Your financial thermostat is an internal setting for how much money you feel comfortable with, and it pulls your income back to that level, so raising it through exposure, proximity and the people around you is how you break the plateau. The video argues that most people have a flat financial life because their earning power stalls once income reaches a certain threshold. The cause is an unconscious comfort level as much as skill or luck.
Here is how the thermostat works, where it comes from and how to turn it up.
Watch the full video here, or skip to the breakdown below.
The financial thermostat at a glance
- How the financial thermostat works
- Where your thermostat setting comes from
- Proof that the setting can be much higher
- Exposure: raise your financial IQ
- Proximity: get close to money
- Your circle and your daily inputs
- Helping your partner raise theirs
- Bonus: Your obsession dictates your reality
How the financial thermostat works
A room thermostat set to 70 degrees Fahrenheit (21 Celsius) blows in heat when the room is colder and cold air when it is warmer, until the room matches the setting. Money works the same way: everyone has an internal thermostat that regulates how much money they are able to manage.
Say yours is set at $3,000 a month. When you earn less, you feel the drive and ambition to reach it, and eventually you do. The second part is what traps most people. If you earn $5,000 but the thermostat still reads $3,000, you slowly slide: you slow down, stop paying attention to the little things and it starts to cost you, until you are pulled back to $3,000.
In the words the script borrows, balanced, as all things should be.
Where your thermostat setting comes from
Mainly, it comes from your upbringing: how much money you saw around you, how open your environment was to financial education and how well you understand how money works. Think about how openly your parents talked about money, whether it was taboo at home, and whether they fought over it or its absence.
Unconsciously, your life made you comfortable with a specific amount, and the setting usually sits slightly above that, because that is what you consider safe. The script’s uncomfortable conclusion is that you are comfortable at your current income. You may want more, but that is not where the thermostat is set.
To someone whose setting is $3,000 a month, earning over $1,000,000 a month sounds ridiculous. They do not believe someone like them could set it that high.
Proof that the setting can be much higher
Plenty of people have a thermostat that high by default. A 2020 IRS statistic cited here shows over 23,000 households in the United States earning more than $10 million a year, which it puts at roughly $1 million per month for each of those households. It adds that the numbers are four to five years old, before inflation.
Such people get there by setting their internal thermostat high and keeping it there until reality catches up. If yours is set at $100,000 a month, you behave, think and decide like someone earning that, and it is a matter of time until your reality follows your actions.
Most people want to earn more but do not know how to act like someone who does. Poor people, it also claims, stay poor by copying the outcome of rich people instead of the input.
Exposure: raise your financial IQ
Exposure means the more you see, talk about, learn, read, study and interact with money, the better you understand its flow and the more of it you can capture. It lets you see behind the curtain and understand value and cost.
That knowledge helps you avoid selling yourself short, price yourself correctly and remove the earning ceiling. Many people do not know they have one, and apart from working longer hours they do not know how to earn more because their financial IQ is low.
The good news is that you can raise it on purpose, the same way someone at the gym builds muscle.
Proximity: get close to money
Proximity is how physically close you are to money. The script says it is easier to get rich in Silicon Valley or Zurich than in Bastar, India, or Gombe, Nigeria, because proximity increases your luck surface: you are likelier to find resources, tools, knowledge and the right people.
Being around wealth raises your thermostat because you see it materialize. This is why people pay $1,000 or more for a three-hour seminar, or listen to podcasts with people who did what they want to do. Your brain starts to believe it is possible when it sees others doing it, sometimes people no smarter than you.
The $3,000 earner does not believe earning $1 million a month is possible because their environment never showed proof.
Your circle and your daily inputs
Run with a group that has a better pace and you will improve yours to keep up. Money works the same way. If your friends earn 10 to 20 times what you do and you sit at the same table sharing insights and resources, your thermostat will sync to theirs over time.
Push your boundaries on purpose. If you fly economy, save up for one business-class ticket to see what it is like. Look around and you will notice the seats are sold out too. Your brain starts working out how to make that the new normal.
Check what you consume every day and whether it is making you richer or only keeping you entertained. Replace some of the fat with a daily habit that builds your knowledge.
Choose your friends wisely.
Helping your partner raise theirs
The people around you probably have theirs set to the default they came with. Your biggest challenge may be helping your partner raise theirs. If you do not, it is like running the air conditioning with a window open: you earn more, but they keep behaving and spending according to the setting that pulls your lifestyle back.
It can happen with a spouse, parents, siblings or friends, and they may start relying on you to fund their pace of spending.
The advice is to take care of yourself first, since a sinking ship cannot save anyone, then help others build theirs so your rising tide raises all boats.
Bonus: Your obsession dictates your reality
The team says it became obsessed with building wealth because it grew up without it. Most childhood problems could have been solved with money, and it thought that with enough, its parents would stop fighting. That obsession led it to ask what rich people know that people like them do not.
It takes the average person 7 years, the claim goes, of obsession to go from poverty to wealth, and 10 years if you are slower. Each time you progress you plateau, and you will not find escape velocity until you adjust your thermostat.
One more idea: build something where success is possible and incredible success is a probability. The video gives its own app as an example of a business with a chance to become far larger if everything goes right, and argues it takes the same effort to chase small goals as big ones, so think big.
Turn the setting up on purpose
The takeaway is that your income ceiling is partly a belief you were handed. You change it with exposure, proximity and a circle that sets a faster pace, and you keep adjusting it as reality catches up.
Ask yourself where your thermostat was set growing up, and where it sits now.
FAQ
What is a financial thermostat?
It is the internal setting that determines how much money you are comfortable earning and managing. If you earn less, it drives you up toward that level, and if you earn more, it nudges you back down.
What sets your financial thermostat?
According to the video, mostly your upbringing: how much money you saw around you, how open your environment was to financial education and how well you understand how money works.
How do you raise your financial thermostat?
Through exposure and proximity. Exposure means learning, reading and talking about money to raise your financial IQ. Proximity means being physically and socially close to wealth, which makes high income feel real.
Why does your circle of friends affect your income?
Because you adapt to the pace of the people you spend time with. The script says that if friends earn 10 to 20 times more and you discuss how it works, your thermostat syncs to theirs over time.
Why do people stay in the same income range?
The video says the thermostat pulls earnings back to their comfortable level, so after a raise people drift back through slowing down and neglecting small details until income returns to the old setting.
Keep reading
- Fix These Problems If You Want To Be Rich
- These are the 15 SKILLS You Need To Develop If You Want to be RICH
- New Money & Old Money: 15 Differences
