Principle #1:

WEALTH CANNOT BE CREATED OR DESTROYED. IT ALREADY EXISTS.

When you think about wealth and how it works, you soon discover that it is very similar to energy — it cannot be created or destroyed. Rather, it is constantly changing form and changing hands. Wealth is something that already exists in one form or another and has been accessed or harnessed by one person or another. We all know that we cannot take wealth with us when we die, so it is always left behind in some form to someone. Think of the farmer who trades his labor for money. He then trades his money for some land and seeds. He sows the seeds and they become produce. He sells the produce and buys a cow. He sells milk that he gets from the cow and receives money, which he uses to buy more land and seeds so he can produce more crops and sell them for more money. You get the point. Wealth is always changing form and always changing hands.

So why is it so important to understand this principle? There are many reasons, but one of the most important is that there are many who promote the false concept that wealth is a zero sum game. They want you to believe that there is only so much to go around. They teach that if someone else has it, you will have to go without unless you take it from them. Under the guise of equality, they preach that wealth should be redistributed so that everyone has the same amount. These people are either ignorant or part of something far more sinister. Either they don't understand the governing laws of wealth or they are trying to deceive and control you. Don't listen to them. A power plant doesn't have energy; it generates it. The same is true of you. You don't have wealth — you generate it!

Using Wealth for Good

If we want to be wealthy, we must learn the principles that govern wealth. We must learn to access, harness, and use it for good. What goes around comes around. When we use wealth for good, it ends up coming back to us in many forms and in many ways and ultimately creates more wealth for everyone. The worst thing we can do with wealth is to hoard it. It only fulfills its potential when it is kept in circulation.

Consider the following. I have heard that luck is what you get when preparation and opportunity come together. That being said, I believe that wealth is what you get when a good idea and proper resources come together.

A great idea is one that solves problems, meets a need, or fulfills a desire. Resources are all around us, but until someone comes up with a great idea on how to use the resources to solve problems, they just lie dormant. However, when the idea and resources come together, they generate wealth.

Take the concept of the railroad, for instance. The railroad is made up of ore that was mined and refined into steel. The steel was made into rails that were laid upon the backs of timber to support the heavy steel. Metal was also used to build powerful engines and boxcars to haul precious commodities from one end of this country to the other. The railroad was one great idea after another, turning raw resources into usable products that solved problems and met needs and desires. It's impossible to measure how much wealth has been generated by the ideas and resources that created the railroad.

Another wealth-generating union involves what I call a second-generation idea and resources. In this case, the money is already there. It is just looking for a problem to solve or a need to meet. At the same time, someone else has a great idea and is looking for the money needed to put the idea into action and bring their combined problem-solving ability to life.

When a young preacher named Frank W. Gunsaulus preached a sermon entitled "What I Would Do If I Had a Million Dollars," little did he know that a wealthy gentleman by the name of Phillip D. Armour was present in the congregation and very interested in the preacher's message. When Mr. Armour's money and Mr. Gunsaulus' idea came together, the Armour Institute of Technology was created. Because of a great idea and the necessary resources coming together, many lives were enriched. This second-generation idea and resources allowed access to a great deal of wealth.

How Does This Apply to You?

So how does this apply to you? When you think of wealth, don't simply wish you had it. Think of a problem that needs to be solved, a need that could be met, or a desire that could be fulfilled. When you consider a problem to solve, be sure that it is one you feel passionate about, something you could put your heart, mind, and strength into. Then, use your imagination and create a way to make it happen. Envision the resources that would be necessary to implement the idea. Consider every possible detail, and begin working to make it happen. Remember, luck is what you get when preparation and opportunity come together. Well, opportunity is everywhere; we just need to do the preparation so we can recognize it and know what to do with it. When we do, our idea and the needed resources will also come together. We will generate wealth and use it for its intended purpose, which is to solve problems, meet needs and desires, and enrich lives in the process.

Remember, wealth is like energy; it cannot be created or destroyed. It already exists. Just as the power plant converts energy from one form to another, you have the ability to convert resources into wealth. This is how we access wealth. The answers to the questions in Activity 1 will likely take some time to find, but if you are really passionate about your idea, it will be worth the effort and may be the source of great wealth to you and others.

When you help others succeed, you succeed with them.

Activity 1

How Can I Use Wealth for Good?

This activity contains several questions to help you discover how to use your wealth for good. Answer the questions to see how you could access wealth.

1. What problem, unmet need, or desire do you feel passionate about?

2. How would you solve that problem or meet that need?

3. What resources would be necessary to implement your idea and bring it to life?

Principle #2:

GIVING GENERATES WEALTH.

What goes around comes around." In other words, the things we do will always come back to reward us or to haunt us, depending on whether they're good or bad. Having seen this many times and in many ways, it makes sense to me to try to do as much good as possible. Whether we are giving our time, money, or talents, we receive a satisfying feeling that we are part of the solution because we are participating in an effort to make things better. That good feeling makes us happy. When we are happy, we tend to be healthier. Healthy people tend to be more productive. Productive people tend to be more prosperous. And prosperous people have even more to give. The giver and the receiver experience a benefit spiritually, psychologically, physically, and financially. That's a lot of benefits for just one act of giving.

When we give, we generate wealth. You see, when the giver lifts the receiver up from dependence to self-reliance, the receiver becomes a contributor. As a contributor, the former receiver is now in a position to pay his own way and to become a giver. For every receiver who becomes a giver, you increase the ability to lift two more receivers up from dependence to self-reliance. This is true because instead of one giver and one receiver, you now have two givers. Now that you have two givers, you can reach two receivers. When those two receivers are lifted from dependence to self-reliance, you now have four givers. As you can see, with that process at work, it would only take thirty successful rotations to lift over one billion people out of poverty and turn them into self-reliant givers. Check out the numbers on page 11.

When we give, the cost of dependence goes down, and the reward of self-reliance goes up. Self-reliant people work and earn money and then spend and save it, which helps create jobs. More jobs create more pay. More pay creates more tax revenue and so on. Everybody prospers when every possible person is contributing.

Engage in Personal Charitable Giving

Charitable giving is the responsibility of the individual. Each person should have the right and responsibility to decide for himself or herself how much they want to give and where they want to give it. When that responsibility is assumed by the government, it takes away those rights and responsibilities.

Students understand this concept very well. Just watch what happens when professors take high scores from "A" students and give them to "F" students in order to create equal grades for everyone. The "F" students will be pleased because they no longer have to worry about passing the class, or even studying for that matter. The "A" students, however, will protest that they worked hard to have high grades. If their efforts are only going to reward students who haven't earned it, they will simply stop working so hard. Of course, in this situation, everyone suffers as performance and standards are reduced.

Personal charitable giving increases the contribution and cooperation of the giver and the receiver by engaging both in an effort to overcome poverty. In the effort, everyone prospers.

In direct contrast, government welfare promotes and perpetuates poverty by robbing the giver and receiver of incentive and opportunity when it seizes assets by force and distributes them by quota. In this effort, everyone suffers.

If you simply remove a man from the ghetto, he takes the ghetto with him. However, if you remove the ghetto from the man, he is free to go where he wants and leave the ghetto behind.

Why Must I Give My Wealth?

So why is it important to understand and live by this principle? Hopefully it's obvious, but just to be sure that everyone understands, we should not look to government to solve our problems. We should work with each other and retain our individual rights and responsibilities. When we do it, everyone prospers. When the government does it for us, everyone suffers.

"What goes around comes around." The more you give, the more you receive. The more you receive, the more you have to give. Be a giver! Giving generates wealth.

Activity 2

Determine Two Charitable Causes

Write down at least two charities or causes that you are going to give more time and or money to and determine when you will begin.

1. Charity Name.

2. What I Will Give (Time/Money).

3. When I Will Begin.

Principle #3:

THERE ARE ONLY 100 PENNIES IN A DOLLAR.

Who doesn't know that? Apparently, a lot of people don't know. Otherwise, we wouldn't have out-of-control spending at the personal and national level. Think about what that simple statement really means. For one thing, it means that one man's pay raise is another man's price hike. If I pay more for labor, I have to charge more for products and services. When a person or group such as a union or other entity demands more pay, unless they have increased productivity and profitability enough to justify the pay increase, they will simply raise the cost of the product/service being produced. That, of course, is because it just became more expensive to provide the needed product or service.

In like manner, if the government thinks it is solving financial problems for those who have not by confiscating wealth from those who have, think again. When you take from the "haves" and give to the "have-nots," you simply raise the cost of goods and services for the "have-nots." You can combat this by placing price controls on the "haves" so that they cannot raise the price for goods and services. But in this case, you simply end up with fewer "haves," which increases the number of "havenots," because without the ability to generate profits, you have nothing to pay employees or incentivize investors, which in turn lowers demand for goods and services. The snowball effect of this action also lowers wages and opportunities for employment, so instead of solving the problem, you have done what non-thinking, principle-violating, short-term solutions do, and that is make the problem worse.

The only way to justify paying more for labor is to find ways to make labor more productive and profitable. When those two components are in place, you can raise pay without raising prices.

The important thing to remember is that there must be productivity and profitability, and you must account for every penny. Activity 3 will help you evaluate the value you provide your employer.

Activity 3

How Valuable Is Your Labor?

Write your response to the following questions to evaluate how much value you create on the job.

1. What value do you create for your employer?

2. If you were the employer and were making payroll, would you see your services worth what you are paid?

3. What can you do to increase the profitability and productivity of the services you provide?

Principle #4:

THERE ARE ONLY TWO ECONOMIES.

There are only two economies, cash and credit. Let's examine the difference and see why it is so important to understand this principle and what we can and should do as a result.

What Is a Credit Economy?

In a credit economy, everything you buy costs more. You see, you borrow money from the banker in order to buy something from the retailer, who borrowed from the banker in order to buy it from the wholesaler. The wholesaler borrowed from the banker in order to buy it from the manufacturer, who borrowed from the banker to be able to manufacture their product. In this model, you add layer upon layer of cost to the price of the thing you are purchasing. When you enter and live in a credit economy, it costs more to live. Your hard-earned dollars only go so far. Why add all that extra expense unless it is absolutely necessary? That alone is a pretty good reason to do your very best to avoid living in a credit economy.

Another reason to avoid a credit economy is because it adds substantial risk of financial failure. Remember in 2008 when Bear Stearns and Lehman Brothers were "sold for a song" or went into bankruptcy because of their extreme leveraging? In other words, they borrowed money using assets as collateral that were only worth a fraction of what they were borrowing. Additionally, the stock market crash in October of 1929 was caused by individuals borrowing money to speculate on stocks. And the most recent crisis in the real estate market was caused by over-leveraging and speculating. As an interesting side note, I think it somewhat bizarre that governments around the world are trying to get us out of the most recent economic malaise by doing exactly what caused it, which is over-leveraging.

Plan for the Inevitable Economic Downturn

The economy inevitably slows down from time to time. You may lose your employment or may be forced to take a reduction in income because everyone around you has either lost their employment or are taking a reduction in pay as well. When this happens, how will you pay your debts? If you can't pay your debts, what happens to your belongings that you have partially paid for? Does the banker grant you a waiver? When the collectors come knocking at your door, do they buy back any equity you may have built up in the asset you owe against? Sorry, it doesn't work that way. You pay or you lose. And when you lose, you don't just lose the asset or belonging; you also lose all the money you have been paying in order to create ownership.

When things slow down in a credit economy and people around you can't make their payments, they are forced to default on their obligations. When they default, the bankers lose money they can't afford to lose. When the bankers lose money, they aren't able to pay depositors their deposits. When that happens, the government has to step in and pay the depositors. Where do you think the government gets the money to pay the depositors? From the depositors, of course — the government gets the money it needs by raising taxes to collect revenue to bail out the failed financial institutions. Seems to me that taking money from someone to pay them back what you owe them is counterproductive. In the end, borrowing to repay debt creates a financial nightmare and substantially increases the risk of financial failure.

Again, this seems like a pretty good reason to avoid credit and debt unless it is absolutely necessary. Having said that, I understand there are times when a person or business has little choice but to borrow some money in order to progress with their financial plans. However, you should never borrow more than absolutely necessary and only if you are in a position to easily afford and quickly pay it back. There is no such thing as "good" debt and "bad" debt — only debt.

There Is a Better Option

The second economy is the cash economy. If you haven't already begun to understand why this is a much better way to live and operate your finances, let me just say that it costs substantially, if not exponentially, less. And the potential dangers and heartache of loss — due to circumstances that may be entirely out of your control — are greatly reduced.