From: alexhormozi

This article outlines common pitfalls that prevent individuals from achieving financial success, framed through the lens of 28 rules to remain poor [00:00:01]. The approach is based on “inversion thinking,” a problem-solving method advocated by Charlie Munger, where one identifies ways to achieve a negative outcome (e.g., destroy a marriage, stay poor) and then does the exact opposite [00:14:14]. This leverages the brain’s natural ability to find problems more effectively than solutions [00:30:30].

Core Mistakes Preventing Wealth Accumulation

Many individuals inadvertently hinder their own financial progress by engaging in specific behaviors and holding certain beliefs:

1. Procrastination and Lack of Action

  • Starting Tomorrow: The best way to stay poor is to delay taking action on any goal, whether it’s losing weight, saving money, or starting a business [01:37:37].
  • Reading Without Doing: Merely consuming information, such as reading many books, without applying the knowledge is a common mistake [01:50:00]. It’s more effective to read one book and act on its principles [02:02:02].
  • Talking More, Doing Less: Spending excessive time discussing goals, affirmations, or elaborate routines for preparation, rather than actually executing tasks, is unproductive [02:35:35].
  • Constant New Starts, No Finishes: Starting numerous new ventures or projects but never seeing any through to completion creates “half-built bridges” and prevents achievement [02:09:09]. This often stems from an “uninformed optimism” that turns into “informed pessimism” when real work is required, leading to abandoning the effort [02:30:30].

2. Misguided Advice and External Validation

  • Taking Advice from Poor People on How to Be Rich: Listening to financial advice or judgment from individuals who are themselves poor is illogical and detrimental [02:06:00].
  • Prioritizing Others’ Opinions Over Your Own: Valuing what others think more than your self-belief is a significant obstacle [02:22:22] [02:50:50]. Success is often an internal decision, not an external validation [02:53:53].
  • Picking a Discouraging Spouse: Choosing a partner who makes you feel guilty for pursuing your dreams leads to resentment and prevents personal growth [02:33:33].
  • Expecting External Salvation: Waiting for the government or other people to “save you” rather than taking personal responsibility is a common way to remain poor [02:50:50].

3. Negative Mindset and Blame

  • Believing the World is Fair: Operating under the assumption that life is inherently fair leads to complaints and inaction when things don’t go as expected [02:37:37]. The reality is often unfair, and adapting to that fact is crucial [02:16:16].
  • Blaming Circumstances and Complaining: Attributing failures to external circumstances and complaining about uncontrollable elements is unproductive and prevents action [02:55:55]. Adversity often builds character and provides valuable lessons [02:58:58].
  • Assuming You Are Always Right: A refusal to learn from others due to a belief in one’s own infallible correctness severely limits growth and opportunity [02:17:17]. Successful people have a voracious desire to learn from everyone [02:12:12].

4. Poor Performance and Management

  • Failing Once, Quitting Forever: Giving up after a single failure prevents learning and improvement, as failure is a necessary part of the learning process [02:35:35].
  • Tolerating Mediocrity (Self and Others): Accepting subpar performance from oneself or from employees (in business contexts) leads to degradation over time instead of improvement [02:40:40]. Leaders set high standards for themselves and others [02:42:42].
  • Making and Breaking Promises: Consistently breaking promises to oneself and others erodes self-respect and external reputation [02:43:43]. Self-respect is earned by knowing you’ve pushed yourself to your full potential [02:45:45].
  • Doing Your “Best” Instead of “What It Takes”: Often, “your best” might not be sufficient to meet the required outcome [02:58:58]. The focus should be on what is required, and improving oneself until one’s best surpasses that requirement [02:00:00].
  • Making and Repeating the Same Mistakes: Continuously making the same errors in relationships, business, or other areas leads to stagnation and identical negative outcomes [02:23:23].

5. Prioritizing Image Over Substance

6. Inefficient Work and Strategy

  • Avoiding Discomfort: Shying away from new or challenging experiences because they are uncomfortable prevents learning and growth [02:11:11]. The discomfort often comes from self-imposed judgment about not being good at something new [02:14:14].
  • Waiting for Perfect Conditions: Believing that success requires perfectly aligned circumstances is a barrier, as such conditions rarely exist [02:14:14]. Starting in adverse conditions builds resilience and guarantees future success even when conditions change [02:17:17].
  • Avoiding Work on What Matters Most: Being busy with many activities but failing to advance the most important tasks that move the needle forward is a common trap [02:16:16]. The wealthiest people do the “right stuff” rather than the “most stuff” [02:17:17].
  • Doing What Everyone Else Is Doing: Mimicking the actions of the majority often leads to average or poor results, as most people are not in the top percent of earners [02:18:18]. This reinforces the idea of not valuing the opinions of the financially unsuccessful [02:19:19].
  • Being Replaceable: Developing skills that anyone can acquire through a degree makes one easily replaceable, limiting earning potential [02:24:24]. Becoming irreplaceable requires learning unique skills that others cannot easily replicate [02:25:25].
  • Finding Something That Works and Then Stopping: Many individuals discover effective methods for generating income when pressured (e.g., unexpected bills) but cease these profitable activities once the immediate need is met [02:29:29]. This often happens because they are willing to work for others’ benefit but not consistently for their own [02:30:30]. This relates to the broader discussion on hard work vs. smart work.
  • Hiring Unintelligent People: Employing incompetent individuals can make a business or job miserable and hinder overall success [02:17:17].

7. Financial Mismanagement

  • Spending More Than You Make: The most fundamental economic mistake is consistently spending more money than is earned [02:18:18]. This guarantees poverty regardless of income level, often driven by the desire to “look rich” and prioritize external opinions [02:19:19]. This directly contradicts smart money management techniques.

Strategies for Avoiding Poverty

By reversing these common mistakes, individuals can identify strategies for escaping poverty and build wealth. The steps to avoid poverty involve deliberately doing the opposite of these behaviors. For example: