I just read Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth, by T.Harv Eker. With a lot of wealth books, it tends to hover around mindsets. But this book has a good balance of both. I found the practical tips helpful in helping me think about what keystone money habits I need to have.

For this chapters, what I really took away was the concepts of cheat days, true wealth and rich habits. Yes, just like how a well-planned cheat day as part of a larger diet/nutrition plan helps you sustain the diet longer, money cheat days are helpful too, on the road to wealth. Setting aside some money to blow off helps to maintain the money-saving streak. 

Secondly, true wealth is freedom. I read it before but this book really helped drill it in. I might be aiming to get to $1mil ARR, but all that is a means to an end. The end? Freedom. Financial freedom. That’s the endgame. 

Lastly, I love the contrarian nature of the money habits of the rich versus the poor. I guess that’s exactly why the rich are rich, isn’t it? Some pretty counter-intuitive ones like how doing what is hard makes life easy, and taking advice from people richer than you are. 

Sharing them here as reference for myself, and for anyone who might find it useful. This is not a book review, just raw notes lifted directly from the book, with some minor edits, interpretations and categorisations of my own.

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Cheat days - accounts for intentional valve release

You must have an equal and opposite account specifically designed for you to “blow” money and play. One of the biggest secrets to managing money is balance. We are holistic in nature. Saving too much without fun, backfires. And vice versa. Your play account is primarily used to nurture yourself—to do the things you wouldn’t normally do. It’s for extra special things like going to a restaurant and ordering a bottle of their finest wine or champagne. Or renting a boat for the day. Or staying in a high-class hotel for an extravagant night of fun and frolic. 

The play account rule is that it must be spent every month. That’s right! Each month you have to blow all the money in that account in a way that makes you feel rich. The only way most of us will ever continue to follow our saving plan is by offsetting it with a playing plan that will reward us for our efforts. Your play account is also designed to strengthen your “receiving” muscle. It also makes managing money a heck of a lot more fun.

What is true wealth?

The goal of the money game is to never have to work again…unless you choose to. And that if you work, you work by choice, not by necessity. The goal is to become financially free as quickly as possible. Definition of financial freedom: “The ability to live the lifestyle you desire without having to work or rely on anyone else for money.”

Your desired lifestyle will cost money. But to be “free”, you need to earn money without working, i.e. passive income. To win the money game, the goal is to earn enough passive income to pay for your desired lifestyle. Financial freedom = passive income exceeds expenses.

2 primary sources of passive income:

1. Money working for you

 - e.g. investment earnings, financial instruments, owning mortgages or other assets that appreciate in value and can be liquidated for cash

2. Business working for you

- generating ongoing income from businesses where you do not need to be personally involved for that business to operate and yield an income. Any business that can be systematized to work without you; producing value for people, without you. 

Importance of passive income structures

Without passive income you can never be free. But unfortunately, everyone has a money blueprint that is set for earning working income, and against passive income. Social conditioning from young, and  never being taught how to earn a passive income or it being a viable career choice. If you understood from an early age that a primary financial goal was to create passive income, wouldn’t you reconsider some of those career choices?

By choosing business opportunities that immediately or eventually produce passive income, you’ll have the best of both worlds—working income now and passive income later.

Habits of the rich vs the poor

- To increase your wealth, you either earn more or live on less. Rich people have a lot of money and spend a little, while poor people have a little money and spend a lot. 

- Rich people buy assets, things that will likely go up in value. Poor people buy expenses, things that will definitely go down in value. 

- Rich people collect land. Poor people collect bills.

- Poor people see a dollar as a dollar to trade for something they want right now, rich people see every dollar as a “seed” that can be planted to earn a hundred more dollars, which can then be replanted to earn a thousand more dollars. Consider each dollar to be investment “soldiers”, and their mission is “freedom.”

- If you are willing to do only what’s easy, life will be hard. But if you are willing to do what’s hard, life will be easy. Rich people don’t base their actions on what’s easy and convenient; that way of living is reserved for the poor and most of the middle class.

- Rich people take advice from people who are richer than they are. Poor people take advice from their friends, who are just as broke as they are.