Steve McKnight Money Magnet is the latest book from the multi-millionaire, famous for his bestseller From 0 to 130 Properties in 3.5 years. Money Magnet delivers insights and simple actions to help you make, manage and multiply your money. It’s the best Aussie finance book since the Barefoot Investor, but it goes next level with life changing strategies for wealth creation. Let’s take a look in this Money Magnet review and summary.
Money Magnet – The Verdict
Money Magnet is a refreshing take on money. It comes with new ideas and confronting exercises to empower the reader to make, manage and multiply their money… by becoming a money magnet.
If you have read the barefoot Investor and you want that next level of transforming your money mindset and building wealth, this is a Must Read. This non-technical, and easy to read book is worth investing your time to find a pathway to financial freedom.
Why Money Magnet is a Fantastic Book
The Barefoot Investor is the perfect first step for anyone that has no idea about finances (like I was before my financial awakening). It creates a basic framework to get out of debt, save and invest for the future. It is simple and anyone can follow the steps to become better money managers. That is why the Barefoot Investor is the perfect beginners book. But….
Money Magnet is the next level of financial literacy.
Money Magnet is not your typical finance book. It’s a workbook to engage with and to plan your escape from the rat race.
Money Magnet delivers so many new ideas and fresh takes on finance. I’ve read many finance books over the years. Money Magnet really made me sit up, take notes and re-think my own finances. McKnight is an engaging writer, with a poetic turn of phrase, and his insights are amazing.
Some people are happy to read the Barefoot Investor and stop there. If you are looking for the next chapter in your financial journey, and you don’t want to get rich slow, and you want to learn from a multi-millionaire that went from 0 to 130 properties in 3.5 years, this is the book for you.
Money Magnet is a Must Read. Let’s take a look at some key takeaways.
Money Magnet – Three Key Takeaways
- Have a Vision for your Money and Your Future
- Be ambitious, have a vision and plan for the future. Understand that you will need to make sacrifices now to achieve your financial freedom dreams.
- Understand Your History and Yourself:
- Your Financial DNA and family history may be holding you back. You might be programmed to be poor and not even know it. Learn from the past and chart a new path by reprogramming your Auto-pilot, bad money habits.
- Money Magnetism to Make Your Money Matter
- Become a Money Magnet, save, invest and compound your profits to achieve your dream while making your money matter, increase your happiness by being generous.
Money Magnet Summary
Money Magnet has so many great ideas and insights, I have selected some of the bigger ideas and a couple of smaller ones. You honestly need to read the book to get the full breadth and depth of McKnight’s life changing strategies. But here are a few favourites.
Have a Vision For Your Money
One thing I love about McKnight is he is an ambitious, smart money manager. He set out to become financially free within 5 years and achieved that. He’s happy for people to get rich slow, but if you want to speed things up there is a cost. And it’s not a physical cost. It’s a combination of two things.
- Sacrifice: Choosing not to have something ever.
- Delayed Gratification: Choosing not to have something now.
McKnight believes there are two ways you can approach your financial future: Chance or Choice. You can build your wealth slow and steady. Or you can put on the afterburners and accelerate your wealth building.
McKnight believes that a compelling vision is the secret to turning small ideas into world changing action. It gives you a reason, and motivation to work hard and bring your financial vision to life. And those sacrifices aren’t so difficult when your financial vision is bigger and more important then another pair of Air Jordans. Or a new car or expensive, designer item.
Have a Magic Number for Retirement
McKnight also takes you through the alternative to financial freedom, retiring reliant on welfare and in poverty. Unfortunately this is the likely reality for many Australians. McKnight believes that you should have a desired “Annual Income number” to aim towards for your retirement.
McKnight suggests that to retire among the richest retires in Australia, you should aim for $1,250,000 invested. If we get a return of 8 percent on average after tax, we will receive $100,000 per annum, for singles or couples.
The Magic Number is a $100,000 annual return for singles and couples in retirement. Which sounds like a nice amount rolling in every year to retire on. But now we need to plan on how to achieve that number.
Complete a Blueprint for Financial Freedom
A financial blueprint is a plan for your financial future.
McKnight believes that “if you don’t know where you’re going you won’t know how to get there.” The financial blueprint is an exercise in the book, which assumes that you want to be financially free, own your own home and have no debt. It attempts to quantify where you are now financially, where you want to be and the financial gap in between.
McKnight suggests spending an afternoon on this exercise and I agree. There are detailed directions on how to complete the numbers, and the output (a financial blueprint) is only as good as the inputs. An electronic version of the calculator can be found on moneymagnet.au. It’s worth signing up for the calculator alone. It’s a nice way to tweak your numbers and play around with them, and to understand how the calculation is created.
The output of the financial blueprint is the “Savings and capital shortfall”. This means how much money or future investment profits is required to cover the gap in a plan. And how many years is needed to achieve that number.
As you can see in my example, my Savings and Capital Shortfall is 366K (in the red box above). The calculation for my shortfall is Remaining Capital Needed (666K) – Future Savings (300K) which equals 366K. This means I will need to make 24K a year, for the next 15 years to make the shortfall.
Oh Jeez, that is a lot of extra money to make every year….
That number looks almost impossible. But it doesn’t seem as impossible after we learn about the “Half-Life, Third Value” model.
Use the “Half-Life, Third-Value” Model to Achieve Your Dream
Life doesn’t happen on a straight line. And a linear approach to your finances assumes your income and job opportunities will not change or improve over a long time period. Most people will acquire new skills and get better jobs and build more wealth with more experience and capital.
We can account for these life and financial changes using the “half-life, third-value” Model.
The half life, third-value model was pioneered by Brendan Kelly, a school teacher that worked with McKnight. The model applies a “half-life” to the number of years required , while also dividing the total required savings and capital base by three. This takes into account your enhanced ability to create wealth in your latter years.
This is a great example, where if you have $1,000,000 and 10 years to make up that shortfall. If we used the linear approach, you would need $100,000 every year for 10 years. The half-life, third-value method gradually increases, from year 1 you would make 37,040, and that will increase as time goes on.
Now $37,000 might still seem out of reach for most people, McKnight re-iterates that the concept isn’t about just saving money to accomplish your goal. You need to save, invest and compound your profits to achieve the target.
Using this method, a large amount seems more achievable. Especially as you continue your Money Magnet journey. McKnight provides great advice on how to improve your money habits. Which will help change your financial trajectory.
Understand Your Financial DNA
Financial literacy is never taught at schools. McKnight is right to say that playing Monopoly is likely to deliver more financial skills than 14 years of formal schooling. Most people do not have any money skills. They don’t know how to track spending, understand financial reports or how to evaluate investments.
Your money skills will depend on your financial DNA. Your financial habits, attitudes and behavior is a combination of your DNA and the environment you lived in. If money was an open conversation at home, you are more likely to have mature money habits as an adult. Bad money habits can be passed onto children, and they will inherit bad behaviors. But these bad behaviors can be broken.
McKnight also has a great section on the financial family tree. This is another fascinating exercise to study your own financial history and to learn lessons from the past. And what financial DNA did you inherit in this family tree? And what is the occupation of your family members? What level of education did they achieve?
McKnight believes that you are unlikely to exceed your financial pedigree without a higher education. Leaving school early will remove the opportunity to improve reading, writing, numeracy and comprehension skills. And lower Education usually results in lower paid work, making it harder to save and invest. And that ability to learn, will help you gain knowledge to manage and multiply your money.
Reprogram Your Financial Programming
Your financial programming is the way you think and act financially. This runs in the background of your mind most of the time. It’s a semi-conscious way we can make most of our decisions on auto-pilot. And occasionally, we take control to make bigger decisions.
Semi-conscious spending can be a problem if your default is to buy whatever you like, whenever you like. This “say yes” mentality can also problematic when your are faced with a big purchase like a car. When the car dealer asks if you want all the extras, what is the likely outcome? I’d wager that every extra will be included in that purchase.
McKnight asks the question, is the outcome of your financial programming leading to where you want to go?
The way you act financially is like a program that runs in the background. The good news is this program can be updated. All you need is to seek new information, to learn about finances and to improve your good habits and diminish your bad habits. Essentially, you need to improve your financial intelligence.
Improve Your Financial IQ and Financial EQ to Accumulate Wealth
A person’s financial intelligence (Financial IQ or FQ) is the ability to reason, think and solve money problems and apply those in the real world to attract and maintain wealth. This is a combination of having the intelligence to know and the wisdom to apply.
A high Financial EQ (emotional intelligence) denotes the ability to control and harness emotional responses to monetary matters rather than being led and dominated by them.
The concept of financial IQ and EQs is powerful. It removes the idea of magically being good with money and spending. There is intelligence involved. It’s something you can invest in learning how to make, manage and multiply your money. And being aware of emotional responses to money is a game changer. Those impulses can be identified and reprogrammed, replacing bad habits with good habits. And ultimately, aligning those habits to your financial vision.
The chart above is a fantastic example of the overlap between financial IQ and financial EQ. And it is a great way to gauge where you are in this quadrant and then improve in your financial freedom journey.
Master the “GDR 70-20-10 Program” for Financial Success
To become a money magnet, McKnight believes you need to master only two things.
- Spend less than you learn
- Invest the surplus.
This simple approach sounds great, but money is never simple.
McKnight is 100% correct when you make budgeting complicated, and difficult, it resembles a diet. It’s hard work. And most times a diet will fail, as will your budgeting plans.
That is why I really love the GDR 70-20-10 program. It is super simple and it doesn’t need excess “buckets”, spreadsheets or apps to manage it.
The GDR (Giving-Deductions-Remainder) program follows the rules above. Spend less than you earn, and what is remaining, invest it.
The Remainder is your take home pay after the Giving (donations) and Deductions (tax and Super), and is split into three categories.
- Spending (70%): There is no separation of living/lifestyle/fixed bills/guilt free spending. Every dollar you spend on anything belongs in this category.
- Savings (20%): Divert some money here to keep in reserve for any unexpected expenses. Otherwise, use this amount for investments.
- Slashing (10%): This amount is used to accelerate the pace at which you pay down your debt. Once debt free, you can reallocate this amount to savings.
Using the GDR 70-20-10 approach, you only need two bank accounts: a transaction account for your spending with a linked debit card. And a savings account.
The GDR 70-20-10 is so simple, and it works if you have your spending under control. The “barefoot” multiple accounts with dollar amounts is an organized way to manage expenses. But it’s not unusual to borrow from accounts, and make a mess of the spending because life can be messy.
The simplicity of two accounts – Spend and Save is fantastic. And all you need to do is spend less than you earn.
And speaking of Saving…
Green Army Soldiers Are Your Dollar Defenders
Money Magnet also has some great new visualizations of how you manage and save your money. At a seminar years ago, McKnight showed an image of a plastic green army soldier. He painted an interesting picture for the audience when he said…
“Imagine every dollar you’ve saved is one of these soldiers. You’re their commander, and it’s your job to keep them alive and to use them to conquer new wealth territory. Every time you spend unwisely or on a whim you’re sacrificing your soldiers for no gain and depleting your wealth creation army.
What kind of general does that?”
What a great way to feel guilty about superfluous spending. And it’s a fantastic way to reinforce the fact that every dollar does count. Every dollar can be used in a better way. Do you want to sacrifice a member of your wealth creation army? No, we leave no soldier behind… CHARGE!!!!
Magnetize Your Money To Make Your Money Count
I said earlier that Money Magnet is not your typical finance book.
Money Magnet provides various life changing strategies to achieve financial freedom and build wealth. But it goes deeper then that. This is first hinted at in the books Preface where McKnight shares a dream he had in 2006. In the dream, God wanted him to “teach people how to use their money effectively”.
McKnight discovered when he achieved financial freedom, he didn’t feel any happier. He felt a tinge of “oh, is that it”. He did some soul searching and discovered faith, and a way to attach meaning to his wealth. And McKnight shares some personal stories of his own journey, and the goodwill and generosity he has given to others.
Ultimately, McKnight wants to share the significance you will feel by investing your money in causes that matter. And this feeling will exceed any happiness you receive from watching your money multiply. The good news is, you don’t need to be wealthy to receive that feeling of happiness. It can start today as you build wealth, you can live a life where you leave a lasting legacy.
There is a spirituality to McKnight and Money Magnet which I enjoyed. This finance book isn’t about hard core capitalism. There is a deeper meaning in his approach and his writing. Money Magnet is a breath of fresh air and as I said earlier, it is not your typical finance book.
Money Magnet Podcast – The Cherry On Top of the Cake
And I have to mention the Money Magnet podcast. It’s a must-listen for readers of the book. Mcknight and co-host Rohan Wenn delve deeper into Money Magnet in 58 short and sharp episodes. This is a fantastic addition that complements the book and provides new insights and ideas from McKnight.
The Podcast is a valuable resource, and I enjoyed listening to McKnight discuss the book further. The podcast has some interesting tangents, and other insightful content such as “the danger of teaching your kids to save” and “is property a ponzi scheme”. The podcasts could be released as a book in itself.
Unfortunately, the podcast recently wrapped up (Feb 21 2024). It was a highlight whenever a new episode dropped and it is a shame that it isn’t an ongoing podcast. The 58 episodes available are all fantastic and 100% worth a listen.
Also, worth a listen is Steve McKnight’s appearance on the Aussie Firebug Podcast. Great conversation, worth a listen
Final Thoughts
Money Magnet is a fantastic personal finance book, bursting with new ideas and actionable insights that will help you build and save your wealth.
To get the most out of Money Magnet, you really need to complete the exercises, think about your own life and really spend some time with the book. I’ve personally read the book three times, and I flick through highlighted pages often. There is so much great stuff packed into this book.
Money Magnet is a Must Read. It’s an amazing, but underrated book. Honestly, you have to read this book if you are interested in financial freedom.
FAQs
What is a Money Magnet?
A money magnet is a law of attraction where you give from the heart to help others. Rather than giving from the head and thinking “what’s in it for me”. This will make you more “magnetic”. This magnetism will attract more opportunity and increase the calibre of people that are drawn into your sphere of influence.
To become a money magnet, you simply need to invest a little from your survival fund (the money that funds your lifestyle) into a significance fund. This money is then used in an altruistic manner, which will also give your life meaning.
This way of thinking, will make you more “magnetic”. McKnight claims that “if you want to attract more, first become more attractive.” Becoming a money magnet is a skill that can be learned. And these skills can help build a fortune and can give meaning to your life, making you financially and spiritually rich.
What is Steve McKnight’s Net Worth?
Steven McKnight is a self-made multi-millionaire, but that exact figure has never been shared. His Net Worth is estimated to be between $50-100 Million, based on his entrepreneurial ability to acquire 500 properties, his global property investing and investing fund.
What is Steve McKnight’s Website?
Steve McKnight has a few websites, with his latest being Moneymagnet.au. This website has great content and extras to complement the fabulous book, Money Magnet.
McKnight’s original website, stevemcknight.com is still online, although it is old and hasn’t been updated. But McKnight’s main website, PropertyInvesting.com is more modern and has more information for readers. Worth a look.
