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Have you ever heard of the velocity of money? Let’s compare it to compounding interest. If you remember, we said that compounding interest needs to be uninterrupted and continuous to work for us. We’re not going to throw this out, we want to use compounding, but we want to use it the only way that it works. Yet, there is something more powerful than compounding. It’s actually known as the velocity of money. Some have called it the motion or the movement of money. And in nature, everything is moving.

The next concept you need to understand is, how do banks work? How do they use money? They use money differently than you do because they work on a different playing field. They work with a different set of rules. So to give you a graphic picture of this, I'm going to tell you a true story. Our daughter-in-law works for Wells Fargo. She started there after college, age 22, roughly. When she started working there, they said to her "You're an employee here, so we want you to have a checking and savings account here."

Compound interest is powerful. They can’t prove this but Einstein said that compound interest was the eighth wonder of the world. He said, “Either you can earn it or you can pay it. It’s your choice.” It’s either working for you or it’s working against you. If you know how it works and if you know what’s necessary for it to work, you’ll be able to be in control of it.

The velocity of money and compounding are commonly understood principles. They even go all the way back to biblical times. Jewish traditions on money are very solid and they've been around for thousands of years. Have you heard the story in the Bible called the parable of the talents? The parable goes like this. Some followers come to Jesus and they say, "Jesus, when are you coming back?" He says, "I don't know. No man knows and the son of man doesn't know. I don't know when I'm coming back, but let me tell you a story. A parable."

Another thing we want you to understand is what is an average rate of return? This one's going to surprise you a little bit. First of all, I want you to know that everything I'm going to show you is legal. A lot of the time you view money through a certain set of glasses and you think you understand what's going on. If I were to give $1,000 to an investment and say I got a 20% return on my first year and a 20% in my second year. That's an average 20%, and I would now have $1,440. When I say an average 20% rate of return, this is the big picture you have in your head. I'm going to end up with $440 more than I had before.

this is called social conformity. It's a social experiment by Candid Camera. There are lots of them out there but I love this one because it's so humorous, but so blatantly in your face. We learn by watching other people. You look around and you start to ask questions based on who you're hanging with and what you're seeing.

Rule number one is pay yourself first, okay? This means before you go spending money you need to be setting some money aside for your own future. For your own well-being and for your own ability to grow wealth. Pay yourself first. If you start to accumulate some money, somebody's going to tell you, "We need to start creating some sort of schemes to protect your money." Usually what that means is paying a lawyer or an accountant a lot of money to help you protect that money. And then paying that money to maintain it for years.