I used to read a lot of books about wealth and how to get rich. One of the things that bothered me was how much time they took to not really present that much information. Often the author would spend more than half the book talking about their past history and how many months they spent sleeping on a friend’s couch until they made it rich. I’ve also spent months sleeping on a friend’s couch and it didn’t lead to me getting rich. So instead, here are the distilled lessons in an article:
- Become absolutely obsessed with money. This is the first step. If you want to be rich you have to seriously want it. When I was younger I used to think it would be great to be rich because then I’d never have to think about money again. That is so wrong. Rich people think about nothing else. They eat, sleep, breathe and dream about money. If you want to be rich you have to do the same. You need to think about nothing else. Every decision you make has got to either increase your income or reduce your debit. That’s it. You become rich because every single part of you is committed to the process.
- Create multiple sources of income. No one ever got rich by working for someone else. If you want to be wealthy, you need to start looking at alternative ways of making an income. Generally about 7 different ways is considered a reasonable number. They don’t all have to be making millions but they all have to be steady and reliable. That way if 2 or 3 fail, then you still have some income while you try to establish more. This doesn’t mean you need to get 7 different jobs, it means you also need to find ways of making money that doesn’t depend on you actually being there (called “making money in your sleep”) see point 4 for further details.
- Learn how to sell. This is the best skill you can develop. Learn how to sell yourself, sell your ideas, sell your solutions, and sell your brand. Selling is what you will be doing most of the time so you need to be good at it. The only thing you shouldn’t sell is your time.
- Don’t sell your time. What I mean is, don’t trade your time for money. Contracting, or consulting is a mug’s game. You are being paid for the hours you work. You might be paid a lot but that doesn’t matter. You can only sell so much of your time before you haven’t got any left. And then you can’t sell it again, it’s gone. What you need to do is spend the time to develop a product that you can sell over and over again, like a book, movie, song, video, or whatever. Something that is able to be produced and distributed multiple times without you giving up more time to make it again. This is called leveraging your time. For example, I spend a month writing a book that sells 5000 copies. Even if I sell those copies for only $1 profit, I have still made $5000 for 1 months work. And if the product is good then it will keep selling even as I produce other books or other products.
- Work on your brand. A brand represents you to others. Usually it is a representation of a feeling or emotion that other people associate with your product, like quality, or fashion, or some other felt need. Why do people spend more money on a brand name product when another cheaper product is just as good? Because they associate that brand with some emotional need that is important to them. Some brands are associated with quality, some with convenience and some with prestige. If you want people to buy your product then you need to associate it with something in their mind. When most people buy something they will either buy a product, a service or an experience. If you can manage it then you need to associate the first two (the product or service) with the experience. When I go to MacDonald’s I don’t go because the food is great (because it isn’t), I go there because it gives me something that other places don’t (besides massive amounts of sugar). It might be a sense of nostalgia for my childhood, or a convenient place where I already know the menu, or a place to hang out with my friends. It’s that association that helps me decide to go there and all of those emotions are part of the brand.
- Buy assets, not liabilities. This is really important and ranks up there with creating multiple streams of income. Try to get into the habit of distinguishing between assets (which are defined as anything that actively puts money into your bank account) and liabilities (which is anything that actively takes money out of your bank account). So, a house for example is a big debt that you have to pay so it is actively taking money out of your bank account for many years, so it’s a liability (even though it’s seen as an asset). However if you could manage to buy a house and rent it out for enough to cover the repayments (which is incredibly hard to do, and which is why they brought in negative gearing, otherwise no one in their right mind would ever do it) then it would be actively giving you money and it would be an asset. An asset isn’t something that will hopefully make money at some point in the future, an asset is something that makes money now. For example, an investment that pays dividends, or a piece of equipment that helps produce income right away. It is something that pays for itself over the short term and keeps on producing money for you, not just once, but over and over again.
- Don’t work for a boss, be the boss that other people can work for. As I said before, no one ever got rich working for someone else. You need to be the person who handles the money if you want more of it. This means that you also need to be ultimately replaceable. You can’t be the person who is always doing the job (even if you’re the best at that particular job), you need to be able to train someone else to take on your role while you remain the business owner. This is important again because it frees up your time to look at other opportunities which still being part of the company, and also this allows you to “make money while your sleep”. If you really can’t give up your job then you will be stuck in it. You don’t own the job, it owns you.
- Standardise and automate your processes. For a time I was reading a lot material on how to write a book, and a lot of them had one thing in common, often the author presented a system for how to write a bestseller which went through in great detail how the conflict should be presented, the stages of the story, the climactic scene, the supporting characters and so on. The author would declare (quite honestly) that this was the process they used for writing all their books. So I would diligently follow this process and find that it didn’t work out for me. The reason is because the author had spent years and years honing this process and refining this process around the way that they write, not anyone else, so while they were honestly saying that it was a bestselling writing process which it was, it was only a bestselling process for them. My point here is that you need to work out how to standardise your process of producing something as much as possible, and then refine it until it takes as little time as possible to make something. After that you need to automate the process as much as possible so that anyone can do it. The idea is that you shouldn’t produce anything that only you yourself can produce, otherwise you will always need to be there to produce it and that will tie you down. Remember you need to be able to make money in your sleep.
So that’s about it for now. I hope these points are helpful. This is the distilled wisdom of several “get rich” books without the long winded stories about sleeping on my friend’s couch or in my car.
That’s something I wish I was taught at school.