Success can be measured by many things. Some people measure it by the amount of money they have. Although I don’t fully subscribe to that, I do believe one measure of success is your ability to make money and create wealth. In this chapter I want you to park all your beliefs about money and read with an open mind. Some of the ideas may seem counter-intuitive but keep an open mind and, most importantly, test them.

Pay yourself first

The more I study happy prosperous people, the more I realise they use Flip It thinking to acquire their wealth. It starts with a simple mindset that the wealthy have called ‘pay yourself first’.

When I first discovered ‘pay yourself first’ I became very excited as I thought it meant I would take a percentage of my income every month before paying any bills and use it first to buy myself treats and make me feel good. I was half right. Yes, you do take a percentage of your income each month before you pay anyone else but you save the money. Every month, month in month out, without fail.

If you are reading this and you currently earn exactly enough to pay your monthly bills, you’ll probably be thinking, ‘When I earn more, then I’ll save’ or ‘When I’ve paid off more of my debts, then I’ll save’. If that’s you then you need to Flip It right now and create a new belief system if you want to be wealthy.

I really believe that the vast majority of people who spend all they earn could use this simple system to get started on the road to prosperity.

• Step 1: Find ways to cut back on your expenditure by at least 10 per cent.
• Step 2: Find the right type of savings account for you.
• Step 3: Set up a standing order to pay a percentage of your wages (10 per cent is a good start) into your savings account the day you get paid.
• Step 4: Review after a year and see if you can afford to save more.
• Step 5: Reinvest the interest.

I’m pretty certain at this point that many readers will have a challenge with step 1. Most people are not taught good financial management skills; we have lived with an attitude of spend now and pay for it later. This is fine when you can control the payments and you are using OPM (other people’s money) to leverage your goals, but in many cases it’s just that we think we need the things we don’t.

My friend Chris was always a very good spender. One day (I think it was his 50th birthday) he got it into his head that he was going to be a saver. He went nuts and within a few months had saved a small fortune. When I asked him what he had done differently, he said it was all simple stuff, ‘I just made my mind up to do things differently’.

What Chris did was to Flip It from excessive to thrifty. One of my favourite pieces of Flip It thinking he tested was around cash. Chris loved to carry a wad of cash. When he became a saver he made the decision to leave the house with just £1 in his pocket.

There are lots of other ways to find the 10 per cent. Buying cheaper brands, eating out less, renegotiating bills, deferring a holiday, preparing your own lunch, etc. You know what to do – but now it’s time to do it.

Do this and you’ll develop the mindset of a saver. Now it’s time to look at how to make more money. So you can save more – not spend it!

Let’s make lots of money

People who have made a lot of money usually say they have one of two mindsets. The first is that they didn’t set out to make money and the financial success is just a by-product of what they did. The second is that they had a goal to earn a certain amount of money then they set out to earn it. You can choose which one works best for you – but choose you must.

Most people don’t have any strategy or written goals about how much money they want to earn. Coincidently most people don’t believe they are earning enough either!

Unfortunately the only tactic they have is based around a misguided belief that they are owed a living or that if they were paid more then they would do more. They hope to win the lottery. Sound familiar? If that’s you then you’d better sit down as I have some very bad news for you. It is incredibly unlikely to happen – especially the lottery bit.

When it comes to resources I think you’ll be surprised just what is available to you. Here’s a simple audit you can do for yourself. Tick every box that applies to you.

How many of those statements describe you?

Brilliant, that’s the most important bit done. The idea that you can make money needs to be established then set in stone before you will make money.

Have you ticked the boxes? So now you’ve got a list of your resources (and you can add more). Time to start to flex your confidence muscles in the money-making department.

Time to be clear in the task of making some money. What do you want? For some this may be a little extra to clear a debt or pay for a treat, while for others it could be total financial security. Write it down, right now, how much extra income you want to make in the next 12 months.

Next it’s all about the action. You do know that to make money you have to take action – don’t you?

Owing lots of money

How can this ever be a good thing? Owing lots of money can be stressful, tiring and lead to challenges in relationships, work and health. In an ideal world you wouldn’t owe too much money and the debts you do have would be managed easily. Unfortunately this is not an ideal world.

Many people find themselves owing just too much. If that’s you then I hope Flip It can help. This is just a short section with a couple of simple ideas; many more can be found in specialist books, at advice centres, etc. But as you’re here let’s Flip It and get the best out of this situation by using a watery metaphor.

• Step 1: Money flows. Create a belief that money is just energy, which means it’s going to flow in and flow out of your life – like water. I guess the challenge you’ve had is that it’s been flowing out a little faster than it’s been flowing in.
• Step 2: Build a dam. A money dam is designed to hold on to as much money as it can. Yes, some might leak through, but your job is to make sure every crack is filled and every hole plugged. This involves getting brilliantly organised, knowing exactly what you’re doing with your money and making a plan. It also means you won’t waste money – did you know that on average we each spend around £4,000 on impulse purchases each year? Now that’s food for thought as you reach for that chocolate bar at the newsagents.
• Step 3: Create a monsoon. One of the challenges of owing lots of money is the belief that the money flow will stop – it won’t. So be open to the possibility that more money will flow in and believe you deserve it. This mindset is vital.
• Step 4: Get some quick wins. If you had to fill a glass, a bucket and a bath, which one would you fill first? Correct. You’d fill the glass first. By getting a quick win and paying off a small debt you’ll start to create momentum which will accelerate your success.
• Step 5: Keep a record. As you go through this process keep a diary of each stage – what you’ve done and how you feel. This journal will be an inspiration to you later and you’ll be surprised and delighted at what you have achieved in a relatively short period of time.
• Step 6: Make it work for you. Water is all around and yet we buy it. Why? Because the people who know how to supply it hold the power. When you have paid your debts, learn how to make money work for you.

Flip It for investing

Many people waste time and waste money then blame others for the situation they got themselves into. I bet you are more pleased than ever that you’re not most people. The idea of any investment is to get a return.

Here are a few simple truths to consider about investing before you start.

• Truth 1: Remember, becoming a great investor is not about levels of income, it starts with your attitude towards money.
• Truth 2: If you want to be a financial investor, learn from those who have always been investors. The first thing you’ll notice is they always find a way to invest, even if it’s just a small amount – investing money is a mindset first.
• Truth 3: Be comfortable with your level of risk. As a rule of thumb, think like this: if it’s as ‘safe as houses’ you’ll feel comfortable but won’t earn so much. If it looks too good to be true, that’s almost certainly because it is!
• Truth 4: Remember, money is an energy that flows – it flows in and flows out. And always will.
• Truth 5: There will always be someone whose investments are earning more than yours, someone who spotted a trend before you did and who can invest much more than you can. Good for them.
• Truth 6: There are exceptions to truths 1–5. So don’t beat yourself up or stop learning if things don’t feel perfect.

Most people can save, but few choose to invest, either for one or a combination of these reasons.

• They don’t know how to.
• They fear failure.
• They believe they haven’t got enough money to invest.

Why invest?

Can’t you just get stuff on a credit card or borrow from a bank? Well yes, you can, but it’s a sure-fire way to end up in financial ruin, as we so deftly proved in 2008 with sub-prime loans, overextending and some decidedly dodgy strategies from the guys at the top. And more recently we’ve seen whole countries ending up in financial ruin because they borrowed too much, too quickly.

If you don’t have the knowledge now you can learn it!

Right now you can go on investment courses, join clubs and learn online. There are dozens of excellent books available on how to invest so I’m sure you’ll find the right thing for you. Yes, you’ll make mistakes but, seriously, could you get it any more wrong than some of the mighty institutions that are supposed to ‘know’ about investing?

Fear of failure

Investment can seem very daunting and many fear the risks are too great. So they create a belief system that they shouldn’t start until they get more knowledge, get more cash, wait until the market is right, etc.

Of course, in reality, investment – if approached in the right way – needn’t be high risk at all. Here’s an idea to get you started and to help you overcome that fear.

Imagine you have three barrels which are standing one on top of each other. The top barrel is your easy access barrel, which is used for day-to-day living expenses. Your second barrel is your safe investments. And the third (bottom) barrel is your higher-risk investments.

Your job is to fill the barrels from top to bottom. In the top barrel (the one that gives you easy access), you need to have enough money stored to pay for three months’ worth of expenses. This is basic saving rather than investment.

So if you have a lifestyle that costs £1,000 per month you need £3,000 in that barrel. It’s fair to say that if you don’t have any current investments then that may seem like a huge stretch, and not a very sexy one, as you’ll be putting your money into an easy access building society or bank account or perhaps maximising a tax-efficient government incentive to save.

However, once you have filled that barrel, any excess will start to pour over into your second barrel. This includes the money you were putting into the first barrel prior to filling it, plus the interest the first barrel produces. This barrel should be built to hold the equivalent of 6 to 12 months’ salary. This can be deposited in safer investments such as blue-chip companies with excellent steady growth records, property and legitimate investment schemes.

Finally, your third barrel will start to fill with the overflow from the success of barrel number two. You can use this to invest further in the areas from barrel two or you can take some higher-risk investment opportunities. This is going to be your major investment barrel and over time it will build. And here’s the exciting bit – you get to spend what overflows from barrel three! Great investors have enough in barrel three so well invested that they can live a very comfortable life just from the income this barrel produces. They need never work again. Would you like that level of security?

It may take you many years to fill all three barrels but the most important thing is to make a start with barrel one. If you don’t do it now you will kick yourself later.

Invest and invest again

When your investments start to pay, the real key is to reinvest the interest. It will be tempting to take the interest and spend it. You’ll say things like, ‘Haven’t I done well, I deserve it.’ It’s tough, but every great investor used the same formula of reinvesting their returns to create highly successful investment portfolios.

Here’s why: two magic words – compound interest.

Did you know that if you invested £1,000 now, with an annual return of 8 per cent you would have £46,902 in 50 years? That may seem like a long time (and a very high rate until you contemplate what you can achieve in those 50 years!).

However, what if you could Flip It and become a brilliant investor? What if you invested £5,000 over 30 years with a 20 per cent return? You’ve just made a million!

The younger you are the more time you can take. You can afford to make some gaffes but in time you’ll also get a bigger return.

How much is enough?

If many people believe they need more money before they can start to invest, how much is enough – £100, £1,000, £10,000? Well, I really do believe you can start to learn about investing with as little as £200.

It’s actually more about getting started than waiting until you have ‘enough’. And when you do have enough you won’t want to risk losing it by making the wrong investments if you have no experience.

As the investment guru Warren Buffet has said:

Financial security is great, but it’s only one way to look at success. Real achievement can be measured in many ways – that’s why I wrote a special section called . . .