This book focuses on finance and was written by a German author who is also a millionaire. For this book. Before we dive into the summary, let's look at the book's title. How can you make $1 million in 7 years? What exactly is financial freedom? Financial freedom means you have enough money and time for yourself without having to work hard just to earn an income to cover your daily living expenses. At this point, it means you don't have to work but you still have an income, because you have enough money that is already working for you.
When your income grows many times over and is larger than your daily expenses, it means you have achieved financial freedom. Another point is that when you achieve financial freedom, you can quit the job you don't like, do what you want to do, go to the places you want to go, and you can also help your parents achieve their dreams. So, if a person wants financial freedom, how much money do they need?
Regarding this question, many people have asked themselves and there have been many answers. But the answers are all different. Some say $3 million is when they would have financial freedom. Some say $10 million, and others say $30 million. In fact, the answers are different because their lifestyles and spending habits are not the same. And their definition of the term "financial freedom" is also different. But regardless of the answer, you all have to accept one common point: achieving financial freedom is not easy. But this book will summarize and tell you exactly the method to achieve financial freedom. And the author, who is a millionaire, has already done it successfully. In practice, if you think carefully and use the right method, a person can earn $1 million in just 7 years.
Hearing this, some of you might shake your heads. "$1 million in 7 years? How is that possible?" Actually, it's not that far from us. In a single lifetime, on average, each of you will spend at least $2 million. One million dollars is not a lot; it's just that most people don't know how to keep a million dollars like others do. Or you could say they put their money in the wrong place.
Because most people don't really believe in this, when this book was first published in Germany, it broke records as the most supported book for two years in a row. It was also translated into more than 33 other languages and became famous around the world. Of course, many people have used the methods and techniques in this book to manage their personal finances, achieve financial freedom, and succeed in their lives. The captivating title of this book has attracted the world's attention: "Make $1 Million in 7 Years."
Some people think that $1 million is not a lot. Other people think that $1 million is a lot. This is because people have different perceptions of the definition of financial freedom. Whether it's 1 million, 10 million, or 100 million, these are just numbers. What's important is the method. When you find the right method, you will move toward the financial freedom that you want. This book was written by the German millionaire Mr. Bodo Schäfer, who is known as the number one financial coach in Europe. He was born in 1960. At 16, he moved to the United States. At 26, through bad luck, he faced a financial crisis and was deeply in debt. But four years later, he got himself out of debt and even had several companies in his hands. He invested successfully and became a young millionaire in Europe.
Later, he shared his financial knowledge with the world. He hopes that ordinary people can also have financial freedom once they deeply understand true financial knowledge. Besides this book, he has also written two other books that are also very famous, such as "The Winner Law" and "A Dog Called Money".
Now, let's get to the summary itself. Today we will summarize this book in two parts. In the first part, we will look at the differences between the rich and the poor, and their mindset towards money. At this point, you might be saying, "Don't waste time, just tell me how to make $1 million in 7 years." But that point is in the second part, which I will present in the next section.
Let's move on to the first point. What is the reason that we have no money left, cannot become rich, and do not have financial freedom? To put it simply, what is the difference between us and those who have financial freedom? You might say the difference is that they have more money than we do. That's not wrong. Having more money is one thing. But what's important is that if they gave you the money they have, you probably wouldn't be able to manage it either. That's because you lack financial knowledge. And the most important difference, the author states, is that the difference between the rich and the poor is their understanding and principles in using money.
To be more detailed, they have different definitions of money, different attitudes towards money, and their strength in seeking money is also different. What's important is that they have different mindsets when it comes to using money. The rich and the poor are different in that they have different definitions of being rich. The poor have never given a clear definition to the word "rich." The rich, however, have a very clear definition of the word "rich." What does this mean? It means, do you know how much money you need to have to call yourself rich? Can you tell me the exact amount of money? One million, 10 million, or 100 million dollars? And how long will it take? One year, 10 years, or 20 years? You call yourself rich, so how much money can you earn in how much time? The author states that we can define the word "rich" by fulfilling four conditions.
Condition 1: There must be a specific number, you must write it down, and you must visualize the goal that you have set. For example, if you want to have $1 million in 7 years, you must write it down on paper and visualize the situation when you have that $1 million. Because when you visualize it, it's no longer just a word or a number. The message that is sent to the brain is not a number or a letter; it must be a picture that can be captured in the brain.
You can imagine what your life will be like in 7 years: having a good job, a good business, driving a nice car, living in a beautiful house. And you can imagine it in even more detail, which is better. What kind of car do you drive, what color, what price? Where is the house located, what is its size, what is the style of the house? You can imagine all of it. And if you have a house like this, how do you feel? You can imagine it all. This imagination is like a map that leads you to your goal. You will start thinking about how to achieve it, and it will also be a motivating factor for you. So, right now, in this very minute, you must think carefully about what you want and give a specific definition to your financial freedom.
Condition 2: The difference between the rich and the poor is also their attitude towards being rich. In the mind of a poor person, they never think that they will become rich, or their goal is not firm. Today they want to be rich, but tomorrow they don't want to be. Through some seminars, they get highly motivated. They start doing everything, finding every means to get money fast. But when they face problems or small obstacles, they start to hesitate, thinking it's too difficult, not daring to push forward, and in the end, they abandon their goal. This is because they are not committed to their goal. Then, they will think, "So what? Why bother becoming rich? Having enough money to live is good enough. When you die, you can't take it with you anyway."
People who say this are not wrong. This is the choice of 97% of people in this world. And all these people will never become financially free. As for the rich, they think differently. They say to themselves, "I must succeed. I must have money. I have no other choice. I can't stand my life right now." Therefore, when they set the financial goal they want, they don't easily change it. Besides success in their life, they don't want anything else.
You might ask further, "If I'm going to set a goal, should I set a small, easily achievable one, or should I set a big goal, even if it's a bit difficult?" Most people think they should set small goals because it's easy and the work gets done quickly, and we are confident in that. But the author thinks that if you're going to set a goal, you should set it big. A big goal is easier to achieve than a small goal. Because when you set a small goal, it's easily blocked by problems. You can't see your goal. Because you will only see the problems that are preventing you from achieving your goal. At that point, you will start looking for a new, easier goal. In fact, it's not because of the problem; it's because your goal is too small. You failed right from the start. The author said that the goal must be set big. When your goal is big, you don't see the problems. Even if you face problems, you will use every means to overcome them to achieve your goal.
Point 3: The difference between the rich and poor is that their motivation in earning money is not the same. The poor have many excuses; they only see their shortcomings and don't try hard, or they try hard with the wrong goals. The poor always ask themselves, "Why am I poor? Why do they reject me? Why do I lack this and that?" But the rich mindset is different; they never think about their shortcomings. They think, "What do I have to do to achieve my goal?"
In this book, the author raises two simple questions. All of you, think for a moment how you would solve them. Question 1: Have you ever thought that if you tried your best for one month in the next 12 months, how much money could you earn? Try to think about it roughly. Second, in the 12 months that you earned, which month did you earn the most? Take the income from the month you earned the most and multiply it by 12. You will see a rough number. Next, try to increase the income in other months by 10%. It's not a lot. If you try a little harder than this, you will get an additional 10%. As long as you try 10% harder than usual, you will get surprising results. You can try it.
Point 4: What is as different as sky and earth between the rich and the poor is their mindset about money. Most poor people think that money makes people evil. Rich people are not good. Money makes people lose their morals, etc. In fact, money is not evil. It's the people who don't use money correctly who are evil. If you see money in a negative light, you will find it difficult to become a person with money.
The author mentioned his close friend named Thomas. Thomas is a man with little money, but he doesn't value money very positively. He thinks money makes people evil. But he is a person who likes nice things. Whenever he has money, he never saves it. He buys this and that; he never saves. Doing this, how can he become rich? There are others who don't like rich people, don't like money, and especially don't like people with money. Whenever money is mentioned, they don't want to listen. They think the rich have many worries, no time for their families. Rich men are bad; bad women have money. And sometimes they think being poor is decided by fate, and there's no need to fight against destiny.
In fact, if you think more optimistically, you will see that money is not that bad. But here, we are not talking about right or wrong. We just want to point out that we are reading this book because we want financial freedom. Therefore, you have to think, "What do I have to do to achieve the goal of becoming truly financially free?" The author has a method that can make you change your thinking about money in just 30 minutes. Think for a moment: why do you want to be rich? Is it because you see rich people are happy? Or because you see the things they have? Or for some other reason? Who is the person that makes you want to become rich? If they came to trade their current life with yours, would you agree?
We can use an analogy. Your beliefs or perceptions are like a table. And the four legs that are the table's legs are the concrete examples that support your beliefs. If you think money makes people evil, you will try to find many examples to support your view. For example, money makes people use power to oppress, money violates justice, etc. But if you change your thinking to "money brings happiness," you will try to find some factors that support the above belief as well. For example, you find that money helps many vulnerable people, money can create businesses, and provide job opportunities for others. Like the foundation of the world's millionaire, Mr. Bill Gates, the Bill Gates Foundation, which just donated $4.6 billion. And there are many philanthropists, artists, and other famous people who have donated their personal funds to disaster relief and those in need. At that point, you will see the benefits of money and you will change your mindset about money.
The above are the reasons that hinder your thinking, preventing you from becoming rich. And it is the difference between the rich and the poor. Therefore, to close the gap between the rich and the poor, to achieve financial freedom quickly, you must give a clear definition to being rich: how much money you need to have, in how long, to be called rich. Find your strengths, try your best with all your ability and strength, and rush towards your goal. What's more important is to be clear about your mindset towards money. If you want money, you must love money; you must understand that money is a good thing, that money makes us happy.
Now we have finished the first part, and you understand the reason why we cannot become rich. Next, we will see how to earn $1 million in 7 years. We have talked from the beginning that financial freedom means when our assets can generate a sufficient source of income for ourselves, without us having to work tirelessly for a living anymore. You could say that you no longer depend on your own labor to earn money, because you have a money-making machine that is earning money for you. The author says that to achieve financial freedom, you need to have 3 principles and 4 tactics.
Those three principles are: First, achieve financial protection. Second, have financial security. Third, have financial freedom. These three principles differ in the amount of money you earn. Financial protection refers to the amount of money you have to cover your normal expenses for a period of 6 to 12 months. This means when you are sick or lose your job, which prevents you from continuing to earn an income, this money can guarantee your daily expenses for at least 6 months, until you can earn an income again. For example, you need to spend $500 a month. Then you need an amount of $500 times 6 months, which equals $3,000, as financial protection money. This money is only for use when it's necessary and needed. You should not touch this money if there is no urgent business. You cannot use this money to invest or lend to others. You can put this money in a bank or an electronic wallet that has high interest. When you have enough money for financial protection, you can move to the next point, which is principle two: financial security.
Financial security means that you have to earn a sum of money where its interest can support your monthly expenses. For example, the annual interest rate is 8%. And you need to spend $500 a month. Then you need to have an amount of $500 times 150, which equals $75,000, to be able to say that you have financial security. This means you do nothing at all; you just take the $75,000 and put it in the bank. You will get interest of $75,000 times 8% per year, which equals $6,000 a year, which is about $500 a month, enough for you to spend each month. To achieve financial security, you must invest in places with low risk, such as banks or financial institutions.
Of course, for those who want true financial freedom, $500 a month is too little for them. This amount of money cannot make them financially free. Using the same formula, try to think about how much you need to spend a month to be able to call yourself financially free. $5,000? Or $20,000? Just take the amount of money you spend in a month and multiply it by 150. Then you will see the amount of money you need to achieve financial security. For example, if you spend $3,000 a month, you need to have an amount of $3,000 times 150, which equals $450,000, to be able to say you have financial security. But what needs to be taken into account is, in order not to affect your daily spending, you should not withdraw the security money to invest in any business that has high risk.
So, to achieve the peak, which is financial freedom, what should we do? The author advises you to follow four tactics below. First, save money in a specific percentage. Second, take the money from that saving and invest it. Third, find every means to increase your income. Fourth, take a portion of the increased income to save and invest further. Hearing this, you probably think, "What's so difficult? It's just save, invest, increase income, and then save and invest again and again." That's not wrong. As the author has already said, there are no other tactics besides saving and investing. But what's difficult is the implementation.
Let's take the first point for discussion: save money in a specific percentage. What does this mean? Nowadays, there is a popular saying: "You can't get rich by saving money. You have to work hard to earn more money to become rich." I would like to say that if you don't know how to save, no matter how much money you earn, nothing will be left. Some people think saving is outdated. In this era, it's an era of spending. You have to know how to spend to know how to earn. With businesses everywhere like this, it's not easy to resist temptation. Besides, what's left of life besides buy, buy, buy, eat, eat, eat? The author states that what makes you rich is not how much your income is, but how much you have left in savings. If they are extravagant with their spending on food, travel, and entertainment around the world, they cannot become financially free, even if they have a high income, because they don't know how to save. Because when you have a high income, your quality of life will increase, and you will have more needs, and your spending will be bigger too. In summary, you are still just a money-making machine, not a person who has a machine that generates money for them.
When the author first entered society, he lived a lavish lifestyle, using credit cards until he was deeply in debt. Later, he met a successful person. That successful person told him to save 50% of his income. At that time, the author said, "I can't. This money isn't even enough for my monthly expenses, how can you ask me to save 50%?" But having no choice because he was so deep in debt, the author forced himself to endure and took 50% of his monthly income to save. And he started practicing the $8 a day rule. Meaning, he only spent $8 a day. To achieve this goal, he drove an old car with no doors for 8 consecutive months. Because one car door cost more than $300. If he used that money to buy a car door, it would affect his savings and violate his rule. Not long after, 8 months later, he paid off all his bank debts and with the little money left, he started investing. In fact, saving is the most basic financial knowledge. Even the financial millionaire, Mr. Warren Buffett, and the father of global investment, Mr. John Templeton, also highly value saving. When he was young, he and his wife decided to take 50% of their income to save. Even sometimes when he earned very little, he still had to do it. The financial millionaire who is a famous stock market player and the world's 4th richest person, Mr. Warren Buffett, said that when he was a kid selling newspapers, he always saved one dollar from the money he earned. He didn't spend it on anything because he was looking at his financial freedom in the future. He had to learn to save. He added that the secret to becoming rich is very simple: save, invest, then save, and invest again.
Moving to the second point that we need to talk about is investing. Because just saving alone cannot make money generate money, and you cannot become rich in a short time. And our goal is to become people with financial freedom. To be a person with financial and time freedom, using the money you have without worry. We must know how to take money to invest, and the interest from this investment will generate profit, enough for you to spend monthly, but it's not about just saving and not daring to spend money.
Before moving on to investing, let's understand the difference between assets and liabilities. The way to determine whether something is an asset or a liability is to see if that thing brings money to us or takes money away from us. If something makes us spend more, it's a liability. On the other hand, if the thing we buy generates more income for us, then it is an asset or an investment. And sometimes we can't clearly distinguish what is an asset and what is a liability. For example, a car, a house, etc. You might ask, "Isn't a car an asset?" "Isn't a house a good investment?" "The price of a house only goes up. Isn't buying a house a good thing?" "Isn't a house a good investment? Because the price of a house keeps rising. Isn't buying a house a good idea?"
The author warned that when we use money to buy a car, you start to spend more: spending on gas, on repairs, paying taxes, parking fees, etc. Money starts flowing out of your wallet. Therefore, the car at this point is a liability. But if you buy it to rent out or to drive as a taxi, you will get money from the rent and income from driving the taxi. Therefore, the car at this point is an asset.
If we talk about buying a house on a mortgage, in terms of the bank, it's an investment. Because you took money from the bank and put the house title with the bank as collateral. Every month, you have to pay interest, which is your expense, and it is the bank's income. Therefore, your house is the bank's investment. So at this point, your house is a liability, and it is the bank's asset. You must think very clearly and carefully about this point. As long as the interest has not been fully paid off, your house is still the bank's asset. This type of person is a debtor to the bank for their whole life. And after the mortgage is paid off, you can't really benefit from it unless you rent it out or sell it to make a profit.
But the author did not discourage people from buying a house. Having a personal home shows stability in your life. You also feel warm, and your quality of life also increases by another level. What he wanted to tell us is, when is the right time to invest in buying a house? If you can have enough money from your investments to buy a house, then it is a truly correct investment. When you have the ability and the time is right, it is the best choice to invest in real estate. Therefore, when you start investing, you must clearly distinguish what is an asset and what is a liability. Is money flowing into your wallet or is it getting further away from you?
The third tactic is to increase income. In this abundant world, if you use your brain to think just a little, you will see many opportunities to earn more money. It depends on the hard work and personal ability of each person. The advice from the author is to find your natural talents and the thing you want to do the most. Then, set a goal to make yourself an expert in a certain field within the next three years. And work hard to achieve this goal. To do this, the author has provided another tactic, which is: imagine that it is now three years from now. You have become an expert in a certain field. When you write that business plan, you will know if you are truly satisfied with your life at that time or not. If you are not satisfied, please change your direction immediately. Because even if you are successful in three years, the life you are living is not the life you desire.
You can choose to find a business that has a strong source of income and spend time focusing on it, cutting back on work that yields little income and takes up a lot of time. When you find a job or a business that suits you, you must increase your income further by starting to implement the fourth tactic, which is to take a portion of the additional income and save it. When you don't have high needs, you can take a portion of the money you earn and save it all, pretending as if you don't have additional income. And use that portion to continue investing. When you have sufficient knowledge about investing, you can start it. The sooner, the better. And the two factors that have the strongest influence on the money you have are time and interest rate. For example, the annual interest rate is 12%, and you want to retire at the age of 65 with $1 million. If you start saving from now, and you are currently 30 years old, you only need to save $200 a month to have $1 million at the age of 65. But if you start saving at the age of 55, you need to save up to $5,000 a month. This example shows that you must save as early as possible.
Another point, if you want to become a smart investor, you must follow the 50/50 rule. That is, 50% is invested in things with low risk, and the other 50% is invested in things with high risk. Learn a lot, practice a lot, find successful people to be your mentors. When you raise many chickens, you won't lack eggs. This means the more you invest, the easier it will be to become a person with financial freedom. If you can implement it like this, you probably won't need to use up to 7 years. You will be able to have $1 million.
The important concepts in this book have been explained. Now, let's summarize again. First, we talked about the reasons that prevent us from becoming rich. That is the difference between the rich and the poor, which includes four main points. First, the different definitions of being rich. Second, their attitude towards being rich. The poor have many excuses, only see their own shortcomings, and don't try to find ways to escape poverty. And what's most important here is their mindset about being rich. As long as we define being rich clearly, walk on the right path, and try to add 20% more effort to what we are currently doing, we are confident that you will become rich very soon.
The second point talks about the method to earn $1 million in 7 years. We talked about 3 principles. The first principle talks about financial protection. The second principle is financial security. And the third principle is financial freedom. These three differ in the amount of money you need to have. And each of us can calculate our own financial situation according to the formula above. Next, the author has given four other tactics. The first is to save money in a certain amount. The second is to take the money that has been saved and start investing. The third is to become an expert in a certain field within 3 years. And the fourth point is to increase income and take a portion of that income to save and invest. As the theory of millionaire Warren Buffett said, "Save, invest, save, invest." In 7 years, we hope that all of you can achieve financial freedom, no longer worry about earning daily income to cover the general expenses of your family anymore. Make money become a machine that works for us, then we will become people who are truly free.