Hello Aluxers, we’re excited to be back this Sunday with another cold shower on the things poor people don’t know about making money. This one should serve as both a wake-up call to some of you, as well as the light that shines your path forward.
You’re going to find answers to questions you didn’t know you had, but for that, you need to put your feelings aside and act like a big boy or girl and be honest with what’s actually happening in your life.
Fundamentally, – and this should come as no shock to anybody – :
Poor people are bad at making & keeping money, otherwise they wouldn’t be poor!
What better way to tackle this issue than to actually give you guys the cheat-sheet to what making money is all about.
If you’re not feeling like reading this long piece, we’ve got you covered! Here’s the video version:
Here are 15 Things Poor people don’t know about making money, in the same Alux fashion that you’ve grown to know and love!
You can pay little to no money in tax if you start a business
This should be common knowledge among everyone but just to make sure we’re going to say it again:
Business do not pay taxes on INCOME* they pay taxes on what’s left after you subtract expenses!
*money they are able to generate
If you spend the money the business generated on Goods & Services that benefit the business, you will NOT PAY any taxes at all.
The more business expenses you have, the less amount of money is left to be taxed. That’s why people spend millions on a private jet. It’s a business expense, because it allows you to meet with clients. The private jet is a deductible, so is the jet fuel, meals with clients in restaurants, traveling for work and so on.
This is a fundamental difference between businesses and individuals. To illustrate it in the simplest way possible:
|Makes money||Works for money|
|Spends money||Gets Taxed|
|Taxed on what’s left||Spends what’s left|
The average corporation pays between 0 and 3% in taxes. The average american pays somewhere around 27% in income tax, while in Europe is closer to 50%
Making money is about system solving, not working hard
You make money when you’re able to solve and put together all the pieces in the puzzle.
The only way poor people know to make money is to “work” for it. Exchange time & effort and someone else pays you for it.
The value comes from your ability to create a chain of systems that transform INPUT into MONEY.
Here’s what we mean by that in a simple way.
Poor people earn money by being the sales person at a lemonade stand. The owner of the stand is paying you by the hour.
In this case, you are just a piece of the puzzle!
The lemonade stand owner has the following pieces:
1. Identify the product or service: in our case: Lemonade (it’s the good that gets exchanged for money at the end of the chain) (now let’s see what happens before the sale of the lemonade)
2. You have the stand where the lemonade gets sold at. (but the fresh lemonade doesn’t sell itself, so you have to bring in someone)
3. The person who’s selling the lemonade ( now that you think about it, this person needs to receive the ingredients, in our case CUPS,LEMONS, WATER & SUGAR, so…)
4. Transport of the ingredients to the lemonade stand – as well as:
5. The actual ingredients that need to be purchased from what is called a supplier.
To put the process in business terms:
Supplier -> Distribution -> Processing -> Sales -> Consumer
See how the lemonade seller is only a piece of the puzzle, while the owner needs to think about all these elements.
As a rule of thumb, the employee gets $1 for every $10 of value they’re able to generate for the owner. The reward for solving the process is a lot bigger than being a wheel in the machine.
The moment you’re able to solve the puzzle of processes, you can begin to take full advantage of the marketplace which will make you more money if not rich.
Here are some problem you should solve if you want to be a billionaire:
Make money while you sleep or you will never be rich
Listen and listen very carefully:
As long as you’re trading time for money, you will never be rich!
Why? Because there is a limited number of hours in a day you can trade. Even if you traded all of them, you would still hit an earnings wall.
Your ability to generate income should not be tied to you!
Don’t be the machine that makes money, build the machine that makes money for you!
This is why the previous point of solving the system is so damn important.
Unless you take back control of your time, you will always be poor. 8 hours of your day you sleep, 8 hours you spend at work. 2 hours get wasted in traffic going to and back from work.
You’re left with 6 hours in a day, to eat, do chores, invest in yourself, figure out who you are, date & have a romantic life..
There’s not enough time for all of them, so what do people do.. They sacrifice some of these, without realizing that these are actually the things that make life worth living.
You’re not here just to wake up, go to work, pay bills until one day when you die!
It takes the same amount of effort to make $50,000 or $1 Million
This one will get most people confused. We can almost hear all the heads tilting and your inner voice going: HUH?! Wait What?!
It took us over 5 years to understand this concept, because it felt so disconnected from where we were sitting in the earlier days.
A mentor of ours gave us the following compliment & advice:
“Wow, congratulations on the effort, quality and amount of work that you’re putting in, it’s a shame you’re focused on the wrong thing!”
Once you’re able to solve puzzles, might as well try to solve the ones with the bigger rewards.
What’s the point of working as hard for a fraction of the reward.
It took us 3 years to find a different puzzle and 2 more before we were able to solve it; but the reward was definitely worth it.
Here’s how this applies to you:
If you’re earning $2000 a month selling Telekom subscriptions over the phone, you can earn over $20,000 a month by selling cars or real estate.
The process is quite similar, but the reward is greater. Pushing this example further, that same person can earn over $100,000 a month by selling stocks on wall street.
The sales process is the same, but your focus isn’t right.
This is one of the secrets rich people use to get ahead in life! We made a video about the other ones:
Ideas are worthless without extended execution
Can y’all please stop with the million dollar idea that you have?
How long have we been saying this here at ALUX:
An idea is worth a million dollars, only after it made 1 million dollars!
Everyone has ideas! You can stop anyone on the street and they’ll be able to vomit 1 or 2 business ideas that they think are worth quite a fortune.
Please pay attention for what we’re about to tell you will change the way you think about ideas for as long as you live:
An IDEA is a MULTIPLIER to your EXECUTION!
Even if you have a killer idea that’s worth a 100X Multiplier, if your execution is 0.. Do the math:
0 x 100 = 0.
Your Ability to execute is multiplied by the quality of your idea.
Which means, take any mediocre idea and simply execute better on it! That’s how you win!
That’s why Google crushed YAHOO, Facebook crushed MySpace. That’s why TikTOK won where VINE failed. That’s why McDonalds won over the other burger franchises at that time.
This is why STARBUCKS is still winning the coffee game! Making coffee with milk isn’t a 85 Billion dollar idea, but the puzzle they’ve been able to execute on the way they did is.
Success comes from being able to execute at a high level for extended periods of time!
& please: Do not neglect the “extended periods of time” part.
Instead of cutting down costs, focus on increasing income
Poor people cut coupons. They spend hours figuring out ways how to save a couple of pennies.
You know another of our favorite sayings:
A penny saved, isn’t a penny earned! It’s just a penny!
It doesn’t matter if you’re worth $1000 an hour or $7.50, why are you wasting 2 hours of your life driving to 3 different supermarkets just to save $10 on some detergent?
The RETURN on YOUR TIME is wack!
We deeply despise, from the bottom of our hearts, the people that spend their efforts trying to cut down personal costs when that time could go towards increasing income.
If you’re earning $7.50 an hour and you have time to go to 3 supermarkets, you’ve got time to learn Microsoft excel here on YouTube and find a different job that pays 3 times that amount.
Instead of wasting time cutting costs, invest the time into becoming more valuable!
Why? Because There’s always a limit to how much you can cut costs, but there’s never a limit on how much you can earn!
$100 in passive income is worth more than $1000 of worked income
This is something counter-intuitive to most people and we’re glad we get the opportunity to finally address it and maybe light up a path forward.
The average person looks at our comparison and scoffs away… “how can 1000 dollars be worth less than $100”.
Here’s why: That thousand dollars is dependent on you being able to show up, to perform, to secure clients, etc. while the hundred isn’t. That hundred will come in no matter what you do.
What happens if you get hit by a car or get sick and your ability to perform goes away?
Passive income also frees up your life. Ready to have your mind blown?!
$40,000 per year in passive income is worth more than a $200,000 a year job.
A 200,000 dollars per year job will require your time, effort and attention at least 5 days a week – you know you would be working weekends as well in one form or another. It also chains you to a desk, to a location, to a country, to an office. For $200,000 you will be stressed the hell out and have to put up with a shitty boss.
With $40,000 per year, you could live almost anywhere in the world and have 100% of the time to yourself. Want to learn Tango? Sure. What do raise bees in the wilderness, more power to you. Maybe write that book you’ve been planning to, or spend as much time as you want with your kids.
Passive income revenue is multiplied in value by the time it frees up!
If with the 200,000 job, you had 10 hours a week to spend with your family, with passive income, those 10 hours daily you don’t waste at the office or in transit grants you an extra 50 hours per week. And we didn’t even include the time during the weekends.
In this example the passive income grants you 5 times more time to focus on the things you love. That’s the 5X multiplier, which is why 40,000 dollars in passive income is worth more than a 200,000 a year job.
Over 50% of your income should go towards investments
You can not escape the rat race if you’re saving 5 or 10%. You just can’t. You might be able to have enough funds to overcome a hurdle, but that’s not enough to buy yourself freedom.
What to hear something that’s going to blow your minds away?
Last year, we saved/invested between 80-90% of our income.
And you know what, we did similar numbers the year before that and the year before that; we’re probably going to do the same this year and the year following.
We’re not alone in this. Almost everyone in our circle saves and invests at least 60% of their income. This is freedom money. This money buys real-estate, buys stocks, goes towards other business investments..
The truth is, poor people have no way of saving this much of their income because their income barely covers their basic needs. The problem is, they completely disregard everything else we mentioned earlier in this list.
The moment you begin to increase your income, don’t act stupid and increase your lifestyle dramatically.
It all boils down to simple math:
Do you want to know how much money you should be making to be free?
First of all, you need to know: How much does it cost you to be alive with your current lifestyle? We’ll call this “LifestyleCost”
In order to be FREE, your passive income needs to be at least double that of the LifestyleCost!
If you are looking to actively earn your freedom by working:
In order to be free, your active income needs to be at least 5 times the Lifestyle Cost.
If being who you are costs you $50,000 a year, you need to bring in at least $250,000.
Why? Because out of that $250,000, $50 will go towards expenses and the remaining 80% needs to go towards buying yourself that freedom through investments.
If you’re poor right now here’s your to-do list:
1. Learn new skills that immediately improve your market value.
2. Start to build a system that does not rely on you to earn money, on the side.
3. When the new money starts coming in, switch to the side project full time.
4. Reinvest everything in the business while living below your means
5. When the real money comes in, move it to alternative investments.
This is the most truthful approach you’ll ever get to this issue. You’re welcome!
$1 Million dollars per year isn’t a lot of money
You can almost hear all the butts clenching all around the world as we mentioned it.
We all grew up with this idea of a millionaire; that 1 million dollars was enough to set you up for life, because it used to be true back in the 60s. Maybe it still feels true if you live in a poor part of the world and right now believe you don’t need much.
The paradox is, that only those who are earning in excess of 1 MIllion per year, realize that it’s just a decent earning.
Money is getting devalued every single year. Let us put this in perspective for you with the US as the main example.
As of the beginning of 2020, there were 1.75 TRILLION dollars worth of notes in circulation. That’s actual money bills out in the marketplace. Scared that the economy will tank because of the coronavirus, the FED decided to print another 2.3 TRILLION dollars – out of thin air – and simply give it to people and businesses to avoid a financial collapse.
Value comes from scarcity!
The more something is to be found in the marketplace, the less valuable it is.
Congratulations, every dollar you have is worth less than half of what it used to.
This devaluation of currency is called: INFLATION. Every year, the government prints new money and the stash you have in your Nike shoe box is worth less and less.
$1 million dollars per year in 2020 is roughly the equivalent of $250000 just 30 years ago, not just because of inflation, but also the buying power. Real-estate is a great barometer of this.
Poor people fall victim of this system. They don’t understand that keeping money in CASH is actually costing them money. The rich leverage their understanding of the market and park their money in assets called: STORE of VALUE. (Real estate, gold, art, luxury goods & more recently crypto).
Here’s why 1 million per year isn’t that much money to begin with.
The average person will work for approximately 40 years, right? Between the ages of 25 to 65.
If you made 1 million per year, every year of your working life, completely ignoring inflation and didn’t spend a penny, you still wouldn’t have enough money to purchase this rothko painting that sold for 46 million; or this one by Newman that sold for 43.8.
Imagine working your entire life for 1 million per year and still unable to buy a piece of canvas with 2 colors on it.. Yet these type of paintings sell every year..
A wall gets built brick by brick – same is wealth
Poor people have always had this idea of striking it rich. Through unpredictable means, luck would come their way and bless them with financial riches.
The rich never buy lottery tickets!
It’s actually one of the reasons they became rich in the first place. It’s Because they understand how wealth is built and you can not leave this to chance.
Pay close attention to how most poor people act with money. Notice their choices, notice their thinking:
They have no problem spending $10, $50, $100 on random unnecessary things, but scoff at the idea of earning $10, $50 or $100. That’s too little money for them, but when they have it, they’re quick to throw it away on vices or things they don’t need.
“But ALUX, you need a lot of money to build passive income & we don’t have that kind of money”.
This is why we decided to make this video. The average person doesn’t understand that you can build passive income with as little as 10 to $50; and this has always been possible, yet you are not educated enough. Let us take you to school on this!
The simplest – and cheapest- way to create passive income is through investing in DIVIDEND PAYING COMPANIES!
Write this down in your notebook.
How do you do that? You use any investment platform, robinhood, revolut, etoro etc. and purchase companies that are paying dividends. Every quarter, these companies split the profit between the shareholders.
Here are 3 dividend paying stocks super accessible to beginners:
|Company (Ticker Symbol)||Industry||Recent Price||Dividend Yield||Beta|
Toronto-Dominion Bank (NYSE:TD)
|Realty Income (NYSE:O)||
You start small, move some of that money into dividend paying companies that you know and trust. This way, your wealth grows, you will store value, but when these companies make money you get paid as well.
Building a wall requires you to put one brick at a time, so does building wealth. If you want to escape this situation you’re in, you need to not only be more educated about the tools you have at your disposal – and we’ll touch on this at number 12 – but also begin to act on the information you’re learning.
Stop waiting for someone else to make you rich!
That stimulus check – if you even get it at all – won’t stretch that far, we promise!
There are 3 fundamental books to read if you want to educate yourself on wealth building.
1. Money: Master the Game by Tony Robbins – in our opinion the best beginner book on using little money & stocks to build wealth
2. Rich Dad Poor Dad by Robert Kiyosaki – the best book on the fundamentals of cashflow and passive income
3. The Millionaire FastLane by MJ. Demarco – the counter to the previous 2 books mentioned and what it takes to build a multi-million dollar company.
These are mandatory reading to everyone watching this video. These cover the basics, without them you’re gonna have a hard time with money.
Stop thinking that books are expensive because currently your life is cheap!
Your life is cheap because you think investing in yourself is expensive!
But let’s say you’re truly struggling and can’t afford $20 for a book, go to alux.com/freebook right now and sign up. Our friends at Audible are giving our community 1 free audiobook if this is the first time you’re signing up. Pick any of these 3 books and listen to it on repeat until you get every ounce of value out of it.
The more educated you are, the more you are able to understand what’s happening around you.
Never borrow money that doesn’t go towards making more money
What are you doing buying a tv on credit?
Why are you ready to do installment payments on the new PlayStation?
Why are you borrowing money to buy a dress or a handbag?
We know many people lack access to funding in case of emergencies, which is why they’re taken advantage by predatory loan shark like institutions.
Believe it or not, these people borrow money from PayDay Loan companies without understanding the contracts that they’re signing. They’re paying 70 to 250% yearly interest on the money they’re borrowing for stupid shit.
This happens all around the world. UK has the same problem as the US – and the rest of the world for that matter.
Here’s an actual example: Money Shop – one of the biggest payday lenders in the UK – charges £30 to borrow £100 for a month. The second biggest player, Wonga, charges £37.15 to borrow £100 for a month.
If you don’t pay in a month, the penalties and interest and interest on the penalties start to apply.
You’d think that one has to be stupid or desperate to borrow money from these people especially if it doesn’t go towards making more money, but millions of americans borrow money to go to college and choose majors without any prospects in the market for their future careers.
Your major in Philosophy or Gender studies has no market value, yet you now owe over $100,000 for the experience of finding this out for yourself. That’s why onlyfans is so popular, these girls have debts to pay.
Borrowing money can either make you rich, or a slave to some creepy old guys who now basically own your life.
The problem is, poor people can not differentiate between the two. Which is why everytime we call them out on borrowing money to join pyramid schemes shaped like Multi-level-marketing they get so obfuscated. Go to the comments right now and see the butt-hurt MLM people defending their “investment” as legit.
As a golden money rule in life:
The moment you’re giving your money to someone else, you’re making that person richer and making yourself poorer.
Pay close attention to who you are making rich!
You earn in proportion to your ability to use the tools you have at your disposal
We’re so accustomed to having all this STUFF around us that we forget that some of these are TOOLS and tools are meant to be used to generate value for your existence.
Back in the very beginning, all you had was your body, so you would cary stones with your muscle, use your eyes to look for snakes in the grass or for red fruits.
There are people to this day that the only tool they use is their body. In many parts of the world, people still cary things by hand for example.
We’re jumping closer to the present and now you have tractors to carry even heavier stuff with people no longer having to rely on their physical strength to get the job done. All you need to do, is learn how to operate the machinery and you’re immediately more valuable than the person who still carries stuff by hand.
Keep this IDEA in mind as we progress through this point.
People no longer understand the purpose of tools!
Why do you have a $1000+ iPhone to only scroll Instagram? If that’s the only thing you use the iPhone for, you just paid $900 more than you should have.
YouTube is a tool. You can either learn new skills from it, or waste 3 hours of your life watching tiktok compilations.
Tools are multipliers and the amazing thing is that they stack up onto each other.
Yet most of you don’t see that.
Poor people purchase things for status, while the rich purchase them for purpose.
This is why most of the poor think of the rich like greedy.. “Man.. if I had that kind of money I would buy 3 ferraris in different colors” while the rich shake their heads in disbelief.
Entertainment is free or cheap, don’t waste money you don’t need to!
Instead, look around you at the things you own, some of them are tools that can be monetized. The device you’re listening to this on, can make you money if you use it right.
Learn to monetize the things you already have!
Keeping money is harder than Making Money
Most poor people think that making money is hard, but almost all of them have made money in the past and will be making money in the future.
The hard part is keeping the money, not making it!
Making money is no secret, you get a job or sell a product or service; that’s basically your only 2 options, but very few people know how to keep it and grow it once they get it.
How many of you are spending money you don’t have? How far behind that line are you, where you’re doing the math in your head and hope the people you borrowed from will just forget about it?! That’s why your life is the way it is.
You can not control your spending habit.
Just a couple of weeks ago, we had a skype call with anti-virus multi-millionaire: John McAfee who despite earning an excess of 100 million from the sale of his antivirus software to Intel, has managed to lose almost all of it, including his freedom in the process. Maybe we’ll actually release the talk sometime in the future on our channel.
His stance was that making money is one of the easiest things in the world, but not losing it is actually very difficult if you don’t know what you’re doing. And it’s true.
Just look at what the average person has of value at the end of their lives. At 80 years old, you’re lucky if you own a house, a rusty car and if you’re eastern European, a Porcelain animal and Doily collection and not much else.
The average person manages to store less of 10% of the value they generate in their lifetimes!
The rest is simply consumed.
Business-People hire Good-Professionals to make them rich.
This is a fundamental difference between two types of mindset.
Poor people are looking for SECURITY
Rich people are looking to BUILD WEALTH
The golden rule when it comes to security is being hard to replace:
The harder you are to replace, the more you are worth to the marketplace.
Specialize and your salary will always be high.
The rich on the other hand, do not think the same way.
The rich don’t think in terms of salary, they think in terms of Profit!
How much is there left to take home AFTER you pay all the professionals their salaries.
The more you think about it, the more things should begin to click in your mind.
A salary buys food on the table – and depending how good you are at your job, even other necessities – but Profit buys you freedom.
This is also why A students and up working for B & C students. “A” students are very good at following orders, they’ve been following everything the teacher told them to do… but if you really think about it, teachers aren’t as successful as they led you to believe they are.
Almost anywhere in the world a Mechanic out-earns the teachers! They never told you this, yet you studied hard because they told you that’s what success is all about.
In the meantime, B & C students learned to play the actual game and build the companies where “A” students dream to work at.
You want to know a secret about the education industry: Only 25% of the money that you pay in tuition goes towards the teachers. The rest of the money goes to the chairmans of the trust funds that OWN the biggest universities in the country..
Although universities are listed as non profits, they get to pay whatever salaries they want to their board. Daniel Cummings, the managing director of real estate at HARVARD is paid over 10 million dollars per year. All the guys at the top earn over 5 Million per year in salaries from the University and they don’t teach a single class! Now you know!
You need at least 3 Income Streams to feel safe.
For most people, when they hear the term 3 streams of income, they’re thinking 3 jobs. Why? Because for the majority of the population the only stream of income they’re aware of is the job they’re working.
In order to not be shaken by the fluctuations in the market, every one should have at least 3 streams of income. We’ve been slowly adding them one by one for years.
Let’s take ALUX Inc as a company for example, we earn money from:
- The revenue from the ads you’re seeing on this video.
- The revenue from strategic sponsors like Amazon, NordVPN, Shopify, Audible and more.
- The revenue from our digital courses
- The revenue from our merch line – although that one’s kinda small but it still brings in some money
- Royalties from the licencing agreements on the distribution of our content to other markets
- Direct original video partnerships with Brands
- We’re looking to release our first book soon, that’s going to be another stream of income.
On a personal level, we’re earning money from multiple streams as well:
- Salaries for our work at ALUX
- Dividends from ALUX Inc
- Rental income from our properties
- Dividends from other tech companies we’re invested in that are profitable
- Not to mention the growth of our stock & index fund portfolio and more.
Why is this so important? Because if one of them were to fail, we would have another thing to fall back on and mitigate the damage.
That’s why we’re building an audience on instagram @alux and we’re looking to revamp the website. If YouTube went away overnight, it would be a big hit to us, but we would survive off of everything else. We’re safe and so should you.
Your goal for the next 5 years is to add another stream of income that’s not dependent on You!
The moment you learn how to do this, life gets super exciting!
Which raised the question: Which of these ideas clicked with you the most? One of them definitely set up an idea domino in your mind and when you guys share your take-aways in the comments, it helps us see what kind of information is actually valuable to you and we can focus on it more.
This wraps up our article on the things poor people don’t know about making money!