She pissed all over my new jumper the moment she was born.
The nurses promised me that my newborn daughter didn’t need a nappy. She just came out, got handed to me, and on with their shift they went.
My jumper still has the yellow stain. But it’s a beautiful stain. It’s the happiest moment of my life kinda-stain.
When you become a parent, you don’t want your kids to suffer. You do your best to make sure they have a decent life.
As a kid, I grew up in hard financial times.
We had our house taken away by the bank when I was 12. We experienced bankruptcy again in my late teens. Every time they came to take away the house, I cried. I just wanted my own bedroom to play music in.
Nothing fancy. One window, one door, a desk, and a bed. My parents tried but circumstances outside of their control ruined us (maybe that’s me making excuses for them — don’t know).
Now I’m going to make sure my 11 month old baby daughter never experiences poverty again, by doing these things:
Use passive income to pay your basic bills
A salary gives you an income. A business does too.
Most of us choose one of these options and then get on with life. The problem is both options need our time. We need to be healthy and show up every day.
Passive income is different. Your money earns money even when you’re not working. It sounds like a dream, and therefore, a pyramid scheme. It’s not.
When you own financial assets they can generate income. Just last week I got a $10,000 check from my investments.
I used the money to pay my mortgage and utility bills. That means the salary I pay myself each money from my business can be used on other things — like living life.
Money expert Condie Sanchez taught me a lesson I’m going to make sure my daughter never forgets:
The ultimate life hack is when your assets pay for your liabilities, and your salary goes to creating more assets.
Trading time for money isn’t the only way to pay your bills. Start small. Build your first passive income stream.
University teaches us to value the wrong thing
It’s weird how people are patient with university, but impatient when it comes to making money online or starting a business.
Business guru Alex Hormozi says:
People are willing to commit to four years of college — paying money & not making any — to get a job.
And yet fear four years of paying money & not making money to start a business. And the reality is — you can make money in a lot faster than four years if you actually start.
I’m going to teach my daughter that college isn’t the only way.
In fact, as the information age gets destroyed by AI, and the digital renaissance (that rewards true creativity/arts) takes over, college-educated people are likely to become the new poverty class.
What we must value is creativity and execution. And when you own an outcome you should get paid more than a by-the-hour pay structure.
The new way to live a moderately wealthy life looks like this:
Assets > Accolades
Cashflow > Credentials
That means you either:
- Become an apprentice to a master of real estate, venture capital, or private equity.
- Start a cash-flowing business.
Don’t risk all your money on one thing
This one is controversial.
Money gurus like James Altucher say “Don’t invest more than 1% of your net worth in any one deal.”
CEOs like Will Mendis say:
If you want to fix your life just stop treating it like an index fund. Every decision you make you should be all in on.
Don’t spread your bets, the kingdom of heaven isn’t achieved through diversification.
You should be systemically destroying optionality, every door you don’t take you should slam shut, every bet you make should kill you if you lose it, think about anthropic leverage, you don’t want to be alive to see a world that isn’t the one you bet on.
The truth I’m going to teach my daughter lies somewhere in the middle.
Too many people use a lottery mindset to invest all of their money/time on one big lucky break. This is stupid. It’s how you become delusional.
Black swan events — like a bat virus — can ruin your perfect strategy or plan.
At the same time, if all you do is take lots of small risks and avoid discomfort and fear like the plague, you’ll never get a decent ROI to live a moderately wealthy life.
The best option is to take some risks across a few opportunities. And make sure to invest enough time and money to work out whether it was a good decision. If it was then likely it’s worth doing more of.
Get a financial education as soon as possible
I learned finance at 26. It should be taught at age 6.
If you don’t understand how money works, you’ll never make money work for you. It’s cliche because it’s true.
The way to get a financial education is to read books from the greats such as Warren Buffett, Charlie Munger, Morgan Housel, Benjamin Graham, Peter Lynch, etc.
But reading by itself isn’t going to make you a millionaire.
One of the best ways I learned was by buying an index fund, owning one government bond, trading some Bitcoin, investing in a dividend stock, and owning a piece of real estate.
The good news is most of this isn’t hard or expensive. So get off zero knowledge and figure out how money and the economy work, that way you don’t have to work so hard.
Drive a modest car instead of a Paris Hilton truck
People buy cars and think nothing of it.
But a car is one of the most expensive and worst investments you’ll ever make. First, we often borrow money to get a new car. Then we forget we have to pay for servicing, gas, and insurance.
Within a year the car depreciates by a lot. Within 5 years that piece of metal is worth 50%+ less than you paid for it. It doesn’t take a financial genius to figure any of this out.
To top it off, luxury cars add on a huge “look at me” tax. It’s why famous nightmares like Paris Hilton drive luxury monster truck SUVs. A BMW or Mercedes is basically a Toyota Camry with plastic leather seats.
The badge costs you 3–4 times as much. Dumb.
The way you get around town shouldn’t cost you a big chunk of your life savings, that forces you to work harder than need be.
Cheapest option? Uber. Even cheaper? Bicycle. Cheaper again? Walk.
Stay away from people obsessed with luxury
Cars aren’t the only thing that have a stupidity tax.
People obsessed with luxury goods also suffer from this next disease. When I go to the shopping mall I see these beasts everywhere.
They have modest salaries but spend their days in the Gucci and Armani stores getting robbed blind by innocent guys/gals that just finished university and need a job. Both sides lose.
You walk out of the store with a fancy bag or pair of $2000 shoes and feel a million bucks. Then a day later you see the credit card bill and vomit. But you tell yourself “I look successful.”
Looking successful and being successful aren’t the same. Too many people confuse the two and get trapped and oppressed as a result.
Remember: the richest people wear basic clothes and don’t own anything luxurious. That’s why they’re rich, and why they don’t have the paparazzi chasing them down the street in their underwear.
Luxury is a tax that steals your time.
Learn about different “stores of value”
Even finance experts don’t know what this is. Sad.
We do work and make money. Simple. Then that money is either spent on bills or sits around waiting for a use case. Most of us put excess money in a savings account.
The problem is government-issued currency loses its purchasing power, fast. Inflation and currency devaluation quietly erode your financial gains.
Finance expert Anthony Pompliano said this:
You can’t print an unlimited amount of money, drive your national debt to the moon, and not expect people to seek alternative stores of value.
He’s referring to the US government. Together with the Federal Reserve they created record amounts of money out of nowhere. This unfair act of power made all of our money worth less. Every country does this.
The only way to fight the problem is to use a store of value that isn’t a government-issued currency like the US dollar.
Examples:
- Real estate
- Treasury bonds
- Gold/Silver
- Bitcoin
These assets traditionally store value over time and perform well against inflation. Knowing which one(s) to choose takes time to understand. But the truth remains the same: think about how you store your wealth or a government will store it for you and use it as their slush fund.
Become a historian with a mustache
History doesn’t tell you the future but it sure as hell helps you understand the likely outcomes.
Best-selling money author Morgan Housel says:
A lot of financial history is people saying, ‘No one could have seen this coming’ about things that have occurred regularly for the last 500 years.
One thing I learned about recently was the 4-year business cycle. Once you understand it, it becomes easier to know when there will be booms and busts. You’ll know when the markets will be flooded with cheap money, and when interest rates will likely go up.
What’s bizarre is the 4-year business cycle lines up perfectly with the 2008 financial crisis, dot com bubble, 2020 bat virus recession, and even the 4-year Bitcoin halving cycle.
Instead of reading Little Red Riding Hood, I’m going to read my daughter history books — that way, recessions won’t look so random. And the outcomes of wars on the economy and our incomes will be obvious.
The fastest way to get wealthy that I’ve ever found (and billionaires don’t know it)
Morgan slapped me in the face again with this one:
The best measure of wealth is what you have minus what you want.
Now you know why most billionaires are broke. They can’t keep their expectations under control. They always need more and they don’t know why. Money becomes a mental illness.
I’m going to show my daughter that when you embrace some level of minimalism, and don’t feel the need to be a big spender, you actually don’t need much money to be happy — therefore you can work less.
True wealth is freedom. True poverty is an obsession with making more money once your basic needs are met.
Final Thought
Poverty isn’t fun.
Having money on your brain every day is an energy drain. It doesn’t have to be that way with the right understanding of how money can work for you.
I’m going to teach my daughter that rich people count money, whereas wealthy people count moments. And by that description I’m going to spend less time working, and more time with her.
Because a lot of what makes us happy in life has nothing to do with money. The sooner we realize that the faster we become free.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.
