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Coach Yourself

to Wealth

Live the Life You Want

Martin Hawes and Joan Baker

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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: [email protected]

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

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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

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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

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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

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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;

[email protected]

COACH YOURSELF TO WEALTH

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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

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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

Chapter

book works

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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

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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 circumstances and talents.

5 Action plans

Nothing much ever gets done without a clear 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 sec￾tion 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.

HOW THIS BOOK WORKS

5

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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

four letters form the memory aid KASH, representing the core

of your learning.

• Knowledge might include a new vocabulary or concepts

such as ‘Wealth-Creating Assets’ and ‘Wealth Allocation’.

Wealth is not nearly as complicated as many people fear

but, like all disciplines, finance has its own jargon. Even

more importantly, concepts such as ‘Net Worth’ and ‘Internal

Rate of Return’ are fundamental to your understanding

of the creation and maintenance of your wealth. All these

ideas are introduced progressively and you will have a good

general knowledge of the field by the time you have finished

this book.

• Attitude covers many things, including our beliefs and

mindsets. We all have a set of ideas and feeling about money

and wealth. We did not consciously choose these attitudes—

most of them have been given to us through our upbringing.

We inherit most of our attitudes from parents, teachers,

friends, and later on in life, our colleagues and the people

we socialise with. We are often unaware of the beliefs—and

even baggage—that we carry around concerning money. But

whether you are aware of your attitude or not, it is affecting

your behaviour and determining many of the choices you

are making. We will be challenging you to think about your

6

KASH your

Chapter

2 way to wealth

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attitude—and at 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 very

good at things like maths in order to be good with money.

Nothing could be further from the truth! You learned all the

maths you need in primary school, but you do need to learn

how to apply that learning to money. We cover skills such as

how to calculate your Net Worth, how to determine your

Freedom Figure, how to do one-page plans, and many more

skills. You should practise all these skills until you are com￾fortable with them. (Keeping a folder or large notebook for

this 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 need the habits of dreaming, setting goals, growing Net

Worth, building networks and many more. The wealthy are

different because they do things differently to the rest of us,

that is, they focus on growing income rather than just

spending it. If you can change just a few core habits with

money, it will make all the difference to your wealth for the

rest of your life.

We point out these learning points, chapter by chapter, and

prompt you to take action. Each chapter concludes with the

KASH items you need to be good at, or need to develop. This

KASH YOUR WAY TO WEALTH

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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!

COACH YOURSELF TO WEALTH

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Having wealth and freedom is about having both the time and

the money that you need to live the life you want. Neither wealth

nor time is enough on its own—it’s hard to enjoy either money

or leisure without having enough of the other. Time without

money is not a lot of fun, nor is it fun having money but no

time. You need both.

It is all too easy to focus on money alone. Many people we see

have plenty of wealth but no time or freedom, when we know

that time and money are both important to having a life of

wealth and abundance.

3

9

What is ‘wealth

Chapter

and freedom’?

LotTIME

INCOME

Little

Low High

Financially Free = Having Time and Money

Financially Free! Financially Free!

Low Income/Lot of Time

Low Income/Little Time

May be

• Semi-retired

• Part-time

• Unemployed

May be

• Single parents

• Have multiple jobs

• Small children

May be

• Professionals

• Business owners

• Double income with kids

• Career building

High Income/Lot of Time

High Income/Little Time

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