Archives for March 2017

I’ve got a lot of hard proprietary data on why the rich are rich and why the poor are poor. Some of the research I’ve gathered centers around the decision-making process of self-made millionaires.

What I found is that self-made millionaires don’t make gut decisions. They don’t “trust their gut”. They mull their decisions over, sometimes for weeks or months, before making them. During this “mulling over” process, they seek out experts, other successful people, business partners or associates, trusted employees and close family members or friends. They are obsessed with gathering as much feedback information as possible before they make a decision. Each person’s feedback is like a puzzle piece. Those puzzle pieces are then carefully assembled to help self-made millionaires see a clear picture of the right course of action.

Once the self-made’s have their clear picture, they make a decision and then take immediate action. So, it might seem to the untrained observer, that quick actions imply quick decision-making, or gut decisions. My research says, not so.

Often, gut decisions turn out to be the right decisions. Particularly for successful people who have been around the block. But just as often, gut decisions can take you off a cliff.

Elon Musk was one of those who was forced to go right when he wanted to go left. PayPal was developed and launched as a money transfer service at Confinity in 1999, funded by John Malloy from BlueRun Ventures. In March 2000, Confinity agreed to merge with X.com, an online banking company founded by Elon Musk. Musk and Malloy reached an impasse on the direction of PayPal. Musk’s gut told him PayPal’s business model was too limited. He wanted PayPal to become an online bank. The PayPal CEO and PayPal VC investor believed that was way beyond the scope of PayPal. Musk would not relent and was forced out. Musk held on to his PayPal stock. PayPal’s “limited” business model eventually went on to enormous success and was purchased by eBay. Musk received a windfall of $200 million from eBay for the stock he owned.

Like Musk, many of the self-made millionaires in my study acknowledged that some of their most critical decisions, the kind that can make or break a business, were forced upon them by others. Their gut told them to go left but their banks, business partners or spouses made them go right. Sometimes our gut decisions are often bad decisions.

All individuals, by virtue of their genes, are born with certain talents that set them apart from others. Finding your inborn, innate talents requires experimentation. Only through experimentation will you discover what those talents are. 

The brain communicates to us the existence of an inborn talent by infusing us with passion when we engage in the activity. Passion acts like a catalyst in driving us to continuously engage in an activity we were born to do. Passion allows us to focus like a laser in perfecting our skill. Passion gives us the emotional energy that enables us to engage in our inborn talents for many hours every day.

Becoming proficient in an activity can take many years, decades or even a lifetime. Innate talents must be fully developed and developing any innate talent can take many years of dedicated practice. Eventually, those who find and perfect their innate talents become experts. And experts are always paid more than others. 

If you are passionate about an activity, if your passion for doing something is WHY you engage in that activity, then you will eventually become expert in that activity because your passion for the activity will motivate you to engage in that activity even when it does not produce immediate wealth.

But when your engagement in any activity is wealth-driven, you’re on the wrong track. When wealth is the primary driver, you will eventually abandon any activity that does not immediately reward you financially.

If your passion is not in the activity but, rather, in the potential wealth that activity can create, then you will cease engaging in that activity when it fails to produce the wealth you expected. You simply will not devote the time that is necessary in developing skills in any activity that is wealth-driven and not passion-driven. This means you will never become expert in any activity that does not produce immediate wealth or the wealth you expected. 

You can simultaneously have a passion for engaging in an activity and a desire to monetize that passion-driven activity. But, the passion for engaging in an activity must be the dominant reason for engaging in the activity. Passion for the activity must be the #1 reason why you engage in the activity so that you will persist in the activity even when there is no money to be made from it. Finding your passion, not wealth, should be your main goal.

Know thyself and thou wilt know the universe – Pythagoras

Each individual has certain innate talents that they are born with. These innate talents are your superpowers. But unleashing your superpowers will only get you half way down the field. If you want to score in life, you need to get all the way down the field.

What prevents you from getting down the field and scoring are your weaknesses. Weaknesses are your kryptonite. They will drag you down in life.

Successful individuals devote their lives to improving and perfecting their superpowers. But they also devote their lives to avoiding their weaknesses. They stay far away from kryptonite. How?

Those who excel in life know their strengths and their weaknesses. They know their superpowers and they know their kryptonite. Then they outsource those things they are not good at by finding others whose superpowers are their weaknesses. Like an orchestra, when you find individuals who can play certain instruments you can’t play, together, you can make beautiful music. 

Self-assess and then partner with individuals who have certain strengths you lack. When you do, success comes much easier. When you don’t, your weaknesses will offset your strengths and hold you back from success.

Exploit your superpowers and avoid your kryptonite.

Habits are amazing. Habits save the brain from work, help conserve brain fuel and allow you to perform tasks without thinking.

There are many shades of habits. Each of your habits affects different parts of your life. They can put you on autopilot for success, failure, good health, poor health, wealth, poverty and happiness or unhappiness. That’s how important habits are. If you want to change your life, you must change your daily habits.

In my research, I uncovered five Rich Habits that are transformational. These habits enable you to reinvent yourself, altering your life circumstances in the process:

1. Pursue a Dream – The self-made millionaires in my study forged the habit of taking action on their dreams. Everybody has dreams, but few actually take action on their dreams. You need to develop the habit of taking action on your dreams.
2. Build Goals Around Your Dream – Goals are the construction team for each one of your dreams. Successful people in my research build individual goals around each one of their dreams.
3. Forge Habits Around Each Goal – You process the achievement of your goals by building daily habits around each goal. These daily habits allow you to effortlessly achieve your goals.
4. Daily Growth – In order to change, you have to grow. Growth involves adding or improving skills and knowledge. You should devote about an hour every day to growth.
5. Find Apostles – Apostles are individuals who share your dreams, goals and desires. They are like-minded individuals who think like you think. In order to change you must find apostles who are seeking the same change you seeking and then associate with them regularly. These like-minded apostles will infect you like a virus, spurring you on to change into the person you need to become in order to change the circumstances of your life.

There are two groups of poor people. The first group are individuals who simply do not make enough money to meet their needs. The second group are individuals whose income exceeds their needs but who, nonetheless, spend more than they make.

According to Census Bureau data, there are approximately 46 million poor people who cannot meet their needs. They are forced to rely on assistance in one form or another from federal and state governments.

According to this same data, there are approximately 30 million other people who make more than they need but who are, nonetheless, one paycheck away from poverty. These individuals engage in something called Want Spending.

Want Spenders spend more money than they make on their wants. They surrender to instant gratification, eschewing saving in order to buy things they want now: 60 inch TVs, nice vacations, expensive cars, bigger homes and jewelry. Want Spenders routinely gamble away part of their income. They also spend too much money at bars and restaurants. Worse, they incur debt in order to finance their standard of living.

Want Spenders create their own poverty. They are undisciplined with their money. They have been brainwashed by advertisers and a consumerist society into buying things they do not need.

When Want Spenders are no longer able to work due to old age, they live out the remainder of their lives in abject poverty. They become dependent on family, friends, the government or the charity of others. Their poverty is the byproduct of a Poor Habit known as Instant Gratification.

Want Spenders rationalize their Want Spending in a number of ways:

• I’ll make more money in the future
• I’ll get a better paying job
• I’ll get a second job
• I’ll get a raise
• I’ll get a bonus
• The economy will improve and I’ll make more money
• I’ll get more clients or customers
• My children will take care of me in retirement
• I’ll move to Florida, or some inexpensive place, and live off Social Security

Most people in society do not make a lot of money. A fortunate few have the Rich Habit known as Delayed Gratification. These individuals live within their means and do not engage in Want Spending.

These individuals are disciplined savers. They diligently save at least 10% of their income, paycheck by paycheck, month by month, year by year. Their savings grow either by the power of compounding or by prudent investing. When they retire, they live out the remainder of their lives financially independent, not reliant on financial support from others.

If you’re like most people, you don’t make a lot of money, but the money you do make exceeds your needs. You have a choice on what you do with this Excess Money. You can engage in Want Spending, live for today, and rationalize away why you do what you do with your Excess Money. Or, you can take control of your financial life, by saying yes to saving your Excess Money and saying no to Want Spending.

Ever find yourself thinking Is it Friday yet?

One of the hallmarks of the wealthy is that they like or love what they do for a living. They look forward to each day. They look forward to work. They are passionate about what they do for a living.

Eighty-six percent in my study said they liked their job. Seven percent said they loved their job. Those who like or love their jobs make more money, accumulate more wealth and are happier than those who don’t like or love what they do for a living.

According to a 2012 survey conducted by “Big 4” accounting firm Deloitte, 80% of those surveyed did not like their jobs. In another survey conducted by Gallup in 2013, 63% of the 230,000 employees in the survey said they were unhappy with their jobs.

The reasons you hate your job:

• Zombie Work – Your work is not challenging. You feel like you are doing the same thing day in and day out. Your work is boring. The people you work with are boring.
• Hitler is Your Boss – You have a tyrant for a boss. These types of bosses are demanding, selfish, arrogant and have little interest in your opinions or feedback.
• Poor Management – Those you report to are not good mentors. They are not interested in helping you grow and improve as an individual. You feel like a ship out in the ocean at work.
• Destructive Feedback – The feedback from others you work with is destructive feedback and not constructive feedback. Destructive feedback is focused on your flaws, errors and mistakes. You learn nothing from destructive feedback and do not improve or grow as an individual.
• Negative Environment – Those you work with gossip about each other. They see only problems. They complain, criticize or condemn other employees including their supervisors.
• Low Wages – You make barely enough to survive and this negatively affects your personal life. You can’t pay your bills. You can’t take vacations. You can’t afford decent housing or a decent car to get you back and forth from work. Every day is a financial struggle. Oftentimes this may be the result of being in an industry that is in decline.

So, if you catch yourself asking Is it Friday yet? it’s because you don’t like your job. If you don’t like your job, you’ll never be happy and you’ll eke out a living, living paycheck to paycheck.

Finding a job that you like will make you happy. Plus you’ll devote more time to a job you like than to one you hate. As a result, you’ll do a better job and the extra effort you put into doing a good job will be reflected in the form of higher wages. The people who perform the best get paid the most and those who perform the worst get paid the least or find themselves hunting for a new job.