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These ideas will change the way you think about money.
By Akshad Singi
Last updated on Feb 16, 2024
Most people claim to hate money and say they don’t want to be rich because money is the source of all evil. But this is just a subconscious defense mechanism people have developed so they don’t have to accept the hard truth: they simply don’t know how to build wealth.
If you truly want wealth:
- You have to stop pretending to hate wealth.
- You have to realize that money is not the source of all evil, and that ethical wealth creation is completely possible.
- You have to accept that you don’t know how to be rich, but you can still learn how to build wealth.
You’re now ready to understand these incredible wealth-building ideas and have your financial mind rewired forever.
Here are 4 habits that can eventually make you wealthy and rich
1. Permissioned and permissionless leverage
Leverage is anything that allows you to multiply your efforts. For instance, a writer has to write a book only once, and then it can be printed repeatedly for decades for people to read. This way, the printing press acts as a leverage that allows a writer’s efforts to be multiplied.
While a printing press is a specific example of a lever, broadly classified, entrepreneur and investor Naval Ravikant says there are two kinds of leverage: permissioned leverage and permissionless leverage.
Permissioned leverage has its own two types:
- Capital
- People working for you
While both allow you to multiply your efforts, they might need someone else’s permission. To raise capital, you need to convince someone to invest their hard-earned money in you; to get people to work for you, you again have to convince them to work for you by paying them a decent salary.
Permissionless leverage also has two types:
- Code
- Media like blog posts, youtube videos, podcasts, music, and so on
Permissionless leverage is the kind of leverage that Naval says is responsible for the newly rich. This kind is very powerful because you don’t need someone’s permission to use these levers to multiply your efforts.
For instance, with code, a person can build an application all by themselves that solves problems for many people and put it into the app store for the world to purchase. Or, a creator can shoot YouTube videos for free and slowly start to monetize them. In both cases, starting out is easy even if you have no money — because you don’t need anyone else’s permission.
If you’re starting out your own journey, I highly recommend you:
- Start out your journey by using permissionless leverage, because it allows you to enter the game quickly. This means you should either use code or media to start multiplying your efforts. If you can’t code, start by writing online or recording YouTube videos. Build an audience, gain their trust, and maybe start selling digital products on Gumroad. Save money and build enough capital.
- Later, use that capital to hire coders or other experts to start businesses. This way, you’re using capital — but your own capital — which makes it permissionless in a way.
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2. Earn with your mind, not with your time
For a majority of the population, it’s etched in their brains that renting out their time is the only way to make money. For instance, the way to make money for them is to work 9–5 for 24 days a month and, in the end, they get a salary.
The salary may be high or low, depending on their jobs. But, in essence, they’re making money by renting out their time. Because their output (money they make) is heavily linked to their input (time they put in). They don't make a penny if they don’t work for a month.
This method of making money can never allow you to be rich, because even if your hourly rate is high (as in the case of doctors and lawyers), the number of hours you can work is limited. You cannot work more than 10–12 hours a day. And that means the most money you can make in a day is 12 times your hourly rate. Simply put, there’s a ceiling.
To build wealth, you need to find a way to make money where your output is not so heavily linked to your input. This is essentially how businesses work. Once you get it going, even if you take a month off work, you still continue to make more or less the same amount of money. Meaning, you earn with your mind and your decisions, not with your time.
And the difference between these two ways of making money is extraordinary. Not just because of the amount of money you make, but the kind of freedom you feel in the latter way.
Take it from me — I make money in both ways.
I work in a hospital as an intern, where I get paid for working 30 days a month. My stipend is heavily tied to my working the entire month. And I make money as a writer. I can write at my own convenience and still make money if I work less in a month.
The freedom of not having to work compulsorily and still having money coming in every month is extraordinary. It takes so much pressure off of you. That’s why you must start figuring out ways to make money where you don’t have to rent out your time.
Yes, you’ll still have to work, but the output must not be directly proportional to your input. Your future self will thank you for it.
3. Work as hard as you can — even though what you work on and who you work with are more important
What you work on and who you work with are far more important than how hard you work.
The importance of what you work on:
A lot of my friends have jobs. They have to work 25 days a month for several hours a day, and they might earn somewhere around $1,500. This is actually a good income in India. However, I can easily make the same amount of money as a writer, even if I don’t work at all in a month. And if I work just 25 hours a month (not 25 days), I can earn 2–4 times the given amount.
What’s the difference here? I’m not particularly smarter than them. I’m not more talented than them. I’m not more skillful than them. The reason is simply that what I’m working on is much more powerful than what they’re working on.
The creator economy is experiencing an incredible high. And because I’m working as a creator, I get to reap the benefits even if I’m not working incredibly hard.
The importance of who you work with:
In the show "Suits," in one episode, an evil billionaire by the name of Charles Forstman offers Harvey Specter (the protagonist lawyer of the show) a job. Harvey declines, saying that he doesn’t want to work for him and that he’ll soon be making half a million dollars annually anyway.
Charles Forstman says, “My gardener makes that,” to which Harvey replies, “Then go offer your gardener a job because I’m not interested.” Good repartee, but there’s a point to be observed here.
Harvey Specter is a lawyer from Harvard — and we can assume that takes a lot of hard work. But then, Charles Fortman’s gardener — a job that takes less work to master than learning the law — makes a lot more money than him. Why? Simply because who you’re working for is, again, much more important than how hard you work.
Of course, I’m not suggesting that one should work for evil billionaires. But just pointing out that who you’re associated with matters a lot as well. The principle here is simple — figure out the needs of rich and influential people, and then figure out how to quench those needs.
While hard work is celebrated in today’s world a lot, it’s not the most important thing. Because mediocre work in the right direction is going to help you much more than hard work in the wrong direction. So, take some time out to figure out what you should work on and who you should work with before you start hustling, only to be disappointed with the results.
4. Remember that you get rich by giving society what it wants, but at scale
To get wealthy, you need society to pay you. To get them to pay you, you need to give them what they want. To give them what they want, you have to figure out what society wants.
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So, while building your wealth is actually a pretty messy and complex journey, it can be simplified into two key steps:
- Figure out what society wants. For example, Steve Jobs realized that people would want phones as powerful as computers in their hands.
- Give it to them at scale. (Scale using permissionless or permissioned leverage) Steve Jobs gave society what it wanted at scale by launching iPhones. He used leverage mostly in the form of capital and humans to multiply his efforts.
That’s why Steve Jobs was rich. However, Jobs scaled his efforts mostly using capital and humans — both forms of permissioned leverage.
But take the example of Emily McDermott, who made $280,000 on Etsy selling spreadsheets. In her article, she said that she realized people would want spreadsheets to simplify their life. She thought of and created those spreadsheets only once — and then scaled her efforts using digital products' power as permissionless leverage.
You can use either permissioned or permissionless leverage, but to get rich, you have to figure out what society wants and then give it to them — at scale.
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Akshad Singi, M.D. is a writer and doctor whose work has been published in Better Humans, Medium, Business Insider, Mind Cafe, and more.
This article was originally published at Medum. Reprinted with permission from the author.