Today, we live in an extremely materialistic world, where we are programed to be a subconsciously obedient consumer from a young age onwards. You’re exposed to a few hundred marketing messages on average each day, and most advertisers try to convince you to buy things you don’t need to impress people you don’t like with hard-earned money from a job you may even not like.
But there’s more than that. Productivity has risen dramatically in the past two decades. An average worker creates more value than ever. Nevertheless, wages aren’t going up, they are remaining steady or even decreasing. All of the benefit (or extra profit, if you want) goes to employers or business owners. That’s why rich people are getting richer, and poor people are getting poorer.
It’s true that an average inhabitant of the world can afford more and more material things. The material abundance has never been as high as it is today. But the profoundly sad truth is that the material status isn’t improving because wages and productivity are higher, but because it’s much easier to access debt. People enslave themselves to debt more and more, just to afford another thing they probably don’t even need.
Being an obedient consumer
There are many reasons and motivators why you should buy something new. Because you get the instant good feeling of gratification, because you deserve it since you work hard, because you’ll feel a little bit better about yourself or other people will notice you more, because a new thing will bring short-lived excitement into your life, and so on.
It’s so easy to spend money. Your hard earned money is just an electronic figure. Your fastest connection to that figure is a piece of plastic; doesn’t even feel like a real money. Just some numbers. You see something you like. You just swipe your plastic and you feel a little better for whatever reason.
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You don’t have enough of your own money? No problem. You have a few more decades to live and you’re going to work hard, for sure, and earn some money. Lenders know that, and they want a piece of your future earnings. That’s why it’s so easy to borrow money and just buy something you want. With a single signature.
A big screen TV you can’t actually afford. A fancy nice car. A big modern home. Dozens of shoes and coats and other clothes. Vacations you haven’t taken for so long and you definitely deserve. A big expensive latte. Restaurants and drinks and parties. There are so many options to spend money, and it doesn’t matter whether you actually have it or not.
You can swipe credit cards and take more and more debt until reality kicks in. The easier road sooner becomes hard. The good short-lived feeling of owning something new becomes a long-term catastrophe; because debt means slavery. Possessions you cannot afford destroy your freedom and your potential, and sooner or later your health and relationships as well, because of all the stress. The more things you buy that you cannot really afford, the longer your jail sentence is, the more enslaved you are.
One of the problems is that things are rarely as they seem. Maybe your neighbor has a bigger house than you, drives an expensive car, wears expensive clothes, has a nice motorbike and I don’t know what else, but in reality, he may be an enslaved person working a job he hates just to pay the debt he owes. The material things are just his short escape from reality.
Having material things in life doesn’t really mean neither wealth nor happiness. Almost anyone can go to a bank for a consumer loan to buy a few fancy things and enslave their own future. But sooner or later, you don’t own things anymore. They own you. Your freedom goes away, your happiness goes away, and all you do is work hard to pay off the debt. Everybody earned money except you. Remember: if you don’t know who the fool in the room is, you’re probably that fool.
The easiest way people see for getting out of a financial hole is by earning more money. But sooner or later, they realize that more money is rarely a solution for poor financial management. You just can’t buy more financial discipline. That’s why most lottery winners go broke soon after winning the money. You must financially discipline yourself, no matter how much you earn. Because money follows management.
Don’t try to only look rich, work hard and be disciplined to really become rich. Buying stuff on credit means slavery. Living a modest and frugal life and not spending money like crazy, especially not by taking debt, means freedom. You have more choices and more choices mean more freedom. You have more options to pursue your dreams and the things you really want in life.
The opposite is also true. The hard road becomes much easier with time. If you save money, you’ll become a winner sooner or later. Because a free cash flow will allow you to become an investor, a business owner or lender. Cash in your bank account will give you more options and possibilities.
Being an innovative producer
The large majority of people are consumers. Most of them afford their lifestyle by taking debt. They enslave themselves and limit their options. But logically, this planet has another type of people – the ones who are selling the products to this majority. These are the people with a completely different mindset. They’re called producers. They’re driven by the force to innovate, to produce to solve problems and to create beautiful shiny products and services that provide value.
Every one of us has the capacity to innovate, create something new, provide value and produce different products and services. Every one of us has a much greater potential than to just go to work, take debt and spend money as the easiest way to escape reality and its challenges. Not everyone is made to become an entrepreneur, but you can also become an investor, sole proprietor, freelancer, you can produce and sell stuff in your free time, partner up etc. There are numerous ways of becoming a producer.
You can break free from being only a consumer by becoming a producer as well. The sooner you switch sides, the sooner life becomes easier. You get more ideas, you see more opportunities, you’re more immune to all the advertising messages, and even more importantly: the will to create and contribute awakens in you. Switching from a consumer to a producer mindset can be one of the greatest things you do in life. First you produce and provide value, which makes you rich, and then you consume. Producers get rich and consumers go poor. That’s a fact.
Think about providing value to the world. See yourself as an innovator, entrepreneur, businessperson, visionary, creator and producer of added value. See yourself as an investor and business owner. Instead of spending money, invest money, save money and produce.
You can even take being a producer to a totally new level. If you have a consumer mindset, you only think about what you’ll buy for your spouse on Valentine’s Day. Producers prefer to think about what they can sell on Valentine’s Day. They see millions of spenders who just want to buy stuff as proof of their love.
Consumers buy things in shopping centers, producers sell them. Consumers buy products on TV, producers sell them. Consumers borrow money to buy stuff, producers lend money. Consumers buy things for every holiday and special occasion, producers see special occasions as opportunities to sell things to needy people.
Think about all the needs people have. Think about how you can provide value to the world. Think about how you can solve problems for people. Think about all the business ideas you have; and if you don’t have them, brainstorm. Think about your dreams and talents, and how you can monetize them. Think like a producer and a creator of value.
“You look at the world, when you buy a sandwich or a beer; you are a consumer where you trade money for a certain type of good. I think money is fundamentally an exchange of value. So, how can you be the guy that produces the value so that people can use that to give you the money? When you see that way, then you kinda see the matrix. That’s the biggest switch you probably have to make.” Terry Lin, Baller Leather, Your Own Way Out Interview
Changing from a consumer to a producer mindset
Changing your mindset from being a consumer to being a producer is not an easy job, but it can be done. Here are some tricks that are going to help you change perspective.
Whenever you want to be an obedient consumer, do the following:
- Whatever you buy, multiply the price by ten. That’s the actual cost of your purchase. If you were to invest that money, that is approximately how much money you’d make in twenty-five years with an average return on your investment.
- Everything you buy doesn’t only cost money. It also costs you your freedom, your space in life, your future and the number of your choices. See how you’re enslaving yourself with every purchase, especially if you’re buying things on debt.
- Whenever you get a paycheck, Pay yourself first. Have a savings account and put some money aside for your future. See it as part of your expenditures and consumption. Feel instant gratification when you save money. Whenever you see your neighbor’s fancy car and feel bad, look at your savings account and it’ll make you feel better instantly.
- For bigger purchases, wait two to three months, don’t make impulsive decisions, especially not for big purchases. If you still need the new thing, maybe you should buy it, but rather not. Time will curb your consumption desires.
- Rather than buying things you won’t use in a few weeks’ time and that only start collecting dust, live a minimalistic life. Remove all waste from your life.
- If you really have problems controlling your expenditures, find a spouse with better money management habits than you. It will be a good influence on you and you’ll be able to save much more money.
Tricks to acquiring a producer mindset:
- Become a smarter consumer, educate yourself, compare prices, understand taxes and the monetary system, read financial statements, become financially educated. Try to see everything you buy as a business deal with room to negotiate.
- Read investing and business books, as this will motivate you to save more and to produce more value for the world; besides learning new things.
- Spend more time with investors and producers. Join business or investor clubs, make new friends, and go to conferences.
- Invest in yourself, unless you don’t think you’re a good investment. But you are. Leveling up your skills, upgrading you mindset and having a better life strategy is the best investment you can make.
- Have a long-term approach. It takes years to change your mindset, to learn new skills and to really become a producer and then produce something of real value. The good news is that you only have to be right once with the right product (to get rich), but you can’t just switch sides, it’s not that easy. You must learn about the markets, you must develop new skills, expand your social network, and so on. The learning curve is long and takes a lot of effort, years of hard work, but it’s worth it. Not only because of a better earning potential, but also because of the feeling that you created something and contributed to the world.
- Start creating something small and try to sell it. Maybe you can start with selling things you don’t need at home. Try to identify small opportunities for making some money. Make your first dollar, then ten dollars and continue like that.
- Go to the Arab part of the world and practice bargaining and negotiating. Most people feel uncomfortable negotiating and getting the best possible price. If you can’t do it, partner up with someone who can.
- Make sure your spouse understands your goals and supports them. If you try to save, invest and produce, and your spouse only wants to spend and consume, things will not work out very well. Besides investing into yourself (you), your spouse is the most important choice you make in your life.
- Think about what else you consume that’s unnecessary, like news, TV, unhealthy food etc. Try to see your time and energy as precious resources you can either waste or invest wisely.
- Try to think about how to create products with real value. If you want long-term success, you need to create value that people really need and respect. Try to build products you’d proudly put your name on. Don’t try to just to make a quick buck or scam people.
My friend Robert Rolih wrote two reports that are great if you are new to investing:
That’s also what I do. I’m not rich (yet) but my material status is improving every year. I drive an average car (which I even downgraded a few years ago) and I live in a small but cute flat I can afford. I spend as little as possible on clothes. I don’t buy any unnecessary stuff. I try to live as minimalistic of a life as possible.
I have a spouse who knows how to save money and she motivates me to spend even less. She is a really good influence when it comes to money. My major expenditures are investments into myself (books, seminars, MOOCs…), healthy food, technology and sports. All that I see more as investments than costs.
Seven years ago, I wasn’t even close to being careful with my money, because of my false mindset. That’s changing for the better every year; especially by reading books and socializing with the right people, and it feels so much better. Still, I’m not obsessed with money and I value relationships and doing good much more than financial benefit.
I see myself much more as a producer than a consumer. I produce things I’m good at, things like writing articles, doing workshops, managing complex projects and delivering consulting work. I’m just in the process of switching from producing value for the local to the global market, while my plan is to also create some products so I can progress from only trading my time for money to also having some passive and portfolio income.
It may take me the next decade to really do it, but I have no problem investing into the process and trusting it. Despite all that, I really enjoy what I’m doing. It’s not only about the final event, the path alone pretty much has the same value and importance.