The video’s answer is that money comes from building systems and assets that earn without your time, not from working harder, cutting costs or saving a small slice of a paycheck. The case made here is that poor people are bad at making and keeping money, and that the gap comes down to a handful of ideas nobody teaches. It covers 15 of them, from how a business is taxed to why a salary buys food but profit buys freedom.
Many of the figures are the video’s own, quoted from the time it was made, so treat them as the video’s argument and check the numbers before you act on them.
Watch the full video here, or skip to the breakdown below.
The 15 ideas at a glance
- You can pay little to no tax if you start a business (0:25)
- Making money is about system solving, not working hard (1:36)
- Make money while you sleep or you will never be rich (3:26)
- It takes the same effort to make $50,000 or $1 million (4:38)
- Ideas are worthless without extended execution (5:43)
- Instead of cutting costs, focus on increasing income (7:20)
- $100 in passive income is worth more than $1,000 of worked income (8:40)
- Over 50% of your income should go towards investments (10:10)
- $1 million per year isn’t a lot of money (12:00)
- A wall gets built brick by brick, and so does wealth (14:31)
- Never borrow money that doesn’t go towards making more money (16:50)
- You earn in proportion to your ability to use your tools (18:05)
- Keeping money is harder than making money (19:40)
- Business people hire good professionals to make them rich (20:47)
- You need at least three income streams to feel safe (22:55)
- Bonus: tracking shows you the way
1. You can pay little to no tax if you start a business
A business doesn’t pay tax on income. It pays on what is left after expenses. Spend the money a business makes on goods and services that benefit the business, and the video says you pay no tax at all.
That is why people buy private jets: the jet, the fuel, meals with clients and work travel are all deductible. The contrast is simple. A business makes money, spends money, then gets taxed on what remains. An individual earns money, gets taxed, then spends what is left.
The video puts the average American at around 27% income tax, Europe closer to 50%, and the average corporation at between 0 and 3%.
2. Making money is about system solving, not working hard
You make money when you can fit the pieces of a puzzle together. The only way poor people know to earn is to trade time and effort for a wage.
The video uses a lemonade stand. The person serving is one piece. The owner has to think about the product, the stand, the seller, the transport and the supplier, which in business terms runs from supplier to distribution to processing to sales to consumer.
As a rule of thumb, an employee gets $1 for every $10 of value they generate for the owner. Solving the whole process pays far more than being a wheel in the machine.
3. Make money while you sleep or you will never be rich
While you trade time for money, you hit an earnings wall, because there are only so many hours to trade. Your income shouldn’t be tied to you. Build the machine that makes money for you instead of being the machine.
The hosts does the day’s arithmetic: 8 hours of sleep, 8 at work and 2 in traffic leaves 6 for eating, chores, learning, dating and a social life. People sacrifice the very things that make life worth living.
It sees two routes out. Raise your hourly rate to something huge, the way speakers and consultants do, or detach your work from the time put into it through systems.
4. It takes the same effort to make $50,000 or $1 million
This one took the hosts more than five years to understand. A mentor once told them, after praising their effort and quality, that it was a shame they were focused on the wrong thing.
Once you can solve puzzles, you may as well solve the ones with bigger rewards. The example: someone earning $2,000 a month selling phone subscriptions could earn over $20,000 a month selling cars or real estate. The sales process is similar, only the focus differs.
You may have every skill needed and still be putting it to use in the wrong place.
5. Ideas are worthless without extended execution
An idea is worth a million dollars only after it has made a million dollars. Anyone on the street can give you a business idea or two, so ideas alone are cheap.
The script’s framing: an idea is a multiplier on your execution. A 100X idea with zero execution is still zero. So take a mediocre idea and execute it better, which is the case it makes for Google over Yahoo, Facebook over MySpace and TikTok where Vine failed. Making coffee with milk wasn’t a billion dollar idea, but the way Starbucks executed it was.
Do not skip the part about extended periods of time. Almost everything starts out as trash, and the difference is how long you stick with it.
6. Instead of cutting costs, focus on increasing income
People cut coupons and spend hours saving pennies. Its line is that a penny saved isn’t a penny earned, it’s just a penny. Driving to three supermarkets to save $10 on detergent gives a poor return on your time.
If you earn $7.50 an hour and have time for three supermarkets, you have time to learn Excel on YouTube and find a job paying three times as much. Spend time becoming more valuable.
There is also a floor. Costs can only be cut so far, and once you hit rock bottom you’re stuck there, with a life designed around cutting lower and lower.
7. $100 in passive income is worth more than $1,000 of worked income
The thousand depends on you showing up, performing and finding clients. The hundred arrives no matter what you do, even if you’re sick or hurt.
The hosts goes further: $40,000 a year in passive income is worth more than a $200,000 a year job. That job takes five days a week, plus weekends in some form, and ties you to a desk, a location and a boss. Forty thousand a year lets you live almost anywhere and keep all of your time, whether for learning tango, raising bees, writing a book or being with your kids.
Passive income is multiplied in value by the time it frees up.
8. Over 50% of your income should go towards investments
You can’t escape the rat race while saving 5 or 10%. That might fund a hurdle, but it won’t buy freedom. It claims rich people save or invest at least 50% of their income, and sometimes up to 90%.
It sees only two good cases for plain saving: when you already earn so much that 10% is substantial, and when the money has a defined purpose, like a six month emergency fund. It cites $8,000 as the average American’s savings and says that is one ambulance ride from gone.
Money saved is money not invested. You don’t save your way to a penthouse. The returns on investments are worth a penthouse.
9. $1 million per year isn’t a lot of money
A million used to set you up for life, back in the 60s. The script’s argument is that currency loses value every year. It says there were 1.75 trillion dollars in notes in circulation at the start of 2020, and that the Fed then printed another 2.3 trillion. Value comes from scarcity, so inflation erodes what sits in your savings.
It claims $1 million a year in 2020 is roughly equivalent to $250,000 thirty years earlier. Its closing image: work 40 years at a million a year, spend nothing, and you still couldn’t buy a Rothko that sold for 46 million or a Newman that sold for 43.8.
What counts as a lot of money keeps rising, so decent money loses value.
10. A wall gets built brick by brick, and so does wealth
Many people happily spend $10 or $50 on things they don’t need yet scoff at earning $10 or $50 more. Passive income can start with that little.
The cheapest route the video names is dividend paying companies. Open any investment platform, buy shares in companies that pay dividends, and each quarter they split profit among shareholders. Start small with companies you know and trust. It lists Toronto-Dominion Bank at 5.32%, Realty Income at 5.37% and Chevron at 4.26%, as quoted in the video.
Building a wall means laying one brick at a time, every single day.
11. Never borrow money that doesn’t go towards making more money
Many people lack access to funding in an emergency, which exposes them to predatory lenders. The script says payday borrowers sign contracts they don’t understand and pay 70 to 250% yearly interest on something like an oversized truck, which is a bad purchase unless people are paying you to move things.
Its UK example: one big payday lender charges 30 pounds to borrow 100 for a month, another 37.15, with penalties and interest on penalties if you miss it. Borrowing can make you rich or turn you into a slave to a corporation that owns money you haven’t earned yet, and the video says poor people can’t tell which is which.
12. You earn in proportion to your ability to use your tools
We’re so surrounded by stuff that we forget some of it is tools, and tools are meant to generate value. At first all you had was your body. Then came tractors, and learning to operate one makes you more valuable than someone carrying loads by hand.
Why own a $1,000 phone only to scroll Instagram? Then you paid $900 more than you needed to. YouTube is a tool: you can learn skills from it or lose three hours to compilations. Same tools, but some people use them to consume and others to create.
13. Keeping money is harder than making money
Most poor people think earning is the hard part, yet nearly all of them have earned in the past and will again. The hard part is keeping it.
The thought experiment: give 10 random people a million dollars each and check in after 10 years. The script guesses none would still have a million, and some would be in debt. Making money has two routes, a job or selling a product or service. Few people know how to keep and grow it.
By 80, the video says, you’re lucky to own a house and a rusty car. The average person keeps less than 10% of the value they generate in their lifetime. The rest is consumed.
14. Business people hire good professionals to make them rich
Poor people look for security. Rich people look to build wealth. Security rewards being hard to replace, so specialise and your salary stays high. The rich think in profit: what is left after paying all the professionals.
A salary buys food and, if you’re good, some necessities. Profit buys freedom. This part uses this to explain why A students end up working for B and C students, who learned to play the actual game and built the companies where A students want to work.
It adds a claim about universities: that only 25% of tuition goes to teachers and the rest goes to the people who run the institutions. Treat that as the video’s assertion.
15. You need at least three income streams to feel safe
Most people hear three streams and think three jobs, because a job is the only stream they know. It wants streams that don’t all depend on you, so one failing doesn’t sink you.
As an example, it lists the company’s own: ad revenue, sponsors, digital courses, merchandise, content licensing and the Alux app, with a book planned. On a personal level the hosts name salaries, dividends from the company and from other tech businesses, rental income and stock and index fund growth.
The goal it sets for the next five years is to add a stream that doesn’t depend on you.
Bonus: tracking shows you the way
You can’t improve what you don’t measure. The hosts isn’t asking for every penny budgeted, only tracking of whatever you want to improve. Want to lose weight? Log food and weight. Want to earn more? Write down what you made this month. Want to waste less? Write down what you spend each day.
Once it’s written, you can tell whether what you’re doing changes anything. Most people wing it and hope things improve alone, but life doesn’t get better unless you do. If this month isn’t better than last month, you’re going the wrong way. Or in the video’s borrowed line: check the scoreboard.
Pick the idea that clicked
Every idea above comes back to one shift: stop trading hours for a wage and start building things that keep earning when you stop. Systems, assets and more than one stream are the three ways the video returns to again and again.
The script ends by asking which idea clicked most. Pick that one, start tracking it this week, and add one brick.
FAQ
Why do poor people stay poor according to this video?
It argues they trade time for money, cut costs instead of raising income, save a small slice instead of investing, borrow for things that don’t earn and rely on one stream of income.
Is passive income really worth more than a high salary?
Its claim is that $40,000 a year of passive income beats a $200,000 job, because the job demands your time, location and attention while passive income keeps paying and frees your time.
How much should you invest from your income?
It says over 50%, and claims rich people save or invest between 50% and 90% of income. It argues that saving 5 or 10% won’t buy freedom.
How can you start building passive income with little money?
The script suggests starting with as little as $10 to $50 in dividend paying companies you know and trust, bought on any investment platform.
Why is keeping money harder than making it?
Because most people consume what they earn. This part says the average person stores less than 10% of the value they generate in a lifetime.
How many income streams do you need?
At least three, according to the video, and they should be streams that don’t all depend on you so that one failing doesn’t sink your finances.
Keep reading
- 15 Things Poor People Don’t Know About Making Money
- 15 Investments Rich People Make The Poor Know Nothing About
- 15 Things Poor People Think Rich People Do (That They Actually Don’t)
