Building Wealth in Your 20s

From: alexhormozi

For young men between the ages of 16 and 28, a 6-day, 12-hour per day work week is advised to build a strong foundation for future financial success [00:00:13]. This approach stems from the belief that an individual’s value is based on their utility, and while young people may lack utility, they possess abundant energy [00:00:22]. The core principle is to trade this energy for experience points to become useful [00:00:30].

Fundamentals of Entrepreneurship and Wealth Creation

The first rule of entrepreneurship is to “use what you’ve got” [00:00:34]. Many people delay starting ventures due to perceived lack of capital or connections [00:00:41]. However, success hinges on resourcefulness, not just resources [00:00:54]. Trading available energy to develop skills and build a track record of competence is crucial [00:01:00]. Skill improvement comes from persistent repetition, embracing failures, and making incremental adjustments over time [00:01:08].

Practical Steps for Financial Growth

For those with less than $100,000 in savings aiming to exceed that amount, specific recommendations are offered, requiring a significant reduction of ego and disregard for others’ opinions [00:01:25]:

• Reduce Expenses
  • Stop eating out; rely on discount groceries only [00:01:42], [00:03:44]. (Note: This advice is for those “super broke.” If you have high-paying skills, time is more valuable than saving a few dollars on food prep [00:01:47].)
  • Buy only Goodwill clothes [00:03:46].
  • Attend only free social events [00:03:48]. Friends who do not support your goals may be detrimental [00:04:04].
• Increase Income and Skills
  • Dedicate time to apply for higher-paying jobs [00:04:28].
  • Pick up side hustles [00:04:30].
  • Learn skills that command a higher hourly rate [00:04:32].
  • Once employed, double the input of the hardest worker in the room [00:04:45]. This accelerates skill acquisition [00:05:08].
• Build a Financial Stockpile
  • Accumulating savings allows for patience and long-term thinking, shifting from “survival mode” to “thrive mode” [00:02:48]. This capital enables strategic investments in education, opportunities, and business necessities [00:02:25].
  • Living far below one’s means allows for heavier investment in business growth [00:11:11].

The Role of Skill Development

To make money, one must provide value, exchanging utility for income [00:06:11]. Becoming more useful naturally develops ancillary skills that transfer across various life domains [00:06:27].

The Power of Sales Skills

Many self-made millionaires and billionaires started in high-volume sales environments, engaging in numerous daily conversations with strangers over several years [00:07:14]. Skill development in sales, or any field, occurs through:

1. Volume: High numbers of repetitions [00:07:56].
2. Feedback Loop: Continuously evaluating performance, identifying what worked and what didn’t, and making deliberate improvements [00:08:00]. This involves looking at data (e.g., top 10% vs. bottom 10% of content or sales calls) and adjusting behavior [00:21:33].

Learning from Experience

Inexperience leads to mistakes, which are part of the learning process [00:14:20]. It’s crucial to make mistakes quickly and not judge oneself for them, but rather see them as opportunities for improvement [00:14:40].

Personal Growth and Mindset

Solving many personal problems, especially for men, involves getting in shape and making money [00:05:59]. This leads to smaller problems and more resources to handle them [00:06:04].

Importance of Self-Investment

Investing in oneself is paramount, as you are the primary asset [00:23:40]. Skills compound; for example, combining sales and finance knowledge can lead to raising significant capital [00:23:58].

Health and Discipline

• Sleep: Setting alarms to go to bed on time can prevent many issues [00:24:41].
• Physical Fitness: Being in shape leads to more energy, focus, and better outcomes in various tasks, including professional interactions [00:25:59]. It’s a fundamental skill of discipline that costs time, not money, and time is cheapest when you’re young [00:26:44].
• Avoiding Distractions: Habits like drinking negatively impact productivity, costing both time and potential future opportunities [00:27:04]. As Charlie Munger suggested, avoiding stupidity is often more effective than striving for intelligence [00:25:04].

Humility and Learning

• Seek Mentorship: Younger individuals can leverage experienced mentors by approaching them with humility. Offering status (by asking for mentorship) can yield advice worth thousands of dollars or years of life, for free [00:22:29].
• Listen to Experience: While younger minds may have peak processing power, older, more experienced individuals possess invaluable knowledge gained from living [00:29:12]. Humble listening leads to greater learning [00:43:08].
• Ego Management: Humbling oneself is better than letting the world humble you [00:30:06]. True respect is earned through work, not self-exaltation [00:30:36].

The “Lonely Chapter”

• Reference Group: Your reference group (the five people you compare yourself to) significantly influences your future [00:32:27].
• Prioritize Goals: Sometimes, your goals must take precedence over your friends [00:32:38]. The journey of building success often involves a “lonely chapter” where you don’t fit in with old friends and haven’t yet achieved the status to fit in with a new group [00:32:48].
• Embrace the Outgroup: To be exceptional, you must be the exception [00:35:48]. This temporary isolation provides fewer distractions and more opportunity for focused work [00:36:28].
• Friendship Evaluation: Ask if a person’s presence in your life makes you more or less likely to hit your goals [00:37:00]. It’s better to have friends who force you to grow than those who accept you as you are [00:37:12].

Leveraging Time and Opportunities

• Outwork the Rich, Outspend the Poor: If you want to impress poor people, outspend them. If you want to impress rich people, outwork them [00:39:55]. Lavish spending early in a career signals irresponsibility to the wealthy [00:39:09].
• Balance Consumption and Investment: While enjoyment is important, a high ratio of investment to consumption is recommended, especially for those prioritizing significant personal and professional growth [00:40:26]. Having ready capital allows for seizing large opportunities [00:40:49].

The Power of Action

• Balls to Start, Brains to Learn, Heart to Never Quit: These three qualities are essential for success [00:42:16]. Anyone who dedicates their life to one thing, continuously improving, will become successful [00:42:49].
• Start Now: Most people already know what they need to do to get in shape or pursue a goal [00:43:02]. The delay is often under the guise of finding a “better plan,” but the plan will always change with new information. The key is to simply start [00:43:37].
• Embrace Imperfect Beginnings: Give yourself permission to start in a role that isn’t your endgame, seeing it as a foundational “tile” in a larger painting of your desired self [00:43:44].
• Overcoming Inertia: Billions of dollars are spent daily to distract you from doing what you need to do [00:44:11]. Personal excellence is the ultimate rebellion against this [00:44:25].
• Delay Gratification: The ability to delay immediate rewards is a crucial meta-skill for success [00:45:10]. The first small success from delayed gratification reinforces the behavior and can lead to obsession [00:45:26].
• Perception of Time: Younger individuals may perceive time as passing slowly, but this perception speeds up with age [00:46:42]. Understand that significant achievements take time, and avoid expecting immediate results like in school settings [00:47:24].

Reframing Challenges

• “Demons” as Skill Deficiencies: What people often label as “demons,” “self-sabotage,” or “trauma” are, in reality, a lack of skills in how to behave under certain conditions [00:53:40].
  • Logic: Define the “demon” in terms of specific behaviors [00:59:20].
  • Evidence: Provide data or specific instances of when this behavior occurs [00:59:31].
  • Utility: Determine if this behavior matters and if it’s conducive to your goals [01:00:38].
• Hardship as Origin Story: Losers dwell on what happened to them; winners focus on what they made happen despite it [00:55:04]. Hardship is not an ankle weight but an opportunity to build resilience and prove your capabilities [01:04:46].
• Infinite Game: Entrepreneurship is a game of “Last Man Standing” [01:09:38]. Persistence and continuous improvement are key.

By embracing hard work, continuous learning, strategic financial decisions, and a resilient mindset, young men can effectively build wealth and achieve their goals [00:00:05].