“To earn more, you must learn more.” – Brian Tracy
There are two reasons why you’re not wealthy:
One is the way that you think about money.
Or, more specifically, your mindset when it comes to money.
The second thing is your habits.
Wealthy people have totally different habits and beliefs.
Over the last four years, I have expanded my net worth by 10x and quit my corporate job to retire with passive income.
I really want you to do the same and grow your wealth.
I want you to think differently about money and to be able to achieve your financial dreams.
Today, I’m going to show you how!
Harmful Beliefs About Money
Harmful beliefs can keep you from achieving your financial dreams.
Really, there are two things:
One is our beliefs.
The other is our habits when it comes to money.
These things go hand-in-hand.
If you have the wrong beliefs around money, you’re not going to develop wealth.
You’re not gonna attract it.
You won’t be able to create it.
You won’t be able to keep it.
Whether you have it or not, wealth is a mindset.
It’s who you are.
There’s a great book called Mindset: The New Psychology of Success by Carol Dweck.
The book compares two things:
The idea of a fixed mindset versus a growth mindset.
You can see on this chart that the fixed mindset is limiting.
The fixed mindset avoids challenges and ignores feedback.
People with this mindset are threatened by other successes.
They have a desire to look smart and give up easily.
The main idea of fixed abilities is nothing ever changes.
You’re wealthy or you’re not.
You’re gifted or you’re not.
You’re skilled or you’re not.
When you look at the left-hand side of that column, it says something totally different.
The growth mindset is freedom.
People with this mindset persevere in the face of failures.
Effort is required to develop new skills.
They find inspiration in other successes.
They accept criticism and have a desire to learn.
I want you to think about this — about yourself.
Are you someone who has an open mindset?
Someone that’s really willing to learn something new?
I think you probably are because you’re reading this post!
But we all need a reminder that we’re not victims of circumstance.
We can change and we can grow.
This is really, really important when it comes to wealth.
Brian Tracy once said: “To earn more, you must learn more.”
And it’s true!
People I respect that earn a lot are typically reading all the time.
They’re always trying to get new information.
So good job reading this post because it’s going to help you get there!
Now I want to talk about three toxic wealth beliefs.
These are things that will actually keep you from becoming wealthy.
1. Money is Evil/Rich People are Evil
This is a mindset I used to wrestle with.
I thought wealthy people took so much more than everybody else.
If you think about wealth in this mindset, it’s like a pie.
The pie is fixed and there’s only so many pieces to go around.
If this wealthy person has something, it means I don’t.
So if you see someone with a really nice car or a nice house, you might think:
Oh man, I wish that was me.
You have to change your mindset.
This is a scarcity mindset.
But an abundant mindset basically says:
Hey, that’s great that they have all that!
Maybe we can do a deal together.
Maybe I can learn from them.
Maybe I can grow.
The pie can actually get bigger.
This is one of the amazing things about wealth and money in general:
It is not a fixed supply.
We can create more wealth by helping each other out.
Let’s talk about the idea that money is evil.
I was raised in a religious household with the idea that money is evil.
There’s a quote I learned that called the pursuit of money evil.
But really what the quote says is the love of money is the root of many kinds of evil.
If you put money ahead of people or your values, then that’s a problem.
Instead, think of money as a tool.
Money can help people.
It can be used to help fulfill your financial dreams as well as the dreams of others.
Money can be a very, very positive thing.
If you feel like rich people or money itself is evil, then you will never become wealthy.
2. I Didn’t Come from Money
There is a very prevalent toxic belief that you’ve got to come from money to be wealthy.
Picture that age-old image of someone born with a silver spoon in their mouth.
This mindset can lead to becoming a victim.
You might think that if your family doesn’t have wealth, you’ll never have it.
That will never change.
That’s just the way it is.
It’s the really down in the mouth type of sad.
Well, Fidelity Investments actually did a study on millionaires.
They found some really shocking results.
They found that 88% of millionaires are actually self-made.
They didn’t come from wealthy families.
They were able to become wealthy themselves.
That’s almost 90%.
Nearly 9 out of 10 millionaires became that way on their own.
Even with these findings, you can stay in a limited state of mind.
It really comes down to what Carol Dweck said.
You have to change that belief.
You can learn more, you can earn more, you can get there.
3. Hard Work Equals Wealth
We all know somebody that works super hard.
They work 60-80 hours a week.
We think that by working hard, we are going to become wealthy.
That’s just not true.
It’s not that you don’t have to work.
You shouldn’t work hard.
Hard work alone does not lead to wealth.
What you have to do is try to find a way to work smart.
The lightbulb will turn on at some point.
You’ll find an opportunity to work hard and work smart.
You can make money at your job, or your business, and then put it into passive income.
That’s how true financial freedom works:
You have become more passive.
It’s not just hard work that gets you more money.
It’s working smart.
Effort is important, but it has to be the right type of effort.
There is this belief that everybody has to be efficient.
Every moment, every day has gotta be full.
There’s something different than efficiency. It’s called effectiveness.
The idea that you’re doing the right activities.
You shouldn’t be busy filling the day with every kind of thing.
You have to do the right activities.
(Psssst. You’re doing the right activity by reading this post!)
Bad Money Habits
What are bad money habits?
They are things you’re doing that could be keeping you poor and preventing you from becoming wealthy.
It’s not just enough to have certain beliefs about money.
What’s important is the actions we’re taking.
If you’re taking actions that are not headed the way you say you want to go, you’re not living a consistent life…
You won’t become wealthy.
Let’s take a closer look into some specific bad habits.
1. Spending Versus Investing
Jim Rohn is quoted as saying: “Poor people spend their money and invest what’s left. The rich invest their money and spend what’s left.”
What matters is the order you invest and spend.
The rich invest first, then they spend what’s leftover.
The poor will spend, spend, spend, and if there’s leftover, they’ll invest that amount.
That might sound very subtle, but it’s actually really important.
It’s all about priorities.
What do you do first?
If you can grow your investments or your income, if you can live within your means, you’re going to become wealthy over time.
This is because you’re putting things in the right order.
Bad habits for poorer people typically include:
- More debt
- More cars
- Buying a house
- Fancy trips
A lot of debt is used to get these things.
These are the things that keep people poor.
It’s not that you should never go on a trip or buy a new car!
I just recently bought a new car.
I’m going on a trip to Iceland soon.
I actually don’t own a house; I rent a house and have a bunch of multi-family real estate.
You might be asking: Why would you do that?
It’s because I’m investing first.
I’m putting almost all of my resources into investing.
Then, on the backside of that, I can spend what’s left over.
If you have the order incorrect then you will continue to stay poor
2. Don’t Take Risks
If you’re someone who loves certainty, like you have to keep things the way they are, know you’re never going to get where you want to go.
Let’s take a look at a very safe, secure job.
Government jobs are known to fit this category.
Typically they come with good hours, good pay, and a lot of benefits.
There’s not really much upside when it comes to wealth, right?
The strong need for security is actually going to keep you from becoming wealthy.
You can work for the government and then invest if you want!
But if everything has to be a high degree of certainty and there’s no upside, you’re never going to get where you want to go financially.
It’s said that the only certainty in life is death and taxes.
With taxes, there is some option on how much you will pay.
We did a video on how we significantly reduce taxes for individuals through something called cost segregation, which you can check out here!
3. You Don’t Network
A really bad habit is not meeting new people that are doing different things and have different ideas.
I typically go to at least 12 conferences a year.
I go to meetups.
I go to mastermind groups that I pay to be part of.
I get introduced to all kinds of different ideas and, the most important thing, I’m around other wealthy people.
I learned from them.
I learned what they’re doing and what they’re avoiding.
You can have every intention to be around people that are wealthy, but the idea is that you’re really out networking.
This is typically beyond your family.
The bad habits come from people who do not do this.
It’s really important that your actions match up with what you want.
In this last section, I’m going to go over the strategies I used to 10x my net worth.
I believe you can do the same!
I call these wealth habits.
1. Learn from Wealthy and Successful People
If you want to 10x your net worth, the first thing you’ve gotta do is learn from people that are wealthy and successful.
You gotta get around people that think differently and are at the next level.
This is the number one thing I would say you can do.
Get around people that are financially free and are living the life that you’d like to live.
How do you get around these people?
If you have wealthy relatives, definitely ask some questions.
But for those without wealthy family members: Go to local meetups.
Meetup.com is a great way to find events for investing, real estate, and more.
You can go to conferences.
I go to a lot of different things to really help me get around people that are very successful.
When you do find somebody that is wealthy, just take them to coffee.
A lot of successful people really like giving back.
They like trying to be able to help others on their journey.
You don’t want to be someone who just takes from them all the time.
You want to add value to them as well.
Jim Rohn once said: “You are the average of the five people you spend the most time with.”
For example: If you are overweight and all your friends and family are overweight, you might have certain habits of eating and inactivity.
If you want to get in shape, typically the best way is to get around people that are healthy.
You start going out to eat with them; try eating what they eat.
If they’re doing different activities, you can try those same activities.
Over time, you are influenced by the people around you.
This is the same with wealth.
Wealthy people have different habits.
The things they’re reading, the things that they’re doing, the things that they’re interested in, are typically very different from the interests of non-wealthy people.
Guys like Mark Cuban, Bill Gates, and Warren Buffet read two hours a day
That sounds insane!
The average CEO is said to read at least a book a week.
After hearing that, I made a goal for myself last year to read more.
I wanted to read 52 books.
I ended up reading 87.
There’s two ways I did it:
1. I read personal growth or investing books in the evening for 10-20 minutes at night.
2. I listened to audio books, particularly biographies, while I drove or worked out.
I love the quote from The Matrix where Neo gets up and says “I know Kung Fu” after new knowledge has been uploaded into his mind.
Just because you don’t know something now doesn’t mean you can’t learn it.
Be open to being around other people.
Learn from other people.
2. Start Low Risk Experiments
What is a low risk experiment?
In his book, The Dhandho Investor, Mohnish Pubrai talks about the idea of having a low downside.
So the idea is: Heads I win, so I can win big, but tails, I don’t lose much.
The loss is not exactly a parallel.
There are a lot of investments you can do by simply putting in a little bit of time and money.
If it goes well, the upside is huge.
How do you find those things?
On Fridays, during my old corporate job, I used to take afternoons off and go to Starbucks.
Thankfully, I had a job that was flexible so I could do that.
During this time, I would brainstorm all different ways to try to make money.
Could I bring cars in and try to find a way to resell them?
Could I wholesale commercial construction products on Craigslist?
I looked at my dental mouth guard and thought maybe I could manufacture mouth guards.
Eventually, I settled on multifamily investing.
What I want to get across with this story is the idea of giving yourself space to think.
Henry Ford once said: “Thinking is hard work, which is why so few people do it.”
You’ve got to give yourself space and time.
It’s not a high risk to think.
But in the meantime you’ll be able to pursue different opportunities.
You won’t get paid for a lot of these, but you’ll hopefully learn along the process.
Currently, I’m doing a flip.
I’ve never really done a flip before.
I have a buddy who runs a property management company.
He said they had a condo in the Los Angeles area that’s $550,000.
We’re gonna put $30,000 into it and try to sell for $725,000.
The idea is that we’ll be able to split and make a lot of money.
Hopefully the biggest risk is the amount of time we’re going to have the property, which is likely only a month or two.
At the time of this post, the market is pretty hot.
I look at that example as being a lower risk, but potentially high return, deal.
3. Save/Invest First
We continue to talk about his idea of saving and investing first.
The wealthy save and invest first, and then they spend what’s left over.
I want to give you a couple of examples.
Think about this Ricky Bobby quote: “If you ain’t first, you’re last!”
If you’re not investing first, then it’s never going to happen.
Let’s say you made $150,000 a year, and you were able to save $50,000 in that same year.
Now, I know what you’re thinking:
How can you save $50,000?
That’s a huge amount!
You cut your expenses.
You save money however you can.
If you can invest $50,000 each year over the next five years, and you’re able to get a 15% return per year…
You would end up with $437,000 at the end of five years.
This would be $65,000 per year in passive income.
Even if you stop investing, it continues to grow and pay you more.
If you’re concerned about how you get 15% per year, you can check out this video that talks about how to 17x your retirement returns by passively investing in multi-family.
Recently, I had dinner with Ken McElroy, who is just an awesome guy.
He told me a story about when he wanted to buy a new Ferrari.
He said he wanted to try to find a way to pay for it.
He has enough money to go buy a Ferrari, but he was trying to find a way to have an asset to pay for his luxury.
He ended up finding a billboard somewhere and fixed it up.
By renting out the billboard, he was able to dramatically increase his revenue by $3,000 a month.
I know what you’re thinking:
How does that exist?
If you’re willing to do these low-risk experiments and find deals, you could also have success.
With his extra $3,000 a month, Ken was able to go buy his Ferrari.
And over time, that $3,000 will continue to increase because it is an asset.
To end this post, I want to give you some encouragements:
You can do it!
You can get to where you want to go.
You can increase your net worth by 10x.
You can become wealthy.
You start by believing that you’re able to do it.
Change your actions, find wealthy people and learn from them, and make sure to save and invest first.
Now I want to hear from you!
What do you find is really keeping you from reaching your financial goals or becoming wealthy?
Leave us a comment down below.
And before you leave, make sure to check out our special report about investing. It compares the stock market to real estate, and it also includes how the pandemic affects your investment future.
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