Introduction
In his book "Money," Rob Moore presents a comprehensive guide to understanding and mastering personal finance. Moore, a self-made millionaire, shares his insights on how anyone can take control of their financial situation and work towards achieving wealth and success. This book is not just about making money; it's about changing your mindset, adopting effective strategies, and leveraging your resources to create lasting financial prosperity.
Moore challenges common misconceptions about money and wealth, encouraging readers to embrace an abundance mentality and take charge of their financial future. Through practical advice, easy-to-understand formulas, and actionable steps, he provides a blueprint for reshaping one's approach to income and wealth.
Key Ideas
1. Embracing the Right Attitude Towards Money
Moore begins by addressing the mindset necessary for financial success. He argues that there's no reason why anyone can't become a millionaire if they have the right attitude. In 2017, there were 35 million millionaires worldwide, proving that it's not an unattainable goal.
The author debunks common myths about wealth, such as the idea that money won't make you happy. He asserts that money can indeed contribute to happiness by providing the means to do things that bring joy and fulfillment. While the best things in life may be free, having financial freedom allows you to enjoy them more fully.
Another myth Moore dispels is the notion that there's not enough money to go around. He presents staggering figures to illustrate the abundance of wealth in the global economy:
- £80 trillion in the global economy
- £150 to £180 trillion in stocks and bonds
- $8.2 trillion in gold
- $38 billion in Bitcoin alone
These numbers demonstrate that there's more than enough money in the world for everyone to achieve financial success. Moore encourages readers to adopt an abundant view of money and to believe in their ability to claim their fair share.
2. The VVKIK Formula for Financial Success
To help readers start mastering money, Moore introduces the VVKIK formula:
- Vision
- Values
- Key Result Areas (KRAs)
- Income-Generating Tasks (IGTs)
- Key Performance Indicators (KPIs)
This system combines big-picture thinking with attention to detail, providing a comprehensive approach to financial management.
Vision and Values: Moore emphasizes the importance of defining your ultimate goals and the values that matter most to you. He suggests writing these down and ensuring that money-based values are given priority in your list.
Key Result Areas (KRAs): These are the high-value areas where focusing your time and effort will make the most significant difference in achieving your vision. Moore recommends choosing between three and seven KRAs and using them to filter out activities that don't align with your goals.
Income-Generating Tasks (IGTs): These are specific tasks within your KRAs that generate the best monetary value from your time. Moore uses the analogy of golf, where practicing putting (which accounts for 40% of shots) has the most significant impact on overall performance.
Key Performance Indicators (KPIs): These metrics provide real-time feedback on the effectiveness of your KRAs and IGTs. By monitoring the right KPIs, you can ensure that your efforts are generating the desired outcomes.
By implementing this system, Moore argues that you can make more money while doing less, focusing on the most impactful activities that align with your overall vision and values.
3. Understanding Your Income-Generating Value (IGV)
Moore challenges the common belief that hard work is the key to success. Instead, he introduces the concept of Income-Generating Value (IGV), which helps you understand what an hour of your time is truly worth.
To calculate your IGV:
- Add up the total number of hours you work in a week, including time spent on side hustles or asset building.
- Calculate your total weekly income from all sources (salary, property income, investments, etc.).
- Divide your total weekly income by the number of hours worked.
For example, if you work 55 hours a week and earn £1,000, your IGV would be approximately £18 per hour.
Understanding your IGV allows you to make informed decisions about which activities to pursue and which to outsource. Moore advises:
- Take on tasks that generate more than your IGV, as they increase your overall value.
- Outsource or ignore tasks that generate less than your IGV, as they lower your overall value.
This approach explains why the rich often get richer – they focus on high-value activities and delegate or avoid low-value tasks. By adopting this mindset, you can dramatically change your financial life.
4. Leveraging Time and Money
Moore emphasizes the importance of leverage in achieving financial success. Leverage is about making more from less – whether it's time, money, or effort. Millionaires and billionaires understand and utilize leverage to maximize their wealth.
Leveraging Time: The author encourages readers to find ways to make the most of their time. This might include:
- Outsourcing low-value tasks
- Multitasking when appropriate (e.g., taking business calls during a haircut)
- Using travel or exercise time for personal development (e.g., listening to audiobooks)
Leveraging Money: Moore provides an example of leveraging money through debt-funded property investment. By using a combination of personal funds and bank loans to purchase property, investors can benefit from property value appreciation while only risking a fraction of the total investment.
The key to embracing leverage is a shift in mindset. Instead of thinking, "I need to do that," wealthy people ask, "Who can do that for me?" This approach allows them to focus on high-value activities while delegating or outsourcing tasks that don't directly contribute to their wealth-building goals.
5. The Power of Compounding
Moore uses the analogy of a water lily to illustrate the power of compounding. Just as a water lily doubles in size each day, eventually covering an entire pond, money can grow exponentially over time through compounding.
Compounding occurs when you earn returns not just on your initial investment, but also on the accumulated growth from previous periods. This leads to accelerated growth over time.
The author provides an example of how compounding can work:
- Saving £3,600 per year
- Earning a 2% return above inflation
- After 10 years: £43,000
- After 50 years: £438,000
This example demonstrates how patience and consistent saving can lead to significant wealth accumulation over time.
Moore draws two important lessons from the concept of compounding:
- Be patient: The biggest rewards often come after long periods of consistent effort.
- Be mindful of spending: Every pound spent is not just gone today, but also represents potential future growth lost.
Understanding and harnessing the power of compounding can significantly impact your long-term financial success.
6. The Importance of Pricing Strategy
Moore addresses the often-overlooked aspect of pricing in wealth creation. Many entrepreneurs and business owners are hesitant to raise their prices, fearing loss of customers. However, the author argues that increasing prices could be one of the best financial decisions you make.
Key pricing strategies include:
Implement a 10% price increase: Moore suggests that a 10% change in price is generally acceptable to most people without causing strong reactions.
Increase perceived value: Add small, low-cost benefits to your product or service to justify higher prices (e.g., complimentary chocolates in hotels).
Avoid underpricing: Low prices can deter wealthy customers who associate low cost with low quality.
Target the right customers: Higher prices can help you attract more affluent clients, potentially leading to better networking opportunities and higher-value transactions.
Moore encourages readers to overcome their fear of asking for more money, emphasizing that higher prices can lead to dealing with better clients and increased profitability.
Final Thoughts
Rob Moore's "Money" provides a comprehensive guide to mastering personal finance and achieving wealth. By challenging common misconceptions about money, introducing practical strategies like the VVKIK formula and IGV calculation, and emphasizing the importance of leverage and compounding, Moore offers readers a roadmap to financial success.
Key takeaways from the book include:
- Adopt an abundance mentality towards money
- Use the VVKIK formula to align your actions with your financial goals
- Understand and optimize your Income-Generating Value
- Leverage time and money to maximize wealth creation
- Harness the power of compounding for long-term financial growth
- Implement effective pricing strategies in your business
Moore's advice goes beyond simply making money; it's about changing your entire approach to finance and wealth creation. By following the principles outlined in this book, readers can take control of their financial future and work towards achieving their dreams of prosperity.
The author emphasizes that anyone can learn to master money and create substantial wealth for themselves. It's not about working harder, but about understanding the rules of money and planning your life to maximize your earning and wealth potential.
As you embark on your journey to financial mastery, remember Moore's actionable advice: Record and track your net worth. Create a spreadsheet listing all your assets and liabilities to get a clear picture of your current financial situation. This will serve as a starting point for analyzing your finances and planning for the future.
In conclusion, "Money" by Rob Moore is a valuable resource for anyone looking to improve their financial situation and work towards long-term wealth and success. By combining practical strategies with a shift in mindset, Moore provides readers with the tools they need to take control of their finances and achieve their financial goals. Whether you're just starting your financial journey or looking to optimize your existing wealth, this book offers insights and strategies that can help you master money and create the prosperous future you desire.