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Today, Dan Martell is known as a serial entrepreneur who has coached over 1,000 business owners, but he wasn’t always on track to make millions.
He was arrested at age 17 and subsequently entered rehab, where he turned failure into personal growth and success. He taught himself to code, started a technology business, and made his first million yen at age 27.
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Along his journey, he learned nine money rules that helped him go from penniless to millionaire, and he recently shared his tips on YouTube.
Here’s how the top 1% of wealthy people think about money, according to Martel, and how you can do the same.
act wages
The first rule entrepreneurs learn is that wages don’t make you rich. That’s what consumption habits do.
“My father once said, “It’s not about how much money you make, it’s about how much money you make.” That’s what you keep. 33% of millionaires never made more than 100,000 a year, which means they knew how to invest their money. ”
After failing financially at the age of 21, Martell walked away from that experience and understood that in order to make money, you must live on a small percentage of your income and never exceed your means. That means I drive a 12-year-old car. I made millions a year.
To maximize your income, live and invest as little money as possible.
“You can’t accumulate wealth, but you can spend it,” he said.
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10% rule
Martell lives on 10% of his income, which may not be possible when he first starts building his wealth, but it’s a goal to strive for. By living on a fraction of your income, you have more money available to invest.
“Learn to live and save with very little money. Then decide at what level you want to start investing in other things,” he said.
prioritize your investments
Martel said his third money rule is “controversial” but that the “poor” makes a living just to buy things, while the middle class “buys things”. They believe that wealthy people invest in things that generate income. .
“Some of you are taking that money and investing it in depreciating assets when you’re very close to actually making money to cover your bills.” he says.
Instead of working more to support your lifestyle, invest in yourself and learn a new skill to make more money, or start a side hustle and use that extra money to invest.
save money
Unexpected things happen in life, and having a few months’ worth of expenses saved can help you get through difficult times. You don’t want to sell your business or things cheaper than necessary just because you don’t have an emergency fund.
Martell lives by the rule of keeping at least six months’ worth of expenses in a savings account that he can quickly access when needed. Six months may sound like a long time, but he explained that in case of an emergency or job loss, “it’s a long time.
“You can stay calm and make good decisions without getting emotional, so you can act from a place of abundance rather than fear.”
Don’t overleverage
When consumers take on debt, they end up paying higher interest rates to benefit banks and credit card companies, which slows down their ability to build wealth.
Don’t finance a lifestyle you can’t afford. Martell learned this lesson when he bought furniture with a loan that took longer to pay off than expected.
“If you can’t afford it, make more money and get it,” he said.
invest in your skill set
Investing in your skill set has the potential to advance your career, create more opportunities, increase your value, and help you earn more. Put off a lavish lifestyle and invest in your skill set and yourself.
Martell was broke when he hired a business coach. He only had two months’ worth of money to pay for it, but it was a year-long effort. He thought that if the coach was good enough, he would have the ability to learn and pay him what he needed to do to make more money. That year, he earned more than $1 million.
“What I’ve learned over the years is that all the money you invest in coaches and seminars adds up to about $1.7 million. If you had taken that money and invested it in the S&P 500, “I would have made some money, but when you look at the income that knowledge has generated over my life, it’s like a 1,000-fold return,” he said.
Know risk return
Investing always involves an element of risk, and investing in something you don’t know increases your risk. With investments, you almost always get the best returns when it’s something that’s in your wheelhouse. “If you invest or do anything outside of your area of expertise, you’re putting everything at risk,” Martel says.
His current investment strategy is to “find situations where there is an asymmetric reward, meaning I know what I’m doing, so I’m guaranteed some upside, and I know what I’m doing. It means we can invest in or buy businesses with fixed downsides, which is better than most people. He added: “I’m not personally endorsing it, so I’m not putting my entire personal net worth at risk, and then I can add value to it and make it even bigger, and it’s a win-win for both of us.” It will bring benefits,” he added.
Build personal profit and loss
The eighth rule that Martell follows is that there is personal profit and loss. Your goal at work is to effectively manage your workload, and the same goes for your home.
It’s important to make sure you’re not paying more taxes than you should, that your portfolio is diversified, that your investments are profitable, and that everything is running smoothly financially.
“Treat your home like a business,” Martel says. Get someone to oversee your finances, review your investments, and reduce stress and strain.
“The richest people are not in control of their wealth,” he explained. “They have property managers. They have people who run their personal lives as well as their businesses. How do you do that? You have an income statement. You have income, you have expenses. , create a budget. Just do the same thing for your personal stuff as you would for your business.”
Martell implements this strategy by having a house manager take on the responsibilities that he or his wife would have.
“If you’re stressed about eating something good, you’re addicted to that goodness,” he said.
Money is a means, not an end
Life is not just about making money, but rather using wealth to “create, expand, and serve others,” Martell said of his ultimate money rule.
According to this millionaire, true success requires personal growth. Along the way, Martel learned:
Make your money work by investing in your own self-worth, growing personally, devoting your energy to meaningful relationships, and working on fulfilling projects. Otherwise, Martell says, having wealth can be “lonely.”
Details of GOBankingRates
This article originally appeared on GOBankingRates.com: 9 Money Rules to Go from Bankrupt to Millionaire by Dan Martel
