Ever see those movies where some poor urchin from the street becomes wealthy and doesn’t know how to act? (Like when Richard Gere took Julia Roberts to that fancy restaurant in Pretty Woman?) It’s a timeless trope in Hollywood, guaranteed for good laughs.

That was me.

There’s even a catchy name for it: nouveau riche. (The English equivalent is “new rich” or “new money.”) It’s a derogatory term to describe those upstart people whose wealth has been acquired within their own generation, rather than inheriting it from their rich, prominent, and illustrious family.

I’m nouveau riche. Or, as I preferred to be called, “white trash with cash.” Some people whose families have generations of wealth look down on the newly rich. They seem to believe there is more honor in having your parents give you wealth instead of earning it yourself. How weird is that?

One of the terrific aspects about our profession is how many people are able to create wealth for themselves and their loved ones. But that does bring a few challenges.

The first of these is helping these newly wealthy people deal with the changes and responsibilities that come with wealth. For years I’ve been contemplating writing a book titled What to Do When You Get Money. Seriously.

When you start out poor and become rich, everything changes. The number of weddings, birthdays, and bar mitzvahs you’re invited to increases exponentially. (You can expect invitations from the cable installer to the bag boy at your supermarket.)

Now that you have some real cash, you have to actually think about things like taxes, investments, and succession planning. And you have friends, family, and entourages that come to you every time they need a loan, wish to start a business, or want to set up a charitable foundation to run a home for unwed llamas.

In Direct Selling, we are often taking blue-collar employees on a modest income and putting them into a situation where they’re now extremely high-paid entrepreneurs. An overwhelming majority of these people are simply not prepared for this.

So about 15 years ago, I began to offer some training for my higher level of leaders on the topics of selling the dream, investing to grow your business, and how to manage money. I’d like to share some of that training with you here.

Important Note: I am not a financial planner, accountant, investment advisor, or tax expert. I have no certification in any of these fields. To obtain advice and guidance in those areas, you should engage a qualified professional.

Remember, I’m just white trash with cash. But I have earned a lot of cash. Probably more than most of the people you know with the certifications above. And I have some very beneficial experience on how the way you manage and utilize your money can influence the activity and results of your team. So please take the advice I’m giving in this chapter within that context, and that context alone. (And to those of you who are company executives and top earners—think about how you can integrate this kind of training in the leadership retreats and award trips for your people at the higher ranks.)

The Hierarchy of Selling the Dream

It’s almost a corny trope in our business that it’s necessary to “sell the dream.” But don’t discount the necessity of this. People are being beaten down and programmed with negative and limiting beliefs on a continuous basis. Many do forget about or even give up on their dreams. We need to help them bring those dreams back to life.

However, make sure you’re doing this with integrity and in a way that actually moves your team forward, not backward. You need to be mindful about what culture you’re creating.

People share their “risen from the ashes” stories to inspire others. They’re posting photos of their bonus car, their free trip to that swanky beach resort, and the jewelry they purchased that would make a rapper blush.

Others on their team want to emulate them. They believe the secret is “fake it ‘til you make it,” and they start staging photo shoots. There are people who rent a sports car for a day, then create social media posts and profiles as though they own it. They’re somehow under the impression that these garish updates will inspire candidates to join or that all their team members will work harder. Then, the logic goes, they will actually be able to afford this “Instagram rich” mirage of a lifestyle.

The last time this actually worked successfully was never.

Here’s another type of trap to avoid. Let’s say your income is now up to $25,000 a month. You see a swanky-looking wristwatch for $25K. You tell yourself, “I should buy this now. When my team sees I can afford something like that, they’ll be so inspired to work harder that the watch will pay for itself. And it’s only one month’s income anyway.”

Um… no.

First of all, that’s not one month’s income, that’s one month’s gross revenue. From that $25,000 you have to take out taxes, which might be anywhere from $7,000 to $10,000. Then what about the airline tickets and hotel rooms you paid for that month? And the other marketing materials and other expenses?

So that watch might actually require three or four months’ worth of earnings. And the probability that this particular piece of jewelry will inspire such a dramatic and immediate increase in volume so as to pay for itself is a fraction of a percentage so small it would require a microscope to see it.

I have no problem with you buying expensive watches. (I’m a watch addict, with more than 200 of them.) But buy them when you can afford them, pay cash for them, and because you enjoy them—not with the foolish belief they are going to grow your team.

Often people in our business rent or purchase a bigger home than they can afford, also thinking this will impress and inspire their team members. In reality, very few people from your team will ever see your home. What most people will notice first will be your clothing and jewelry. (Because they see you at events so often.)

A lot of people think that buying or leasing an upscale car or upmarket home will generate a bunch of new distributors for them. That doesn’t really happen. So please make sure the culture on your team doesn’t embolden imprudent financial decisions.

The best culture to set is one where emerging leaders counsel with the proven leaders above them before making any significant financial and lifestyle decisions. There is a hierarchy of making these lifestyle changes as your business grows. The one I follow and recommend is this:

• Clothes
• Jewelry
• Car
• First class travel
• Home
• Flying private, buying yachts, etc.

In the usual scenario, once someone starts to earn some serious money, they will need to upgrade their wardrobe and image. As we discussed earlier, many people we bring into the business have no experience in fashion or business attire. That’s okay, as we all have to start somewhere.

As men become more successful, they will need to trade in their off-the-rack suit that was never altered to fit them properly for one that is. Later on, they’ll probably evolve to bespoke suits. Some women will need to learn the distinction between a cocktail gown and a business dress. When leaders reach the highest ranks, they’re going to be receiving awards on stage at galas, where tuxedoes and evening gowns are the appropriate attire. Some of them will need advice from the sponsorship line on when and where to buy these items.

After that, they may want to buy some nice jewelry. If your company has a bonus car program, the car decision will be predicated upon that. If you don’t have a car program, counsel with your people so they aren’t getting on the hook for car payments they can’t afford. It will be better if they keep growing their business while setting aside enough money so they can purchase their next auto with cash.

Likewise, counsel with them as they proceed up the hierarchy of selling the dream. Encourage them to first pay off their credit cards and work to become debt-free. As the business and their income get bigger, they can alter their lifestyle accordingly.

You’ll have much more success if you promote a culture of debt-free living than you ever will by encouraging people to act Instagram rich and hope the hype will entice candidates. Help your people invest wisely and make prudent upgrades in their lifestyle. You and they should be building for the future.

If you desire grand homes with 10-car garages, private jets, and enough bling-bling to make your heart sing-sing, I have no issue with you. But if you can’t pay cash for it, don’t do it.

I’ve made millions of dollars. But I promise, you will never feel richer than the day you pay off your last credit card and become debt-free.

The other culture so important in this area is that of investing in your business. Many people want to quit their job and live out of the business. That’s a great goal. But too many people attempt it too early. The reason “selling the dream” works is because you see people actually moving up the economic ladder. You watch their lifestyle improve.

So let’s say a woman makes $50,000 a year in her profession. She has credit card debt, student loans, a car payment, and a mortgage. She joins your team and works her income up to match the $50,000 she currently earns, so she quits.

She hasn’t changed her lifestyle in any meaningful way. She’s still someone who earns $50,000 a year, with credit card debt, student loans, a car payment, and a mortgage. She can work from home now and that’s an improvement. But her financial security hasn’t improved.

Better you create a culture where she continues to increase the time devoted to her business while keeping her job. She reinvests all of her business profits back into the business or paying down her debt. Then when she’s debt-free and quits her job, both her standard of living and financial security have improved.

One of the frequent landmines for new people who reach success in our business is taxes. They’re used to having their taxes automatically deducted from their paycheck. Then when they become an entrepreneur, they don’t make deposits or set aside the money for taxes every month. (I wouldn’t know anything about this. ) This can snowball quickly and cause extreme pressure. So educate your team early on to avoid this scenario.

Start by reinvesting everything back into the business when you begin. Your percentage of business expenses should go down as your check goes up. To build wealth, a sensible strategy is to increase your savings percentage as the amount of your check rises. Table 17.1 is an example of what this can look like at different income levels.

You might think that it would be impossible to earn $40,000 or $50,000 a month and end up in financial trouble. But I can assure you—not only is that possible, it happens far too often in our business. Include developing financial literacy in your training agendas and culture, and your team will have a much greater chance for true financial security.

Next… we’re going to bring this all home with the brutal truth that nobody else will tell you!