FINANCIAL WISDOM IS THE MAJOR THING IT TAKES TO BE WEALTHY
If you wanted to get rich, how would you do it? I think your best bet would be to start or join a startup. That's been a reliable way to get rich for hundreds of years. The word "startup" dates from the 1960s, but what happens in one is very similar to the venture-backed trading voyages of the Middle Ages.
Startups usually involve technology, so much so that the phrase "high-tech startup" is almost redundant. A startup is a small company that takes on a hard technical problem.
Lots of people get rich knowing nothing more than that. You don't have to know physics to be a good pitcher. But I think it could give you an edge to understand the underlying principles. Why do startups have to be small? Will a startup inevitably stop being a startup as it grows larger? And why do they so often work on developing new technology? Why are there so many startups selling new drugs or computer software, and none selling corn oil or laundry detergent?
The Proposition
Economically, you can think of a startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for forty years, you work as hard as you possibly can for four. This pays especially well in technology, where you earn a premium for working fast.
Like all back-of-the-envelope calculations, this one has a lot of wiggle room. I wouldn't try to defend the actual numbers. But I stand by the structure of the calculation. I'm not claiming the multiplier is precisely 36, but it is certainly more than 10, and probably rarely as high as 100.
If $3 million a year seems high, remember that we're talking about the limit case: the case where you not only have zero leisure time but indeed work so hard that you endanger your health.
Startups are not magic. They don't change the laws of wealth creation. They just represent a point at the far end of the curve. There is a conservation law at work here: if you want to make a million dollars, you have to endure a million dollars' worth of pain. For example, one way to make a million dollars would be to work for the Post Office your whole life, and save every penny of your salary. Imagine the stress of working for the Post Office for fifty years.
In a startup you compress all this stress into three or four years. You do tend to get a certain bulk discount if you buy the economy-size pain, but you can't evade the fundamental conservation law. If starting a startup were easy, everyone would do it.
One of the key concepts to creating wealth is to
understand that money is not the goal. That's right, I said, money is not the
goal.
Frequently people will tell me that they want to make money. However, I know it is not money they are really after. It is the things that money can buy and the freedom of time to do what they really want. While you may think this is an insignificant difference, it is actually the reason so many people never become wealthy.
Most of us were taught throughout our childhood that the whole point of making money is to sock it away and build our own 'nest egg'. We think of this as a type of insurance against bad fortune, accidents or old age when we can no longer work. The wealthy know that money only works when it is in motion - not when it's sitting in a bank account. You must understand that wealth is an ongoing journey of growth and circulation and if that circulation is stopped, then the flow of money will cease.
While it may seem that there are many roadblocks on your journey to wealth, the only real obstacle is what you believe, think, and feel about money. Most of us were raised with the cliché "Seeing is Believing" which is a skeptical and negative view of life. Still, we hear it our whole lives until it becomes a part of our thought process without our even realizing it. Wealthy people understand that this cliché is exactly backward - you must believe in what you can achieve before you will see it happen in your life. They know that "Believing is Seeing." The only thing that separates a millionaire from you right now is a wealthy mindset and the foundation of that mindset is belief.
Does this mean that the wealthy have some special skill or knowledge? No - but they do possess some key characteristics that help them become wealthy.
The first of these characteristics is a willingness to listen to their own heart. If you could become wealthy by listening to the masses, then the masses would be wealthy and they are not. It is a natural tendency to ask the opinions of those we love or respect. Unfortunately, we listen to their comments and biases not taking into account the results in their own lives. We make a decision to listen based on our emotional attachment rather than by looking at what they have achieved. How can anyone who has not accumulated wealth advise you on how to do it? They can't.
A second characteristic of the wealthy is the ability to act when opportunities present themselves. Opportunity is often imagined to be something that you can't miss or pass up. However, I know from personal experience that opportunity is often only a whisper that comes during some of the most trying times of life. If you read the life stories of very wealthy and successful people, you will frequently find they were fired from jobs, kicked out of school or dealt with significant personal tragedies that other people would view as devastating. Instead, they viewed the challenges as opportunities and prospered.
The wealthy also understand that wealth is an ongoing process. It is not a destination you arrive at one day and then stop. It is also rarely accomplished overnight - although it can occur in a short period of time. However, if you gain wealth before you have gained a wealthy mindset then you are in danger of losing that wealth forever. We have all heard of those that win the lottery only to be near penniless a few years later. Since they were never taught to think wealthy, they have very little chance of achieving wealth that lasts and ultimately they lose what money they have.
Those with a wealthy mindset do what they love - and make money at it. Often I see individuals who are seeking wealth like it's something outside that they have to search for. In reality, wealth exists within you. You have activities and hobbies that you love and you can make these into your business if you choose to. Those who are successful and create a great deal of wealth do so because they are doing something they love. The money follows and is just a logical result of them realizing their dream. Money is not the dream.
Whether you grow up in the worst circumstance or have every advantage, you have the exact same potential inside of you to create the life you want. No matter how many times you read or hear someone talk about how to become wealthy, your life will never change until you believe that it can - Believing is Seeing.
Frequently people will tell me that they want to make money. However, I know it is not money they are really after. It is the things that money can buy and the freedom of time to do what they really want. While you may think this is an insignificant difference, it is actually the reason so many people never become wealthy.
Most of us were taught throughout our childhood that the whole point of making money is to sock it away and build our own 'nest egg'. We think of this as a type of insurance against bad fortune, accidents or old age when we can no longer work. The wealthy know that money only works when it is in motion - not when it's sitting in a bank account. You must understand that wealth is an ongoing journey of growth and circulation and if that circulation is stopped, then the flow of money will cease.
While it may seem that there are many roadblocks on your journey to wealth, the only real obstacle is what you believe, think, and feel about money. Most of us were raised with the cliché "Seeing is Believing" which is a skeptical and negative view of life. Still, we hear it our whole lives until it becomes a part of our thought process without our even realizing it. Wealthy people understand that this cliché is exactly backward - you must believe in what you can achieve before you will see it happen in your life. They know that "Believing is Seeing." The only thing that separates a millionaire from you right now is a wealthy mindset and the foundation of that mindset is belief.
Does this mean that the wealthy have some special skill or knowledge? No - but they do possess some key characteristics that help them become wealthy.
The first of these characteristics is a willingness to listen to their own heart. If you could become wealthy by listening to the masses, then the masses would be wealthy and they are not. It is a natural tendency to ask the opinions of those we love or respect. Unfortunately, we listen to their comments and biases not taking into account the results in their own lives. We make a decision to listen based on our emotional attachment rather than by looking at what they have achieved. How can anyone who has not accumulated wealth advise you on how to do it? They can't.
A second characteristic of the wealthy is the ability to act when opportunities present themselves. Opportunity is often imagined to be something that you can't miss or pass up. However, I know from personal experience that opportunity is often only a whisper that comes during some of the most trying times of life. If you read the life stories of very wealthy and successful people, you will frequently find they were fired from jobs, kicked out of school or dealt with significant personal tragedies that other people would view as devastating. Instead, they viewed the challenges as opportunities and prospered.
The wealthy also understand that wealth is an ongoing process. It is not a destination you arrive at one day and then stop. It is also rarely accomplished overnight - although it can occur in a short period of time. However, if you gain wealth before you have gained a wealthy mindset then you are in danger of losing that wealth forever. We have all heard of those that win the lottery only to be near penniless a few years later. Since they were never taught to think wealthy, they have very little chance of achieving wealth that lasts and ultimately they lose what money they have.
Those with a wealthy mindset do what they love - and make money at it. Often I see individuals who are seeking wealth like it's something outside that they have to search for. In reality, wealth exists within you. You have activities and hobbies that you love and you can make these into your business if you choose to. Those who are successful and create a great deal of wealth do so because they are doing something they love. The money follows and is just a logical result of them realizing their dream. Money is not the dream.
Whether you grow up in the worst circumstance or have every advantage, you have the exact same potential inside of you to create the life you want. No matter how many times you read or hear someone talk about how to become wealthy, your life will never change until you believe that it can - Believing is Seeing.
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