From: alexhormozi
A significant money mistake people make in their 20s is prioritizing immediate earnings over long-term learning and skill development [01:04:07]. This approach can be detrimental to future financial success.
The Season of Learning
For young individuals, particularly in their 20s, it’s crucial to be in a “season of learning” rather than a “season of earning” [01:26:00]. This means focusing on skill acquisition and personal development that will exponentially increase earning potential later in life.
A concrete example illustrates this point:
“We had a thousand people who applied for a YouTube editor… so we offered somebody very good pay and the guy said I want an extra $3,000 a year missing the plot. What he didn’t understand was that he was in a season of learning, not a season of earning” [01:08:00].
While another job might offer a 30% higher salary immediately, such positions often pay a premium for existing knowledge and offer little in return for the individual’s growth [01:34:00]. The earning potential of an additional 25,000 per year in one’s 20s is “inconsequential on the long time horizon of the skills that you should be learning right now” [01:43:00].
Prioritizing Investment in Self
Instead of saving money conventionally or “cashing in early” [01:42:00], it’s advised to invest that money into oneself and one’s earning capacity [02:16:00]. When an individual makes relatively little, saving 1,000 a month in a traditional savings account might seem substantial but is unlikely to yield “filthy rich” results, especially when considering inflation [02:20:00].
“Think about how much more you’ll get back if you spend $10,000 this year and then you double your earning capacity or you triple your earning capacity instead of saving money to invest in assets invest in the number one asset which is you and increasing your earning potential” [02:36:00].
This strategy for increasing earning capacity emphasizes that skill acquisition and education are the primary drivers of wealth creation.
Budgeting for Learning
To ensure this investment in self, it’s recommended to:
- Prioritize Investment First: Allocate money for learning and education before spending on anything else. This means setting aside a fixed amount from income directly into a dedicated “personal investing account” [02:49:00], [03:43:00].
- Automate Investing, Manualize Spending: Make it easy to invest in yourself by automating transfers, and make it harder to spend on non-essential items by using cash or making spending a manual, conscious process [03:17:00].
- Compete on Savings for Investment: Rather than focusing on how much money is being made, compete with personal records on how much is being saved to be reinvested in oneself [07:09:00].
Living Environment and Mindset
Choosing roommates and a micro-community wisely supports the “season of learning” mindset. Living with people who share similar goals and encourage personal growth is vital [05:16:00]. Avoid those who might “speak over you their limiting beliefs” or “undercut you” because they are focused on immediate earning rather than long-term development [04:54:00].
In the early stages, what leads to success often “looks like failure” because one is learning rather than immediately earning [05:04:00]. Therefore, never listen to people who have smaller goals for your life [05:12:00].