1) Rely on One Person’s Decision. I used to live a life where one person could make a decision that could financially ruin me. In most cases, this person is a boss, manager, or executive. The detrimental decisions they can make are to fire us, lay us off, or replace our jobs with technology. We’ve all heard stories of this happening to someone, and it sucks.
To solve this predicament, we need to structure a life that doesn’t financially rely on one person’s decision. It starts with staying out of debt and creating a security fund, and ends with having a list of to dos if an unfortunate decision were to happen. Attaining multiple sources of income should be the goal as well. Millionaires have an average of 7 different sources of income.
Action Item: Create an idea list for 10 alternative sources of income.
2) Rely on Your 401(k). I used to think that having a 401(k) meant I could be lazy, and I was totally wrong. If 2008 taught us anything, it’s that a lot of “experts” don’t know what they’re talking about. We can look at history and make an educated guess about the future, but no one knows what’s really going to happen. Because of this, we need to invest in the only asset that we know for sure can increase in value, ourselves. By being healthy, surrounding ourselves with good people, coming up with ideas, and being grateful, we give ourselves the best chance of creating a life where we don’t need to rely on something out of our control.
3) Hoard Ideas. Some of the best ideas in the world are rotting away in people’s minds or notebooks. These hoarders are saving their ideas for themselves, which can work to a certain extent, but rarely lasts. If you want to quickly open the door to new opportunities, try giving your ideas away instead. Give them to your family, friends, co-workers, and companies. Below are some benefits I’ve experienced from giving my ideas away:
- Makes you feel good about yourself because you’re helping others.
- It’s practice creating a voice, speaking up, and selling.
- Shows that you’re a selfless person, making you easier to trust.
- Gives your idea a better chance of getting off the ground.
It’s a great way to expand your network, because people want to be associated with someone who has good ideas.
4) Take Out a Loan. The loan can be in the form of a home mortgage, student loan, car loan, small business loan, or credit card debt. To ensure we pay these loans back, we sacrifice one of two things: a large down payment or high interest rates. We fail to ask the following questions:
Do I really need a loan or is society making me feel like I need it?
Are there less expensive or less risky alternatives?
What will happen to this debt if I lose my income or the asset drops in value?
What is the opportunity cost of my large down payment?
This last question interests me the most, because it applies to buying a home. Setting the debate aside on whether a house is a good investment, the question I constantly ask myself is, what could I be doing with my down payment that that could provide me more satisfaction than owning a home? Having more financial freedom, starting a business, investing in an index fund or start-up, and flexibility to move/travel are a handful of things that come to mind. If we value things like this over the need to own a home, then renting is not a waste of money.
5) Educating before Learning. Our society has ingrained that we need to rely on educational institutions to pursue our dreams. I often hear,
“I will be happy if I can only get in to <insert college>.”
“I need to go back to school for <insert major>, so I can get a better paying job.”
“I’ve always dreamt of being an <insert job>, so I need to go to school for <insert major>.”
In most cases, getting the degree is the end goal, but what most people don’t realize is that the real world lies ahead. You need to make money. You need to use skills that they don’t teach in college like selling, negotiating, and creativity. Even worse, you need to pay off student debt, which is nearly $30k on average. Looking back, we often realize we’ve wasted 4 years worrying about grades, when we should have been focused on learning what we’re interested in. We’re stuck.
So what should we do instead? Learn. Read books, blogs, and Wikipedia. Listen to audiobooks and podcasts. Take courses for free on the internet. Click here for MIT’s free online coursework. We can do all of this for far less than the cost of higher education.
And what should we do after we learn? Create ideas, pursue interests, write, speak, connect, help, fail, succeed, and be free.