Coach Yourself to Wealth Live the Life You Want Martin Hawes and Joan Baker Coach Yourself to Wealth 22/4/05 1:24 PM Page i First published in 2005 Copyright © Martin Hawes and Joan Baker 2005 All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without prior permission in writing from the publisher. The Australian Copyright Act 1968 (the Act) allows a maximum of one chapter or 10% of this book, whichever is the greater, to be photocopied by any educational institution for its educational purposes provided that the educational institution (or body that administers it) has given a remuneration notice to Copyright Agency Limited (CAL) under the Act. Allen & Unwin 83 Alexander Street Crows Nest NSW 2065 Australia Phone: (61 2) 8425 0100 Fax: (61 2) 9906 2218 Email: info@allenandunwin.com Web: www.allenandunwin.com National Library of Australia Cataloguing-in-Publication entry: Hawes, Martin, 1952–. Coach yourself to wealth. ISBN 1 74114 365 9. 1. Finance, Personal. 2. savings and investment. I. Baker, Joan, 1956– . II. Title. 332.02401 Typeset in 12/14 pt Adobe Garamond by Midland Typesetters, Maryborough Printed by Griffin Press, South Australia 10 9 8 7 6 5 4 3 2 1 Coach Yourself to Wealth 22/4/05 1:24 PM Page ii Preface: A better life v Part I Setting the stage 1 1 How this book works 3 2 KASH your way to wealth 6 3 What is ‘wealth and freedom’? 9 4 WealthCoaches Model for wealth and freedom 15 Part II Current position: Where are you starting from? 31 5 Facing reality 33 6 What is stopping you? 36 7 Net worth 39 8 Where are your assets? Getting the balance right 46 9 What is coming in: Income 51 10 What is going out: Expenditure flows 55 Part III Your desired position: What do you want? 65 11 What’s the dream? 67 12 Who will share the dream? 72 13 What do you really value? 75 Part IV Your Freedom Figure: How much will you need? 79 14 What’s enough? 81 15 SMART goals 91 16 Now, what do you really want? 97 iii Contents Coach Yourself to Wealth 22/4/05 1:24 PM Page iii Part V Strategies for wealth: How will you create wealth? 101 17 How wealth is created 103 18 How income makes you wealthy 106 19 How wealth is destroyed 110 20 How to protect wealth 114 21 You have to own Wealth-Creating Assets 118 22 Choose only one Wealth-Creating Asset 122 23 How to choose a Wealth-Creating Asset 124 24 Getting asset allocation right 126 25 What if you have a job? 137 26 You must create a surplus 141 27 You should maximise income 149 28 You have to learn to borrow 156 29 How to maximise your returns 161 Part VI Action plans: What will you do? 165 30 Bridging the gap 167 31 Do a one-page plan 171 32 Turning strategies into actions 176 Part VII Where can you find help? 183 33 Who’s on your side? 185 34 Networking: Winners work with winners! 188 35 Assembling a ‘dream team’ 192 36 Are you getting the best? 196 37 Making your team work for you 199 38 Tips for choosing professionals 204 39 Learning from the masters 207 40 The last menu item: Frogs! 215 COACH YOURSELF TO WEALTH iv Coach Yourself to Wealth 22/4/05 1:24 PM Page iv The principles we set out in this book work. For several years now we have been working as WealthCoaches helping people to arrange their money to live a better life. We have applied the principles set out here to many people’s finances over that time, proving that they work in many different situations. Using this book, you too can understand the principles of wealth creation and apply them to your own circumstances. Everyone is different. We all have unique circumstances—no two people, or families, have the same financial situation. Our incomes are all different; our expenditures are all different; what we own is unique, as is what we owe. Even more importantly and interestingly, we all have different dreams, visions and aspirations for our futures, different goals for what we want and what we want to be. It is these differences that keep the two of us doing what we do—coaching people to improve their finances to have a better life. The differences are the challenge—there is no one template that can possibly fit all people with all their different situations. The differences provide us with the challenge of working with people in all sorts of circumstances as they arrange their money for the life that they want. The differences mean that we as WealthCoaches can never relax and become detached as we work with clients. The fact that everyone has a unique position and unique goals demands that in the planning phase we listen hard and think even harder. We have to understand where our clients want to be in the future and have a clear picture of where they are now. We all have strengths and weaknesses, strong parts of our personalities and finances that can be used for the good, and weak parts that have to be accommodated. It is our job as planners and WealthCoaches to work out what is strong, what is weak, and v Preface: A better life Coach Yourself to Wealth 22/4/05 1:24 PM Page v to fit the pieces together to make the best whole. How do we make the pieces fit so that our clients get the lives that they want? The answer is that it is like starting a fresh jigsaw puzzle each time we take on a new client. There is a puzzle that has to be solved each and every time. Having said that there’s no template which can fit and match everyone, there is a process that we follow with our clients, a pro- cess that we have developed and refined over the years and which we will never stop trying to improve. It is presented so that you can use it yourself to create the wealth and the life that you want. Our experience in dealing with people is that despite their differences, everyone wants one thing: a better life. Clients look to us to help with the money side of that, whether they have a lot of money or not much, whether they are getting to the end of their working lives or just starting out. Money is important— it makes the difference as to whether you can have the life that you want or not. Money gives choices—with good finances you have options that other people simply do not have. Having a lot of money is not a panacea—it will not solve all the problems in you life—but for most of us it is a prerequisite to having the freedom to live our lives as we want. Without money (or with our money arranged and invested badly), our lives are more restricted, our choices more limited. We are committed to helping people achieve the financial position they need to be in to allow them to live the lives they want to be able to live. That is the purpose of our work and the theme of this book. Practically anyone can become wealthy and free. We have dealt with all sorts of people, from those who already have plenty of wealth but need help to arrange it to be free, to those with very little, who are just starting out to develop wealth, and much of what we have learned is here for you to read. Joan Baker, Martin Hawes; info@wealthcoaches.net COACH YOURSELF TO WEALTH vi Coach Yourself to Wealth 22/4/05 1:24 PM Page vi Part I Setting the stage Chapter 1 How this book works 3 Chapter 2 KASH your way to wealth 6 Chapter 3 What is ‘wealth and freedom’ 9 Chapter 4 WealthCoaches Model for wealth and freedom 15 Coach Yourself to Wealth 22/4/05 1:24 PM Page 1 Coach Yourself to Wealth 22/4/05 1:24 PM Page 2 So, you have decided that you want to be wealthy and free. Congratulations! That is the hardest step by far. Most people never progress beyond the stage of wishing to be rich. You are reading this book because you want your life to be different. We are going to take you through the steps you need to take in order to become wealthy and free to live the life you want. The process we work through with clients has five main building blocks or steps. We look at: 1. Your current position. 2. Your desired position. 3. Your freedom figure. And then we move on to: 4. Strategies for wealth. 5. Action plans. As you read on you will find out exactly what you need to do in each of these areas. Here we outline the sorts of things you will be working through under each heading. 1 Your current position The most important thing here is to get a very clear sense of where you are starting from. Many of you may have only a vague idea of the current position of your finances—after all, most of us are too busy to do much more with our finances than get through each month. In this section we will be helping you work through exactly where your finances are now—how much 1 3 How this book works Chapter Coach Yourself to Wealth 22/4/05 1:24 PM Page 3 wealth you have, how your assets are allocated, what your current income is, how much money is being spent and where, and what is happening to the surplus—if there is a surplus. 2 Your desired position In many ways this is the most exciting part of creating wealth. This is where you get to decide what your dream life will look like. In this section we help you work through your dreams so that you can describe in some detail the life of wealth and freedom that you want to achieve. 3 Your freedom figure Using your dream lifestyle as a guide, we then focus on helping you to work out how much wealth you will need to live the life of your dreams. We call this amount of wealth your Freedom Figure, the amount of money that will allow you to be wealthy and free to live the life that you want. Freedom Figures differ because everybody has a different dream of their ideal life. You will need a certain amount of passive income to live the life of your dreams. To get that amount of income you will need to have a certain level of capital to provide it. This section shows you how to calculate what your Freedom Figure should be, so that you can set that number as your main goal. 4 Strategies for wealth Your strategy for creating wealth needs to be a good fit with who and what you are. Many people try to become wealthy by copying other people’s strategies without doing the work they COACH YOURSELF TO WEALTH 4 Coach Yourself to Wealth 22/4/05 1:24 PM Page 4 [...]... prompt you to take action Each chapter concludes with the KASH items you need to be good at, or need to develop This 7 Coach Yourself to Wealth 22/4/05 1:24 PM Page 8 C O A C H Y O U R S E L F T O W E A LT H is the stuff that you want to take away so that you can use it again and again to ensure you reach your dreams of a life of wealth and freedom KASH will make you wealthy! 8 Coach Yourself to Wealth. .. to be the right sort of wealth and the right sort of income Living the life of your dreams means that you will need a plan to both create wealth and secure it so that you have enough passive income to spend your time as you choose 14 Coach Yourself to Wealth Chapter 4 22/4/05 1:24 PM Page 15 WealthCoaches Model for wealth and freedom If you dream of abundance in your life you have to first create wealth but... 10 High Coach Yourself to Wealth 22/4/05 1:24 PM Page 11 W H AT I S ‘ W E A LT H A N D F R E E D O M ’ ? • Copy the blank diagram into your workbook or folder and mark the quadrant you are in Mark the one you would like to be in, and draw an arrow showing you moving from where you are to where you want to be • To make this move, what do you have to work hardest on: time or income? • Describe the way... let’s get on with your journey to wealth and freedom Exercise 3: Keys to wealth quiz Score yourself out of 10 points on each of the following 10 keys to wealth 1 Income You must create as much income as possible Income is the key to wealth You have to have income to invest in Wealth- Creating Assets It is also the income from these assets that will in turn drive up the value of your assets—your business.. .Coach Yourself to Wealth 22/4/05 1:24 PM Page 5 HOW THIS BOOK WORKS need to figure out where they are at and what they want We think that you should do a lot of preparatory work before choosing a strategy to build your wealth, a strategy that will work best for you We outline the various strategies for wealth creation and give you some guidelines to help you choose the one that best suits your... plan The path to the level of wealth that will let you live the life of your dreams is usually a long one and could take a few years Without a good plan you are likely to lose your way or become disheartened because you cannot see that you are making progress In this section we help you build a simple plan of action that will assist you to do the right things and let you set milestones that allow you to. .. celebrate your success 5 Coach Yourself to Wealth Chapter 2 22/4/05 1:24 PM Page 6 KASH your way to wealth As we progress you will find that each step to wealth requires you to examine what you have been doing and make some changes There may be new concepts to learn (K = knowledge), new approaches to wealth (A = attitudes), new actions to learn (S = skills) and new practices to acquire (H = habits) These... times to change it so that you have a more helpful set of beliefs to support you in becoming wealthy What you tell yourself about money and wealth will be very important to your success because it will determine what you choose to do, for example, whether to spend or whether to invest • Skill is required to do anything well The basics of wealth are very simple A lot of people feel they must need to be... yourself why you are not more consistent you obviously know a lot about what you need to do to become wealthy Is your attitude stopping you? Are you giving up from time to time? Are there particular keys that you have neglected entirely and that you need to attend to? If you do more of the right stuff consistently your performance should improve rapidly 40+ Well, you can’t plead ignorance! You either have... work, together with a calculator, will allow you to review your skills regularly That will help you build your skills quickly and give you a sense of comfort and competence.) • Habits make or break us! After all, we are whatever we repeatedly do We will be pointing out to you the habits you need to develop and some of the ones you may need to change By the end of the book you will be convinced that you . you want your life to be different. We are going to take you through the steps you need to take in order to become wealthy and free to live the life you. Coach Yourself to Wealth Live the Life You Want Martin Hawes and Joan Baker Coach Yourself to Wealth 22/4/05 1:24 PM Page