessions. Prosperity is an abundance of every good thing. While the determination of wealth depends on your status compared to other people, prosperity is defined only in regard to your own goals. Wealth is having more than other people; prosperity is having enough to do what's most important to you. All of us, by definition, can't be wealthy, but everyone has the capacity to be prosperous.

This book is about the basics of making good financial decisions

not the complexities

Vilfredo Pareto was an Italian economist who developed what we know today as the Pareto Principle, the law of the trivial many and the critical few or the 80/20 rule. Pareto discovered that in Italy, 80% of the wealth was controlled by 20% of the population. In a collection, 20% of the items account for 80% of the value. His principle has been extended to include time management; 20% of your activities account for 80% of the achievement. What this means is that if you focus on the essential things, the 20%, you'll achieve most of the desired results. If you focus on the 80% you'll accomplish very few of the worthwhile results. You'll probably get weary and have nothing to show for you efforts.

I believe that this also applies to your money habits. By understanding and applying a few key principles you'll receive an abundance of the benefits. You might not get rich doing these things, but you'll undoubtedly become prosperous.

Simplicity Is Genius

When man first emerged from the caves he concocted complex stories about how the sun rose every day and the source of things such as rain and thunder. It's in our nature to prefer complicated explanations of simple events. It's been that way for a long time.

William of Ockham was an English monk, philosopher, theologian and victim of the Black Death. He provided the scientific method with its key principle 700 years ago; the simplest answer is usually the right one. This came to be known as Ockham's Razor. "What can be done with fewer assumptions is done in vain with more," he said. In succinct terms, ALWAYS KEEP IT SIMPLE!

Albert Einstein reinforced this principle when he said that everything should be reduced to its simplest expression, but no further.

More than once, I've overheard my beautiful, bright 14-year-old daughter talking with my bride. She asks her mom a question and mom replies, "You should ask your father, he knows a lot about that." And my brutally honest daughter replies, " That's all right, I didn't want to know that much about it."

My instinct is to try to explain to you every possible facet of money, investing, taxes and estate planning, as well as motivation and achievement that I've learned, to have you fully appreciate the nuances and distinctions I've discovered over the years. I truly love what I do and the next best thing is teaching people about how I do what I do.

The reality is that you probably don't share my passion and that's okay. In fact, that's the point of this book. You should spend your time developing and enjoying the things that you're passionate about. You don't need to know everything about money to be able to use it successfully. Admittedly, the complexities often make things worse.

Author and personal development coach, Dan Sullivan, teaches millionaires how to be more productive. He believes that we each have a genius: a unique skill or ability that we naturally excel at. When we pursue this unique ability, it doesn't take energy away from us but gives us additional energy. The key to success, he says, is to delegate everything but our genius.

I will provide you with the basic explanations of how money works and how we make financial decisions. This may seem simplistic or repetitive at times, but bear with me so that when you are pressed by the complexities and ambiguities of modern economic events, you'll know what to do because you'll remember the basics.

It's been a challenge to make sure that there was enough here to give you a meaningful understanding of the subjects but not overwhelm you with transitory information that changes with circumstances. In writing this book, I've frequently been tempted to add some interesting details here and there. I've hesitated to cut things that I thought were fascinating or at least helpful. But, alas, here it is, the 20% that I expect will give you 80% of the results and value; enough to make you financially healthy.

This was not written solely to help you have more money in your life although I hope that is a result. What I hope is that you get more life out of your money. It's not about the growing gap between the haves and the have-nots but closing the gap between the happy and the unhappy. My true desire is that you'll take the knowledge in this book to attain a variety of nonfinancial improvements. You won't learn enough to be able to do your own taxes or make major investment decisions or find one-size-fits-all answers, but you'll understand the foundation and process of making great financial decisions. I hope you'll discover how to use your money as a tool to achieve the kind of life you truly deserve. My wish is that you create a life free from financial stress and worry and that you attract the love, convenience and generosity you hope to attain with your money, your time and your life.