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I first heard of this secret as a young university student working at night in an up-market restaurant. I befriended a regular customer who was a very wealthy, self-made entrepreneur. His story was of the ‘rag to riches’ variety.He saved and scraped together money to buy materials, from which he built his invention in a one bedroom flat, and then travelled the country to find buyers.

The more I heard the more curious I became. What was his secret? What does it take? One night I had the opportunity to ask him.

“Sir, if you don’t mind me asking you a question?” “Not at all” he replied.

“I am young and just starting out in my life and” I paused and blushed from embarrassment. “Well you are a very successful business man and I was wondering if you would tell me the secret to your success?” I blurted out.

“My dad’s a hardworking man on wages and is always travelling, never home and mum works double shifts at a hospital just to make ends meet and I don’t want to end up like them.” I silently thought to myself.

He looked at me straight in the eyes, paused and said. “OK. You buy me lunch and I will tell you.”

Excited by the prospect of being bestowed with this secret knowledge I organised a place, date and time before he had left. There were no mobile phones in those days.

A few days later there I was at a table having lunch with one of the wealthiest men in town. I am about to be told the secret to success. Wow!

I was so anxious. I hardly ate. I waited. The minutes seemed like hours. Then it came.

Without prompting he slowly wiped his lips with the starched white linen napkin, looked at me with a twinkle in his eye and a smile on his face, the sort of smile that reflected compassion and empathy for this very innocent young man eagerly waiting to be launched across the threshold to riches.

“The secret to wealth my boy is the most difficult thing for anyone to do yet it is so simple.” He paused.

‘Yes and?” I was thinking to myself. “Come on spill the beans what is the secret?” I screamed silently in my head.

He learned over with that same compassionate smile and looked me in my eyes. He said slowly and deliberately.

“Spend less than what you earn.”

“And what else?” I said with credulity, dismissing the comment out of hand, as if there had to be more than that


“Nothing, that is it.” He stated, sitting back and taking a sip of his wine. He then looked at me and in a manner befitting one of my lecturers, he went on to say.

“To create wealth, you need financial resources. The greatest financial resource is cash flow. The trick is keeping a little, preferably a lot of it as it flows on through your bank account. In other words,

spend less than what you earn.


He went on. “If you were a business are you profitable? Would I invest in you if I looked at what you do with your cash flow?” He said with a questioning tone and the right eyebrow raised.

“The best way to keep some of that cash flow is to first know where it goes. In other words, do a budget?” he said.“If you don’t know where your money goes, then how can you plan for the things you want?” he paused again, to allow this to sink in.Then he continued with something I have never forgotten.

“Do you want to live your life from week to week and just survive? Or do you want to reach your objectives by choice? If you don’t budget your plans, you may end up somewhere you don’t want to be.

By choice or by chance? It’s up to you and it all starts with knowing where your money goes.”

Lunch was over.

After 36 years of helping thousands of people with their money, the starting point is always the analysis of where their money goes.

Other terms for this are, lifestyle expenses, cash flow, household expenditure, cost of living etc.

No matter which term you use, what I am talking about is the analysis of the amounts that appear in the debit column of your bank statements.

This is the left column where all the withdrawals are shown. The middle column shows the credits, these are the deposits. The third column on the right-hand side shows the balance.

The problem most people have is in maintaining a healthy balance. To maintain a healthy balance start with Money Tool  #1. The Budget.

There are many budgeting and expense apps you can download. They help you record, track and monitor your expenses. However, I’ve found that the analysis of your cash flow can be made simple and easy by segmenting your expenses into four categories or buckets. These are:

  1. Regular Non-Discretionary Expenses 
  2. Regular Discretionary Expenses 
  3. Irregular Discretionary Expenses and 
  4. Worth-Living-for, One-Off Expenditures

Click here for a detailed explanation of each category and budget template.

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