Prosperous
We want people to live a life of prosperity, a life where we have access to the resources we need when we need them.
Some years ago, I heard Gay Hendricks say something that really stuck with me as just the truth:
You'll never have enough money to buy all the things you don’t really need.
And you’ll never have enough time to do all the things you don’t really need to do.
As we saw, we all fall into the trap of thinking that if only we had this or that material thing, then we’d feel … fill in the blank. Good enough. Okay. Safe. Worthy. Loved. Whatever it is.
It can be a house, a car, money in the bank, a flat screen TV, a spouse, a lover, a child, really anything.
The Dream Car
For me, it was a car. A BMW Z4. I dreamt about that car for over ten years.
In 1999 I moved to the US and got a job for a software company named ArsDigita. They had an office in Berkeley where they had a BMW Z3, that I got to drive when I visited.
It was such a great car. I loved it. Driving up and down Highway One along the California coast with my hot girlfriend. It made me feel so powerful, strong, free, masculine. I’d arrived. I’d made it. I was the man!
After moving back to Denmark, I dreamt of that car for years. In Denmark, I started a business, and for the first couple years it went really well. But then I started to struggle financially. In Denmark, cars are marked up by about 180% in taxes and registration fees, so buying my dream car was way out of my reach. New, it would be around $220,000 US after you’ve paid the world’s highest marginal tax rates. Impossible!
When I was finally able to get back to the US in 2011, one of the first things I did was buy a used BMW Z4, the current model of the same car.
Space gray! So fast! So beautiful!
I remember driving down Highway One with my new hot girlfriend, with the top off, slowly passing two young guys on their skateboards. One yelled out “nice car!” The other yelled out “nice girl!”
I felt on top of the world!
Every morning I’d walk out of the motel we were staying at (we were pretty broke, despite the fancy car … the car was part of an investment for my E-2 visa application). I’d go down to the car and just take in the beauty of that thing.
Every time we came out of a restaurant and were walking towards the car, I’d look around the parking lot and confirm that there was no other car in the entire lot that I’d rather own than mine. It was so cool, so sleek. I was beaming. I felt like a million bucks.
Then one morning, exactly two weeks to the day after I took possession of the car, I came down the stairs from our motel room, and something really strange happened: nothing!
I looked at the car, and I didn’t feel that jolt of electricity shoot up through my body.
“That’s weird,” I thought, and I went back up to the room, and back out and down the stairs.
Same thing.
No jolt.
I blinked and looked at the car again. And it was … just a car!
A nice car. A beautiful car.
But just a car.
A piece of metal on wheels that would transport me from place to place. Making nice sounds, feeling good to drive.
But it was still … just a car.
It completely shook me.
I’d dreamt of this motherfucking car for over ten years! I finally got it. And the feeling lasted for just two damn weeks! Come on, man!
I figured it wouldn’t last forever, but could it have at least lasted for a year? A month even?
Two weeks. That’s all I got.
Money Only Solves Money Problems
It taught me a really important lesson: No material possession will ever fill up an emotional void. It cannot. It can mask it for a short time. But emotional voids need to be filled from the inside, not the outside.
When it comes to prosperity, this is a really important thing to keep in mind. It’s a feeling. Money has little to do with it.
We think that we will be happier when we have more money. We think we will make other people happy by giving them more money. We won’t.
Billionaires are often among the most miserable people in the world.
I’ll never forget an email I got in 2010. I’d started blogging (remember blogs? they used to be a thing!) about my personal growth journey, and this guy named Eric from San Francisco randomly emailed me one day.
He told me his story of how he’d co-founded a mobile social gaming startup, and they’d done really well, to the point where they’d now received an acquisition offer for $300M.
And yet he was more depressed than he’d ever been in his entire life.
Why?
Because his entire adult life he’d fantasized about and worked towards this day. The big payday. The big exit. Make a truck ton of money and be set for life. Sip margaritas on the beach. You’ve made it. You’ve arrived!
And now that it was within reach, he realized he was still stuck with himself.
All of his feelings, all of his fears and insecurities, his low self esteem. They
were all still there. The money solved none of this.
And now he was even worse off, because his previous strategy for how he thought he was going to solve these problems had proven to be a mirage.
And that freaked him out.
Problems + strategy = hope.
Problems + no way out = misery.
Money only solves money problems.
They don’t fill your emotional void.
You can use them to help solve emotional problems. You can buy books and therapists and coaches and go to events. But you’re the one that has to do the actual work.
Like my mentor Gay Hendricks says: Money can buy you a ticket to outer space. For a mere $450,000, Richard Branson will take you there. But no amount of money will take you to inner space. Others can help, but you have to make the journey yourself.
So when it comes to wealth, we have to put it in its proper context. It’s about a feeling of abundance. Of having faith our needs will be met. In 2014, I went to Burning Man, and one of the things I remember is the phrase “the playa provides.” It means to not worry about having your needs met and to trust that when you need it, someone will provide it for you.
Whether that is indeed “true” or not, believing it makes you more open to seeing and receiving opportunities for others to provide for you. Just like people who consider themselves lucky are more likely to be lucky because their eyes are more open to the luck that’s available to them, which in turn makes them more lucky.
How to Build Wealth
Now that we understand the role that wealth rightfully plays in life, let’s look at how to create financial wealth.
And as is often the case, the answer is simple, but not easy.
You make money by providing value to other people in a form that they’re willing to pay for.
That’s the foundation of everything.
The question to ask yourself is: how can you use all your talents and skills and gifts to provide as much value for other people as possible, in a way that feels effortless to you, that brings you energy and joy, that makes you feel alive and gives your life meaning and purpose?
This is the big question, and the answer will naturally change over the course of your life.
In the beginning, you need to acquire skills.
You go to school, you read books, you let your curiosity lead you to study topics on X, YouTube, and other online platforms, you find other people with the same interests and learn from and with them.
And you get a job. A job is often the fastest way to learn. My first job out of college was for a US-based company named ArsDigita, the company that had the BMW Z3. My first day at work was with Branimir at the Siemens office in Zagreb. Long story.
I learned more actually useful skills in the first two weeks with Branimir than I did through five years of computer science at university. Seriously.
Minimum Wage
This is why I think minimum wage actually hurts young people who want to enter the job market.
Because at the beginning, you simply might not have the skills to make you worth $12 or $15/hr or whatever the minimum wage is. I’m sorry, but it’s afact.
Instead of getting a job at $5/hr or $10/hr so you can learn and increase your skills to make you worth $12 or $15 or $20 or $30 or $50 or $500, you’re shut out of the job market altogether, and it’s up to you to study on your own. With no pay. And we know most won’t do that.
Meanwhile, it incentivizes companies to automate the lowest paying jobs. Once built, a machine has no sick days, needs no overtime, there’s little turnover, no training, no unions. It’s much better for the employer.
So even though we institute minimum wage out of compassion, it ends up hurting the people we want to help.
Same as affirmative action and other ways we meddle with the market.
It’s a pure “hero” role in the drama triangle. It makes you feel good at the expense of the very person you wanted to help.
You’re unknowingly sacrificing the weakest among us so you can feel like a good person.
I’m not judging you. I know you want to do good. But we have to do things that are actually good, not just things that look or feel good.
Please. Let’s do better.
Marketable Skills
I was fortunate to acquire the highly marketable skill of programming early on in life. My dad taught me. He taught my brother, too, but I was the one that really caught the bug, where my brother more caught the bug of playing computer games with his friends. We’d sit in a room, him and a friend or two on their Amiga computer, and me alone on my PC, writing software.
But most people won’t have a specialized skill like that, and so they need to find some way to trade time for money. Store clerk, waiting tables, warehouse packer, handyman, assistant, whatever.
The purpose is not just to make money. The much more important purpose is to acquire skills that increase your market value. Follow your passion and your curiosity. Do you want to be a leader, a technician, a communicator? There’s a million different directions to go.
The important thing is to find something you’re naturally passionate and curious about and pursue that. Something you’ll want to study on your own time. If you haven’t found it yet, keep looking.
If you feel depressed or hopeless, then that’s the first thing you need to address. It’s solvable. The solutions are out there. Look for them.
This is you investing in yourself. You’ll continue to invest in yourself for the rest of your life, so better get to it.
Financial Freedom
Eventually you’ll want to get out of the game of trading your time for money.
You can do this by starting a business, by getting into a royalty agreement, by getting equity in a business, or by saving and investing the money you earn from your work.
No matter how much money you make, you’ll want to get in the habit of saving. Take a percentage of your income, and immediately put it into a savings account, ideally in another bank, so you never see it. Every once in a while, you transfer that money into some form of investment.
The goal is to accumulate enough money that an annual return of 5% will pay for all of your living expenses. At that point, you have achieved financial freedom. As long as you keep expenses in check, you’ll never have to worry about producing an income again.
If you live on $10,000/month, that’s $120k/year. That means if you have savings of $2.4M, then you can live off of the return alone, so long as your expenses stay below $10k/month.
If you live on less, it’s obviously a lot less.
Why 5%? Because that’s a return that you can typically get with a very low risk, such as treasury bonds or money market accounts.
We have to make sure this is attainable for everyone.
I’ve far from been a great steward of money myself, which is why I’m so passionate about making sure as many people understand the game as possible. Nobody really taught me how this works.
I used to dream of having so much money I’d never need to look at a budget ever again. Then one of my friends sold his company for $200M and talked about the importance of having and staying within a budget, and I realized that I’d been lying to myself. There will never be a time where you want to not live with a budget for your personal finances. Get used to it and learn to love it. Discipline is freedom, not punishment.
Risk Profiles
All investments involve a risk and a potential return. There’s often but not always a correlation between risk and return. There’s also a question of timelines.
Stocks have over long enough periods of time always performed well. It’ll go up and it’ll go down, but if you invest in an index fund and you don’t sell, you will historically have done well over the long term. Past performance is never a guarantee of future returns, but it’s all we’ve got, as we haven’t yet learned to see into the future with certainty.
The younger you are, the more risk you’ll typically want to take, because yo won’t need the money for a while, so you can ride out the downs in the market, and you have time to make up for it if you do incur a loss. As you get older, you typically want to take less risk for the same reasons.
The magic of investing lies in compound interest.
If you can get a 7% annual return, as is typical for the stock market, when adjusted for inflation, after ten years, your return is not 170% (10 years x 7%) but rather 197%. You end up with almost double your money in ten years. That’s pretty good. The higher the return, and the longer you stay in, the more it compounds.
Math Never Lies
This is the path of wealth creation. No amount of wishing it to be different will change this.
Find a way to scale your income independent of your time. Build up enough savings that you can live off of the returns.
When I hear about families that wouldn’t be able to pay their mortgage or buy food if they lost their paycheck, I feel empathy. That’s terrifying.
It’s also their responsibility. They’re simply living beyond their means. If they had more money, I bet they’d spend that money too. It’s a mindset.
If you’re living off salary income and you don’t own a business, you have to find a way to save money. It doesn’t matter how little money you make, it doesn’t matter how little you save. Even if it’s just a dollar a month. Get in the habit of saving.
Instead of it feeling like denying yourself this nice thing you want, think of it as investing in yourself. It’s self love.
Money Mindset
Poor people are poor because of their beliefs, not because of a lack of money. The mindset is what causes the lack of money.
Giving a poor person more money doesn’t change their mindset. It will not make them rich. They’ll find a way to spend the money, and they’ll still be poor. It’s a mindset issue. Trust me, I’ve been there.
The unconscious belief might be that I’m not worth having money, so I need to give it away as fast as I can. I’ve had that for most of my life.
It might be that I need something I don’t have (and maybe can’t afford) in order to feel good enough or to fit in or to feel safe. I have that too.
It might be a belief that you’re broken somehow, and having this thing would fix it. I’ve been there too.
You might have a belief that being rich is bad and that money is the root of all evil, and so of course you’ll want to get rid of it.
No matter what the set of beliefs, the beliefs are what causes your financial situation. Address the beliefs, and the wealth will start to build.
I’m not saying any of this to shame poor people or because I don’t have compassion. I do. I’m saying this from a place of love.
In order to solve poverty or inequality, we have to look the real problem straight in the eyes.
It’s not their fault that no one has told them this straight and no one has taught them how to master money. But it is their responsibility to address it.
Just like your health can never be the government’s or your doctor’s or anyone else’s responsibility, so your wealth can never be anyone else’s responsibility, either. It’s yours.
And that’s powerful. It means you’re the creator of your life, the author of your life. It puts you in a position of power, not victimhood.
Feel the power. Own it. That’s freedom.
Why Welfare Never Works
The problem with any welfare program is that they always implicitly incentivize the exact outcome that they’re looking to address.
Take the SNAP program, aka food stamps. To be eligible, you currently have to make less than $3,000/month and have assets below $2,750. Sounds compassionate and good. We don’t want people to go hungry. What we’ve just done, though, is to create an incentive for people to make sure they don’t earn more than $3,000/month and to not save or invest.
How is that a good thing?
I get that we want to help people in need. But when you create a government system like this, it has to have fixed rules, and it will be managed by people with no emotional investment in the people that receive the money.
The government’s management of the program will be inherently inefficient and wasteful. You have to pay administrators to administer it. They’ll do it imperfectly. It all adds to the waste.
So for every dollar you take from one person to give to another you’re now wasting some of it and incentivizing the recipient to stay needy.
What if instead we reduced the government budget to, say, less than 10% of the total economy, and let individuals handle this? Humans are naturally compassionate. Churches and other religious institutions have always been great at providing for the needy. Local organizations of all kinds too.
But then, instead of a nameless faceless wasteful bureaucratic organization running it by taking other people’s money by threatening violence, which is what taxes are, it could be people voluntarily donating their time and money or food or other items to take care of the needy.
An added benefit is that now there would typically be a real person there with a real relationship to the recipient who could look after their true interests and support them in becoming independent of the need for assistance.
The purpose of helping others is to free them from the need for help.
Not to keep them enslaved and needy.
Normal people can and must take care of themselves.
Let’s make people normal again :)
