40 Eye-opening MONEY lessons (from best FINANCE books)

Summary

Highlights

• Jeff Bezos became the richest person by focusing first on just selling books. 📚
• Real wealth isn't visible expenditures but growing savings and investments. 🏦
• Generational wealth requires smart investments like real estate, gold, and art. 🎨
• The fastest way to financial independence is not saving, but strategic investing. 📈
• Avoid being misled by appearance, real financial success is often hidden. 💼

Key Takeaways

• Focus on mastering one thing to build wealth; diversify once you're stable 🎯
• Achieving financial freedom is not about being rich, it's about smart money management 💡
• Buy assets, not liabilities: Assets put money in your pocket regularly 🏠
• Instead of cutting expenses to live below your means, look to expand them 💪
• Think big: Your big dreams shape your future, so don't limit yourself 🚀

Overview

Chapters

• 00:00 - 01:30: Lesson 1: Put all your eggs in one basket The chapter challenges the common advice of diversification when starting a venture. It suggests that successful individuals, like Jeff Bezos, initially focused intensely on a single area to build a foundation before diversifying. In Bezos's case, Amazon started by selling only books before expanding into other product categories.
• 01:30 - 02:30: Lesson 2: Financial freedom is easier than you think In Chapter 2, titled 'Financial freedom is easier than you think,' the author emphasizes the importance of focus and specialization for achieving financial success. Using examples like how Bill Gates concentrated solely on software, the chapter presents a 'golden rule': wealth is built by focusing on one area, and it is maintained through diversification. However, the author points out a common misstep among entrepreneurs who, after finding success with one product, mistakenly believe they should immediately expand their product line extensively instead of consolidating their gains.
• 02:30 - 04:00: Lesson 3: Simple path to wealth The chapter emphasizes the importance of focusing on one business or product to achieve success, using the quote, "Put all your eggs in one basket and then watch that basket" by Andrew Carnegie. It suggests obsessing over one thing and achieving the first million before diversifying.
• 04:00 - 05:00: Lesson 4: Don't live below your means, expand your means Lesson 4 emphasizes the importance of financial freedom and expanding one's means rather than living below them. The chapter illustrates this point with a story about a student who achieved financial freedom by renting out her flat and moving to a cheaper place. Through the rental income, she covered all her expenses and even managed to save money, demonstrating that one doesn't need to be rich to be financially independent. This strategic shift allowed her to expand her means, proving that the path to financial freedom can be simpler than expected.
• 05:00 - 06:00: Lesson 5: The magic of thinking big Lesson 5 discusses the concept of financial freedom versus being rich, explaining the analogy of climbing two different ladders. Financial freedom is considered a 10-step ladder, whereas becoming rich is like a 1,000-step climb. The chapter emphasizes starting with financial freedom by creating enough passive income to cover basic needs. Once freed from the need for a paycheck, individuals will have the time and opportunity to focus on becoming rich.
• 06:00 - 07:00: Lesson 6: How much is your one hour worth? Lesson 6 discusses the concept of wealth accumulation through asset acquisition. Inspired by the teachings of 'Rich Dad,' the lesson emphasizes the idea that becoming wealthy is straightforward: focus on purchasing more assets. The key takeaway is the definition provided by Kiasaki, where an asset is described as something that generates income (puts money in your pocket), whereas a liability is anything that results in expenditure (takes money out of your pocket). This distinction is central to understanding financial growth according to the lesson.
• 07:00 - 08:00: Lesson 7: Money equals life energy In this chapter, the author discusses the concept of viewing money as life energy and illustrates how people often mistakenly fill their lives with liabilities, believing they are acquiring assets. After reading a particular book, the author becomes more conscious of purchases, emphasizing investments that generate positive cash flow. They share personal examples of acquiring a rental property that yields $40 per month, and surprisingly, a YouTube video that nets the same amount monthly, highlighting a moment of realization about effective income generation.
• 08:00 - 09:00: Lesson 8: Generational wealth The chapter discusses the concept of generational wealth, highlighting YouTube videos as a form of asset. The narrator compares the creation of YouTube content to real estate investment, noting that while property required a significant financial down payment, video content was less expensive to produce and also generates continuous income. This realization led to the narrator taking YouTube more seriously, expanding production and creating content in different languages to maximize asset generation and income flow.
• 09:00 - 10:00: Lesson 9: To make 1 million, understand the law of affection In this chapter, the focus is on expanding one's financial means rather than restricting spending. The narrative challenges traditional financial advice that emphasizes cutting expenses and suggests that such an approach can dampen motivation and passion. Instead, the idea is to look at opportunities to increase income, making everyday expenses insignificant in comparison. By doing so, individuals can move closer to financial independence without sacrificing their quality of life.
• 10:00 - 11:00: Lesson 10: You are one skill away from wealth The chapter emphasizes the importance of nurturing passion and adopting a mindset of resourcefulness. It introduces the concept of 'thinking big' as an essential step towards achieving significant goals. The lesson underlines that, while merely thinking big does not accomplish anything by itself, it is a crucial beginning point for those seeking wealth and success. Without the ability to envision wealth, such as imagining $5 million in a bank account, progress towards financial success is unlikely.
• 11:00 - 12:00: Lesson 11: Get rich young The chapter "Lesson 11: Get Rich Young" discusses the mindset of thinking big to achieve extraordinary goals. The author reflects on their time at the Faculty of Economics and Management, where most classmates aimed for a standard path of graduating and securing a well-paying job at a bank or international company. In contrast, the author suggests that those who dreamed of building their own successful companies achieved greater success by thinking beyond conventional career paths. Ultimately, the chapter emphasizes that aspiring for more significant achievements can shape your future and lead to accomplishing outstanding goals.
• 12:00 - 13:00: Lesson 12: Create your own luck Lesson 12, titled 'Create your own luck', discusses the importance of envisioning a bigger future to be able to achieve it. It draws a key lesson from an earlier chapter about valuing one's time - specifically, lesson six, which asks 'How much is your one hour worth?' This lesson uses the analogy of spending several hours in different stores to save a little money or waiting in line for a free muffin as examples of how people often undervalue their time. The implication is that such behaviors reflect a mindset that can limit personal and financial growth.
• 13:00 - 14:00: Lesson 13: Mental money tricks This chapter discusses the concept of mental money tricks with a focus on how people perceive the value of their time. It uses an example of spending an hour to save 60 cents on oranges, equating to valuing one's time at 60 cents an hour. The chapter contrasts this with the mentality of wealthy individuals, who aim to make their time worth significantly more, such as $6,000 an hour.
• 14:00 - 15:00: Lesson 14: How to spend more on the things you love with a conscious spending plan Lesson 14: This chapter introduces the concept of viewing money as life energy, emphasizing that the cash one earns represents hours of one's life. It discusses how this perspective can significantly alter spending habits by making individuals more conscious about their purchases. The chapter also provides a personal anecdote of the author's experience when earning $5 an hour and how it influenced their spending decisions.
• 15:00 - 16:00: Lesson 15: Become the person who earns more Lesson 15: Become the person who earns more discusses the concept of valuing money in terms of time, illustrating how an $80 leather jacket can represent two days of one's life if that's what it takes to earn that amount. This perspective encourages more mindful spending. The lesson also introduces the idea of generational wealth, highlighting the difference between making money and preserving it. In the context of ongoing currency inflation, preserving wealth becomes increasingly challenging, as more money is printed and savings lose value over time.
• 16:00 - 17:00: Lesson 16: The 80/20 rule in investing The chapter delves into the application of the 80/20 rule in investing, a concept originally popularized in economics. It opens with historical examples where paper currencies eventually collapsed, such as the Roman Daenerius and the Weimar Republic's mark, highlighting the eventual fate of all fiat currencies, including contemporary ones. To underline the importance of preserving wealth over generations, the author references James Rickards' book 'Road to Ruin', specifically citing an Italian family who successfully maintained their wealth for over 800 years, spanning 31 generations, amidst economic upheavals and currency failures.
• 17:00 - 18:00: Lesson 17: Do and grow rich, not just think Lesson 17 emphasizes the importance of diversifying wealth as a strategy for growth and stability through various historical challenges. The chapter discusses insights from Rickards, noting that successful individuals maintained their wealth by dividing it equally among real estate, gold, and art. The narrator, however, prefers physical assets like gold and real estate, as these are more easily comprehensible.
• 18:00 - 19:00: Lesson 18: Know how much is enough The chapter emphasizes the 'Law of Affection,' which suggests that to earn a significant amount of money, such as a million dollars, one must positively impact millions of people. The idea is that the more people you help, the more wealth you can generate. The text uses Jeff Bezos as an example, illustrating that his greater wealth compared to someone like a barber is not due to personal qualities but the broader impact he's had on people.
• 19:00 - 20:00: Lesson 19: The math behind investing The chapter focuses on the idea that helping a large number of people can lead to making more money, exemplified by an individual who facilitates both buyers and sellers on a global scale. The central lesson conveyed is that wealth can be attained through aiding others.
• 20:00 - 21:00: Lesson 20: Understand leverage to build wealth while you sleep In this chapter, the concept of leveraging sales skills for wealth accumulation is discussed. A woman with a master's degree in English literature is advised by Robert Kiyosaki to take a sales course to better promote herself. She responds defensively, citing her educational background and distaste for sales, believing her professional training exempts her from needing such skills. This highlights a common misconception about sales and emphasizes the importance of understanding and utilizing sales skills as a tool for financial growth, regardless of one's profession. Kiyosaki addresses this by suggesting that being proficient in sales can enhance one's ability to generate and manage wealth effectively, even as one sleeps.
• 21:00 - 22:00: Lesson 21: Know exactly what you want The chapter emphasizes the distinction between success and talent, using the example of a bestselling author versus the best writing author. It highlights that being skilled or talented in professions such as medicine or law does not automatically guarantee financial success. The key takeaway is that these professionals are often just 'one skill away from great wealth,' suggesting that acquiring a particular skill could significantly improve their financial situation.
• 22:00 - 23:00: Lesson 22: Mind your own business The chapter introduces the concept of enjoying wealth while still young, inspired by an observation of an elderly couple on vacation.
• 23:00 - 24:00: Lesson 23: Don’t wish for a lump sum of cash Lesson 23 discusses the idea that wishing for a sudden windfall of cash is less effective than pursuing long-term financial strategies. It contrasts the 'slow lane' where one works hard for decades to retire with the 'fast lane' that involves building self-sustaining businesses or income-generating assets. These 'fast lane' strategies are not an easy route to wealth but require years of effort, although less than the traditional 40-year career. The chapter emphasizes creating your own luck by actively pursuing investment opportunities.
• 24:00 - 25:00: Lesson 24: How to spend without feeling guilty In this chapter, readers learn about the concept of creating their own luck through taking numerous actions. It begins with a metaphor, comparing checking 100 flats to 10. The underlying message is that the more proactive one is, the more likely they are to encounter favorable opportunities. This proactive approach might seem like luck to outsiders, but it's actually the result of persistent effort and strategy. The chapter also introduces the idea of 'mental money tricks', encouraging readers to treat their brain like a computer with multiple folders, each managing different aspects of financial decision-making.
• 25:00 - 26:00: Lesson 25: Cut costs versus increase income The chapter discusses how people classify money into different categories, such as 'savings', 'investments', 'bonuses', and 'daily spending'. This categorization affects spending behavior, a concept known as mental accounting. For instance, people might be reluctant to spend savings on an expensive item like a new iPhone, but readily use a bonus for the same purchase. The chapter suggests that mental accounting can lead to inefficient financial decisions and offers three tips for improvement.
• 26:00 - 27:00: Lesson 26: Wealth is what you don’t see Chapter 26: 'Wealth is what you don’t see' explores the psychological aspects of financial management through three main strategies. First, the idea of keeping only a small amount of money in your spending account while storing most of it in a savings account is highlighted. This approach takes advantage of our inclination to regard savings accounts as untouchable or sacred, which helps curb unnecessary spending. Second, the chapter discusses mental accounting as a human weakness and illustrates this by referencing how casinos use chips instead of cash to obscure the real money loss. Extending this logic, it emphasizes the impact of card payments on spending habits, suggesting that using cash can foster more conscious spending. Lastly, while the transcript cuts off, it hints at the importance of having financial goals as part of managing wealth wisely.
• 27:00 - 28:00: Lesson 27: How to save and enjoy money at the same time In Lesson 27 titled 'How to save and enjoy money at the same time,' the discussion revolves around balancing saving and enjoyment. It highlights the importance of saving extra income, such as bonuses, for investment purposes. Additionally, it introduces the concept of a conscious spending plan which involves spending more on the things you love while cutting costs on those you don't value. Automation of finances is suggested as a means to effectively implement such a spending plan.
• 28:00 - 29:00: Lesson 28: Pay yourself first Alex practices the 'pay yourself first' principle by allocating a certain percentage of his paycheck to different accounts before handling other expenses. Specifically, 5% of his paycheck is directed to his retirement account, 25% to his investment account, and another 25% to his savings account. Following this, automation helps in paying off his fixed costs like internet, loans, and insurance. The remaining money is then used for guilt-free spending, such as dining out and buying gadgets, which Alex enjoys.
• 29:00 - 30:00: Lesson 29: To save or to invest, which one comes first? Alex demonstrates financial responsibility by prioritizing savings and fulfilling essential expenses before indulging in personal luxuries. Despite spending $1,000 monthly on areas he's passionate about, Alex's conscious spending strategy ensures he saves 55% of his paycheck and allocates funds towards bills before splurging. His approach involves economizing on non-essential subscriptions like Netflix and gym memberships, opting instead for cost-free activities such as walking in the park, allowing him to enjoy his interests without financial strain.
• 30:00 - 31:00: Lesson 30: Become an entrepreneur This chapter emphasizes the importance of mindset in becoming an entrepreneur. It starts with the idea that if you want to earn more, you need to think and behave like someone who already earns more. By adopting the mindset and habits of a higher earner, your thoughts, actions, and associations will naturally align towards achieving greater success. The chapter suggests that this shift in mindset will lead you to discover new ideas and opportunities to increase your income significantly.
• 31:00 - 32:00: Lesson 31: Have a 3-to-6-month emergency fund The chapter "Lesson 31: Have a 3-to-6-month emergency fund" emphasizes the importance of adopting the right mindset before achieving financial stability. It discusses the common mistake of waiting for a large sum of money, like $10,000, to arrive before changing one's financial habits. The key takeaway is to adopt the behavior of a financially responsible person first, and the financial results will follow. Additionally, it touches on the investment principle known as the 80/20 rule, highlighting that investors often expect 80% of their results from 20% of their investments, underlining the selective focus and strategy in investing.
• 32:00 - 33:00: Lesson 32: Be careful with some financial experts The chapter emphasizes that not all investment decisions will be successful, using Warren Buffett's experience as an example, who despite owning shares in over 400 companies, found that most significant gains came from only 10. The key lesson is to accept failures and focus on a long-term strategy.
• 33:00 - 34:00: Lesson 33: How much is a 1% fee? In Lesson 33, the discussion revolves around a book titled 'Think and Grow Rich.' The text indicates a skepticism about the book's effectiveness, as mentioned by a person who observed that while many people read it, none became rich just by doing so. The critique is that people fail to achieve wealth because they don't act on the book's concepts; they only engage in passive activities such as reading, affirming, setting goals, and visualizing, but crucially, they don't take any further action.
• 34:00 - 35:00: Lesson 34: Spend money to look good The chapter discusses the concept of wanting outcomes without taking necessary actions, using the metaphor of wanting to win a lottery without buying a ticket. It emphasizes that even seemingly random successes require some form of action. Furthermore, the lesson cautions against insatiable desire for more wealth, prosperity, and power, warning that greed can be detrimental. The key takeaway is to understand and recognize personal limits and what constitutes 'enough' for oneself.
• 35:00 - 36:00: Lesson 35: Identify your latte factor Chapter 35 focuses on understanding and identifying personal spending habits that can prevent financial growth or savings, coined as the 'latte factor.' It uses the story of Rajett Gupta as a cautionary tale, highlighting how even individuals in powerful positions can succumb to the temptation of increasing personal wealth through unethical means. Gupta, who rose from challenging beginnings to become the CEO of McKinsey & Company with a reported estate value of $100 million, still desired more. During the 2008 Goldman Sachs crisis, he exploited privileged information as a board member to covertly buy shares before they officially increased in value due to Warren Buffett's investment to save the bank. This chapter uses Gupta's example to illustrate the risks of prioritizing personal gain over ethical considerations in financial decisions.
• 36:00 - 37:00: Lesson 36: How much should you save? Lesson 36 examines the importance of understanding 'how much is enough' when it comes to savings and wealth. The anecdote of someone getting arrested for insider trading is used to illustrate the pitfalls of greed and the dangers of constantly wanting more. The lesson emphasizes not comparing yourself to others, as this comparison can lead to a perpetual desire for more wealth.
• 37:00 - 38:00: Lesson 37: Pay off your debt The chapter discusses the long-term impact of early and consistent investment illustrated through three different investment timelines of individuals named Billy, Susan, and Kim. It provides a comparative analysis of their investment results by age 65, highlighting the advantages of starting early and the cumulative effect of compound interest over time. The discussion focuses on how starting to invest early or investing consistently over time affects the total amount accumulated, despite the differences in the duration and sum of money invested.
• 38:00 - 39:00: Lesson 38: Why you can’t quit after several failures This chapter discusses the importance of perseverance and the benefits of starting early in investments. It shares stories of individuals who gained significant wealth by continuing to invest despite initial failures. The chapter emphasizes that early and continued investment can lead to substantial growth over time, as illustrated by the example of Billy, who turned $15,000 into $1.6 million due to the long period his investment had to grow.
• 39:00 - 40:00: Lesson 39: To retire early, do work that feels like play The chapter discusses the trade-offs between working more hours to earn more money versus finding a better way to achieve early retirement. It introduces the concept of leverage as a solution, explaining three types of leverage: labor, capital, and products with no marginal cost of replication. The chapter implies that understanding and utilizing these types of leverage can allow for a more efficient path to early retirement, turning work into something that feels like play rather than a burden.
• 40:00 - 41:00: Lesson 40: Become the best at what you do The chapter 'Lesson 40: Become the best at what you do' discusses three key strategies for maximizing efficiency and achieving excellence. Firstly, it highlights the importance of leverage through people, suggesting that having more individuals involved can significantly boost productivity compared to working alone. Secondly, it focuses on capital, demonstrating how money can be strategically used to generate more wealth, akin to making smart investments. Lastly, it introduces the idea of products with no marginal cost of replication, such as software and media, which once created, can be duplicated infinitely without extra costs, enabling vast scalability and impact.

40 Eye-opening MONEY lessons (from best FINANCE books) Transcription

• 00:00 - 00:30 lesson number one put all your eggs in one basket everyone says diversify never put all your eggs in one basket that's total BS advice when you're just starting just look at every rich person and you'll see they got rich by focusing on one thing you think Bezos started Amazon selling everything nah just books that's it he became the book guy first then expanded into the everything store facebook
• 00:30 - 01:00 focused on college kids bill Gates focused on software here's a golden rule you get rich by focusing on one thing you stay rich by diversifying but most people do the exact opposite take entrepreneurs they finally get one product working and suddenly they're like "Time to launch 17 new products." Like "Chill you just figured out
• 01:00 - 01:30 something that works why mess that up?" Again success comes from obsessing over one thing one business one product one customer group one social media platform hit that first million then we can talk about diversifying andrew Carnegie knew this 100 years ago when he said "Put all your eggs in one basket and then watch that basket." Lesson number two financial
• 01:30 - 02:00 freedom is easier than you think here's the secret most people miss you don't need to be rich first to be financially free ecker says one of the students realized that if she simply rented out her flat and moved to a cheaper place her passive income from the rent would be enough to cover all her expenses plus she could even save some money and that's exactly what she did she rented her flat moved to a cheaper place and
• 02:00 - 02:30 became financially free only then did she start building her business and becoming rich think of it like climbing two different ladders financial freedom is a 10step ladder while being rich is a 1,000st step climb start with the easier climb focus on creating enough passive income to cover your basics once you're not tied to a paycheck you'll have the time and freedom to focus on being rich
• 02:30 - 03:00 lesson number three simple path to wealth rich Dad once said "Getting rich is actually simple you only need to do one thing buy more assets that's it if you buy more assets you will be rich." As Kiasaki explains an asset is something that puts money in your pocket and a liability is something that takes money out of your pocket sounds simple
• 03:00 - 03:30 right yet most people do the opposite they fill their lives with liabilities thinking they are assets after reading the book I started paying attention to every purchase I made one of the assets I bought was a rental property which gave me $40 a month in positive cash flow at the same time I realized something surprising one of my YouTube videos had been making $40 a month as well this was a wakeup moment for me it
• 03:30 - 04:00 made me realize that my YouTube videos are an asset i created them once but they put money into my pocket every month just like real estate here's the tricky part the rental property cost me $12,000 for the down payment the video it cost just a few hundred and was fun to make from then on I took YouTube seriously producing more videos and even launching channels in different languages every video became an asset
• 04:00 - 04:30 bringing me closer to financial freedom lesson number four don't live below your means expand your means if you go to a financial planner he will look at your expenses and advise you to cut them so you will stop drinking lattes kiasaki says "Why don't we look at the other side of the equation and find ways to expand our means so that the price of a latte becomes nothing?" Cutting expenses is a passion killer don't kill your
• 04:30 - 05:00 passion rather find ways to feed your passion always ask "How can I afford it?" Lesson number five the magic of thinking big most people can't think big they can't even picture $5 million in their bank account let's be clear thinking big won't magically make things happen but it's the first step and if you can't even start there you'll stay
• 05:00 - 05:30 stuck where you are for example I studied at the Faculty of Economics and Management almost 99% of my classmates had one goal graduate and get a well-paying job at a bank or in an international company that's all they could imagine but if you thought bigger they didn't want to work in a nice company they wanted to build a nice company fast forward 12 years and guess what everyone got exactly what they aimed for thinking big shapes your
• 05:30 - 06:00 future if you can't even imagine a bigger life you'll never build one lesson number six how much is your one hour worth have you ever been grocery shopping and spent several hours in several stores just to find the cheapest groceries to save 50 or 60 or have you ever waited in line for an hour just to get a free muffin if you have done this then you have a poor person
• 06:00 - 06:30 mentality i'm sorry to say that but let me explain of course it's not a bad thing to save money while you're shopping but take a look at it this way if you spend an hour looking for the cheapest oranges just to save 60 that means you're valuing your time at 60 cents an hour rich people don't do that they focus on finding ways to make their hour worth $6,000
• 06:30 - 07:00 instead lesson number seven money equals life energy think about it you literally sell hours of your life to earn money the cash in your pocket isn't just paper it's hours of your life stored up seeing money as life energy completely changed how I spend it the first time I heard about this concept I was earning $5 an hour which was $40 a day every time I wanted to buy something I'd ask "How many hours of work is this?" For example
• 07:00 - 07:30 a leather jacket that cost $80 wasn't just money it was two full days of my life when you see purchases this way you value your money differently lesson number eight generational wealth making money and preserving money are two different things this is extra hard these days because we keep printing more money which makes our savings worth less and less it's pretty wild if you look
• 07:30 - 08:00 back in history every paper currency eventually collapsed from the Roman Daenerius to the Weimar Republic's mark and the one you use today will eventually share the same fate if that's the case then how do you preserve wealth across generations james Rickards tells an interesting story in his book Road to Ruin he met an Italian family that kept their wealth for over 800 years that's 31 generations they survived all the
• 08:00 - 08:30 market cycles epidemics like the black death and even two world wars when Rickards asked their secret the answer was surprisingly simple 1/3 they kept onethird of their wealth in real estate and land one/3 in gold and one/3 in valuable art while art is confusing to me I stick to what I understand physical gold that you can hold in houses that people will always
• 08:30 - 09:00 need lesson number nine to make 1 million understand the law of affection the law of affection says that to make a million you need to help a million people of course it doesn't have to be exactly a million but I think you get the point the more people you help the more money you receive for example Jeff Bezos is much richer than your barber David not because he's a better person but because he impacted more
• 09:00 - 09:30 people he helped millions of buyers shop easily not just that he also helped sellers sell their products globally so the lesson is simple the more people you help the more money you make lesson number 10 you are one skill away from wealth during an interview with the journalist Robert Kiyosaki learned that she strived to become a best-selling author he realized she was a great writer and that she should pursue that she told him that she had tried but no
• 09:30 - 10:00 one was interested robert advised her to take a sales course so she could promote herself but she was offended by that advice and said "I have a master's degree in English literature why would I go to school to learn to be a saleserson i am a professional i went to school to be trained in a profession so I would not have to be a salesperson i hate salespeople all they want is money robert Kiasaki gently pointed out that
• 10:00 - 10:30 he was the bestselling author not the best writing author the world has many successful and talented people doctors lawyers dentists and still they struggle financially a wise business consultant once said "They are one skill away from great wealth." Lesson number 11 get rich young you might have already seen this
• 10:30 - 11:00 picture this is an old couple on vacation unfortunately they are so tired they can't even enjoy their boat tour don't get me wrong I'm not making fun of this couple this serves as a reminder to me to get rich young so that we don't have to wait until retirement to enjoy wealth i'm glad that the book The Millionaire Fast Lane finally talks about this the book teaches how to get rich young the author explains the slow lane and fast lane paths to getting rich
• 11:00 - 11:30 in the slow lane you have to work hard for 40 years to hopefully retire rich at 65 meanwhile the fast lane is about building a business that can run without you being there 24/7 or creating income generating assets though its name is fast it still requires several years of hard work but not as long as 40 years lesson number 12 create your own luck let's say you and I are looking for an investment property to buy i go and
• 11:30 - 12:00 check 10 flats but you check 100 who do you think is going to be lucky of course you from the outside it will look like you just came across a great property and bought it but in reality you created your own luck by taking many actions the more actions you take the better your chances of getting lucky lesson number 13 mental money tricks think of your brain like folders on your computer there's a folder for
• 12:00 - 12:30 savings another for investments bonuses and daily spending look we treat the same amount of money differently based on which folder it's in for example you might hesitate to spend $2,000 from your savings folder for the new iPhone but if your boss gives you a $2,000 bonus you'll probably buy that new iPhone without thinking twice this is called mental accounting and it can cost you money so here are three tips to turn
• 12:30 - 13:00 this to your advantage one keep little money in your spending account and put the rest into your savings account because our mind sees a savings account as sacred we can't touch that two knowing that mental accounting is a natural human weakness casinos use chips instead of cash why because you won't see the real money leaving your pocket so do you understand how paying with a card can impact your spending use cash whenever possible three have a goal in
• 13:00 - 13:30 advance for any extra income you will get for example save all your bonuses for investment lesson number 14 how to spend more on the things you love with a conscious spending plan a conscious spending plan starts with this mindset spend extravagantly on the things you love and cut costs mercilessly on the things you don't having automation for your finances enables you to have a conscious spending plan for example
• 13:30 - 14:00 here's how Alex does it alex gets paid at the end of the month 5% of his paycheck goes to his retirement account 25% goes to his investment account 25% goes to his savings account then the automation he sets up automatically pays his fixed costs like internet loans and insurance the money left in his account can be used for guiltfree spending alex loves trying out different restaurants every weekend and spending on gadgets so
• 14:00 - 14:30 he spends $1,000 a month on that you might think that Alex is wasting money but Alex has a conscious spending plan alex spends less on things that don't matter to him for example he doesn't subscribe to Netflix and he doesn't spend on gym memberships because he walks in the park for exercise and before spending extravagantly on the things he loves he has already saved 55% of his paycheck and paid all his bills
• 14:30 - 15:00 lesson number 15 become the person who earns more if you're making $1,000 a month and want to hit $10,000 you need to start acting like someone who already earns $10,000 when you do your mindset changes soon your behavior will change you will start to think differently watch different videos and become friends with different people these will lead you to finding the ideas on how to get to $10,000 a month most people do the
• 15:00 - 15:30 opposite they wait for the $10,000 to show up before changing their behavior but the truth is you have to become that person first once you do the results will follow lesson number 16 the 8020 rule in investing if you want to dive into the world of entrepreneurship and investment you must understand that many things comply with the 8020 rule seasoned investors and large companies expect that 80% of their investment
• 15:30 - 16:00 decisions will fail warren Buffett admitted that he had owned shares in over 400 different companies in his lifetime but the most significant gains came from only 10 so the lesson here is this accept that not all your investment decisions will succeed and that is completely okay adopt a long-term strategy lesson number 17 do and grow rich not just think several weeks ago I was talking to a friend and we started to talk about a
• 16:00 - 16:30 book called Think and Grow Rich he told me that he has seen many people reading this book but has never seen anyone actually become rich he was trying to prove that the ideas in this book don't work which I don't agree with i strongly believe that people don't get rich because they don't take any action they read the book start saying affirmations set goals visualize and that's all they do they don't take any action it's like
• 16:30 - 17:00 wanting to win the lottery but not even buying a ticket now I'm not saying you should buy a lottery ticket that's just an example even something as random as winning the lottery requires action lesson number 18 know how much is enough there is a danger of never having enough people can have wealth prosperity and power but greed for more can lead them
• 17:00 - 17:30 to risk it all take the story of Rajett Gupta who went from being an orphan to CEO of Mckenzian Company the value of his estate was reported to be $100 million but Gupta wanted more in 2008 during the Goldman Sachs crisis Warren Buffett invested $5 billion to save the bank as a board member of the bank Gupta knew this before the public so he secretly bought shares before they rose because of Buffett's investment he was
• 17:30 - 18:00 then arrested for insider trading because of his greed and never having enough he ruined his reputation and his career you have to know how much is enough and don't compare yourself to others when you compare you still want more because there is always someone who's better than you lesson 19 the math behind investing earlier billy Susan and Kim invest $3,000 per year with a 10%
• 18:00 - 18:30 annual return billy starts at 15 invests for just 5 years and stops at 19 susan starts at 19 invests for 8 years and stops at 26 kim starts at 27 and keeps investing for 39 years until she's 65 so who has more money by the age of 65 here are the numbers kim has 1.3 million within 39 years she invested $117,000 susan has 1.5 million within 8
• 18:30 - 19:00 years she invested $24,000 and finally Billy has $1.6 million within 5 years he invested only $15,000 the lowest amount among these three but his investment had the longest time to grow that's the power of starting to invest early lesson number 20 understand leverage to build wealth while you sleep if your income is tied
• 19:00 - 19:30 to your time that means to earn more you have to spend more time working here's what you can do sleep less so you can work at night too then work overtime on the weekends but is there a better way yes first you need to understand leverage there are three types of leverage labor capital and products with no marginal cost of replication number one labor means you use people to make more money you only
• 19:30 - 20:00 have 24 hours in a day more people means more work can be done instead of only you working day and night number two capital means you use money to make more money think of an investment the money you invest in another business will bring more money to you number three products with no marginal cost of replication think of code and media for code you create an app or software you build it once and it can be replicated for millions of people without additional costs for media think of this
• 20:00 - 20:30 YouTube video i created it once but millions can watch it the same goes for an ebook there's no cost to replicate it but if you write a physical book to print another one you have to pay so leverage is the key to earning more without working more hours lesson number 21 know exactly what you want the number one reason most people don't get what they want is that
• 20:30 - 21:00 they don't know what they want imagine you and your friend are ordering at a sandwich shop your friend orders "Please give me one sandwich." Well you say "I want a tuna sandwich with smoked cheese but I don't want this type of bread give me that dark bread with sunflower seeds and don't put onion put some cucumber tomato and toast it please." Guess what your friend gets a random sandwich and isn't happy you You get exactly what you asked for rich people know exactly what
• 21:00 - 21:30 they want and they are committed to getting it if you want a rich life then clearly define what that rich life looks like for example I want the freedom to work when and where I want i want to take my parents on a nice vacation twice a year i want to eat at nice restaurants without looking at prices first know what you want then plan how to get it lesson number 22 mind your own business most people spend their lives
• 21:30 - 22:00 making someone else richer like their boss but don't let that bother you mind your own business here doesn't necessarily mean you have to quit your job to start your own business instead it means building your asset column while keeping your day job an asset is anything that puts money in your pocket without you having to work 24/7 for it for example rental properties royalties or even mobile apps that you create after your 9 toive job which people have to pay for every month to use find and
• 22:00 - 22:30 build assets that you understand and love at the same time keep your expenses low once you have built your assets let the cash flow generated by those assets pay for luxuries not your paycheck lesson number 23 don't wish for a lump sum of cash imagine owning a water well versus having a tank of water the tank no matter how big eventually runs dry the well properly maintained provides water forever real wealth isn't
• 22:30 - 23:00 about having a big pile of cash it's becoming the person who can build income streams once you have that skill you'll never need to worry about running out of money just like riding a bicycle once you've learned you'll never forget it jim Ran once said "When I lost all my money I realized that I had only lost 10% the remaining 90% was the skill that would help me rebuild everything." Lesson number 24 how to spend without feeling
• 23:00 - 23:30 guilty there are two tips to spend without guilt first the two times rule anytime you want to spend on something you have to take the same amount of money and invest it as well for example if you want to buy that smartwatch for $400 take another $400 and put it into your investment account two benefits you will gain from this rule first it removes the guilt of making that expensive purchase because you also make an equal-sized investment second it helps you to think twice before buying because you need to spare double the
• 23:30 - 24:00 amount apart from this two times rule the second tip is to spend money on the things that maximize your long-term fulfillment let me give you my own example i spend $5 on coffee almost every day at the cafe i used to feel very guilty about it so I stopped but soon I realized that was a mistake why because first I got distracted a lot working from home i am more productive when I work at the cafe plus working at
• 24:00 - 24:30 the cafe means I don't have to rent an office so you have to identify what matters most to you lesson number 25 cut costs versus increase income cutting costs is important but let's be realistic there are only a limited number of things you can cut back on sure cut costs on unnecessary items but focus more on increasing your income that's the real game changer lesson number 26 wealth is what you
• 24:30 - 25:00 don't see someone may seem rich at first glance but that new iPhone and new couch might have been bought on an installment plan and you don't know how much debt that person has on his credit card wealth is the income that is saved not spent wealth is the ability to buy things if necessary without having to worry about the price tag and without relying on installment plans when people say they want to be a millionaire what they really mean is that they want to
• 25:00 - 25:30 spend a million dollar but spending a million dollars is literally the opposite of being a millionaire spending money to show others how much you have is the fastest way to have less lesson number 27 how to save and enjoy money at the same time whatever amount you have in the bank that didn't happen overnight it's the result of choices you've made over the years either you spend more or save more both will be reflected in your
• 25:30 - 26:00 bank account so the question is how can you save more while still spending on the things you want the answer is automate and build a system that saves invests and pays your bills while you sleep to automate your finances first you need to categorize your spending then decide the percentage for each category let's look at this example and feel free to adjust the percentage based on your income category one fixed costs
• 26:00 - 26:30 let's say you put 50% toward fixed costs like rent bills and groceries category 2 investment 15% category 3 short-term savings like savings to buy a house or a vacation 15% and finally the most exciting category which is category 4 guiltfree spending 20% this is the fun stuff like eating out at fancy restaurants new clothes or whatever else you want with a system
• 26:30 - 27:00 like this you can enjoy spending on what you want while still saving for the future lesson number 28 pay yourself first the first thing you need to do when you get your paycheck save at least 10% before you pay your landlord or the bank or the internet provider okay you got the idea right that's what pay yourself first means you don't have to strictly follow 10% just save any amount you can the important thing is to start
• 27:00 - 27:30 with some amount so that you can start training your saving muscles imagine it like this every dollar you save is like a soldier in your personal army fighting to bring back more soldiers those new recruits they'll fight for you too bringing back even more soldiers this process will keep continuing but if you spend recklessly it's like sending your soldiers out without protection they can be killed and can't bring back more
• 27:30 - 28:00 soldiers too much imagination isn't it lesson number 29 to save or to invest which one comes first to answer that question here's what you need to do first figure out how much you can save in a year for example if you save $1,000 a month that means you can save $12,000 in a year second if you invest calculate how much the return is for example if you have $10,000 to invest and you expect a 10% return that means you will get
• 28:00 - 28:30 $1,000 third compare those two numbers if your savings are higher focus on saving more if the return on your investment is higher focus on investment first and if the numbers are about the same focus on both lesson number 30 become an entrepreneur growing up I bet you heard this a lot study hard get good grades and land a job at a big company but how often do you hear study hard and become
• 28:30 - 29:00 an entrepreneur many people think becoming an entrepreneur is risky so they want a secure job in a company when you work for a company you have just one client your employer but when you're an entrepreneur you have multiple clients entrepreneurs are the ones who are building the economy creating new jobs developing real estate and investing the government needs entrepreneurs otherwise there would be no jobs and the government could not collect taxes
• 29:00 - 29:30 robert Kiasaki strongly advises becoming an entrepreneur because taxes and laws are written in favor of entrepreneurs lesson number 31 have a 3 to6month emergency fund if you spend $4,000 every month then the amount you need to have in your emergency fund is between $12,000 and $24,000 the decision depends on the type of job you have and how secure you feel with your income if you have a stable income you can focus on saving for 3
• 29:30 - 30:00 months but if you have variable income or depend a lot on external conditions 6 months is right for you an emergency fund is only for emergencies buying a gift for your mother is not an emergency her birthday is on the same day every year so you should save for it in your budget lesson number 32 be careful with some financial experts the best investment opportunities don't need
• 30:00 - 30:30 to be advertised in a brochure the best investment opportunities don't even leave the office they get consumed internally for example when a real estate agent finds the best property he doesn't advertise it on a website if he can he buys it himself or make sure that it is purchased internally by his company or colleagues around him the conclusion is this be very careful with financial experts from whom you take advice they work for a company and are
• 30:30 - 31:00 paid by the company so whose interests do you think they will put first lesson number 33 how much is a 1% fee let's say your grandmother gives you and your brother $100,000 each as a gift both of you now think that you are young and don't need the money now so you decide to invest it for the long term your brother does research and he finds a company that charges a 1% fee and pays 11% interest however you don't do
• 31:00 - 31:30 research and you invest with a company that charges a 2% fee and also pays 11% interest let's fast forward 30 years and see how the 1% difference in the fees impacts your earnings after 30 years your brother's total earnings will be around $1,744,000 but your earnings will be $1,326,000 as you can see everything is the same
• 31:30 - 32:00 but the 1% difference in the fees leads to $418,000 fewer earnings compared to your brother in other words you lose $23.9% of your earnings because of a 1% difference in fees lesson number 34 spend money to look good don't judge a book by its cover is a nice quote but in reality people judge
• 32:00 - 32:30 you based on your appearance how you present yourself impacts how you feel about yourself and also influences what others think of you let me share an interesting story at a supermarket there were two sets of grapes the first was priced at 15 cents a pound while the second was packaged in polyethylene bags and marked $2.35 the person at the weighing station explained that the only difference in price was the bag when you're properly packaged you make a stronger impression
• 32:30 - 33:00 and even increase your value in negotiations lesson number 35 identify your latte factor according to David Bach regardless of the size of your paycheck you probably already make enough money to become rich a lady who attended the author's seminar complained that she was barely surviving by the end of the month so how could she become rich after examining her expenses the author found out that this lady spent around $10 every day on coffee and snacks before lunchtime after some
• 33:00 - 33:30 calculations the author explained that if she invested $5 a day with 10% yearly return she could have $1.2 million by her retirement this lady had to change her latte lifestyle now you might think that this doesn't apply to you because you don't waste money like her the point is we don't realize how much we waste money on little things your latte factor is probably not a latte but it is the
• 33:30 - 34:00 money you waste like eating out every day or cigarettes unused subscriptions or maybe even a second car that you don't use find your latte lesson number 36 how much should you save for example when I was studying at the university I was also working in a company since I was a student I could stay in a dorm in a shared room and eat at the university cafeteria quite cheaply this meant that I could easily save 50% of my income
• 34:00 - 34:30 however once I got married and moved to a flat I could only save 3% at most this made me feel terrible because I couldn't save as much as I used to and that is one of the biggest problems with sticking to a fixed saving rate if life is dynamic then why should the saving rate be static that is why the best saving advice is save what you can if you're single and can save 40% then save
• 34:30 - 35:00 40% if you are married and have kids and can only save 2% then save 2% if you follow this advice then you will experience far less stress and far more overall happiness lesson number 37 pay off your debt how long will it take to pay off your car loan for your studies credit cards even that loan from your brother first list them down in a table in the item section
• 35:00 - 35:30 write what your debt is total payoff is the remaining balance to pay off your debt use this to rank your debts from smallest to largest the debt with the smallest balance will be on top under minimum payment write down your monthly minimum payment for example your credit card has a balance of $3,000 with a minimum payment of $200 student loan balance $10,000 minimum payment $300 car loan balance $20,000 minimum payment
• 35:30 - 36:00 $500 second use the debt snowball method let me explain let's say you earn $5,000 a month from that deduct your basic expenses like food rent and bills let's say you spend $1,000 on that now you're left with $4,000 then pay the minimum on all debts in this example the total minimum payment for your debts is $1,000 you now have $3,000 left use all remaining money to pay off the smallest debt first in this case your credit card
• 36:00 - 36:30 by next month the credit card is gone you no longer have to pay $200 per month for your credit card anymore what's left is the student loan and a car loan repeat the process until all debts are paid off to pay off your debt faster find ways to earn extra money work overtime get a side job or sell items you don't need the key here is to live debtree but here's one tricky part your
• 36:30 - 37:00 mortgage how on earth can you live debtree with a 35-year mortgage leave that out of your list for now why it's too big it may discourage you lesson number 38 why you can't quit after several failures i personally know many people who have tried to create their own business but failed and eventually gave up after three or four failures it always amazes me how these people expected to be successful after just a
• 37:00 - 37:30 few tries giving up after three or four failures is like starting to go to the gym to get in shape but quitting after a few days because you didn't see any results if you want to get in shape you need to be consistent you need to change your exercise routine if it's not effective you need to try a different diet you need to try a different trainer until you find what works for you unfortunately people don't apply the same mentality when it comes to getting financially fit lesson number 39 to
• 37:30 - 38:00 retire early do work that feels like play there are three ways to retire first save enough money so that the returns from your investments provide a steady income every year that is more than enough to cover all your expenses second cut your expenses to almost zero like living as a monk and third do something you love so much that it doesn't feel like work anymore in the third case imagine kids building with Lego blocks for hours they're completely
• 38:00 - 38:30 absorbed having so much fun they forgot to eat lunch then imagine they get paid for it that's early retirement doing what you love because it feels like play you work not because you have to pay the bills but because you love your work so much you want to do it all the time what matters is that you're living today as you wish instead of putting off your desires for when it's financially possible lesson number 40 become the
• 38:30 - 39:00 best at what you do to earn high pay become exceptional at what you do and watch opportunities chase you instead imagine this you're the world's top deep sea diver you are brave enough to dive deeper than anyone else one day someone discovers a sunken treasure ship they can't reach who are they going to call you look the person who found the treasure got lucky but that kind of
• 39:00 - 39:30 blind luck is rare you on the other hand become lucky because you create your own luck by becoming the best at what you do most people wait for luck the smart ones create it by becoming exceptional