“Escaping the rat race isn’t about quitting a 9-5 job. It’s about avoiding the “Money Trap”. A race to the next paycheck, or material possession.
In this video we take a look at what the rat race truly is, ways in which personal finance can help, as well as understanding the relationship between consumption and production. A relationship that can help you save money, but also scale your income.
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Outro: My My Snake Eyes (Feat. Malena Stark) – The Darkness Of The Light
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The Rat Race seems to be conflated with working a 9-5 job. It’s often used to guilt those who have a disliking towards their jobs into purchasing a course, program, or something of that nature.
A real rat race isn’t about working a 9-5 job, it’s about living on a financial edge. Such that your greater life goals and ambitions are placed in the background as you continue chasing the next paycheck, or material possession.
Our relationship seems with money is often as follows: it enters our life, and it leaves. Sometimes this is expressed as your income and expenses, but I think a better way of framing this is your production vs your consumption.
For most of us, we have an issue with consumption. And when fixing this, it may be best to first draw an awareness to yourself as a consumer. Using a budget and tracking your expense is the best way of starting. A common strategy in personal finance is building an “emergency fund”, a fund that holds 3 – 6 months’ worth of expenses – enough so that if an emergency were to ever occur, you wouldn’t have a problem financially supporting yourself through such an occasion.
Production is then about increasing the amount of value you can bring to a society. In my video the Untold Truth About Money I mentioned that people are paid in proportion to their perceived value in the marketplace, and one of the best ways of increasing your perceived value is by solving a problem in the market, then selling this solution through a business at scale. This is the entrepreneurial route. And whilst most of us will be able to produce value into the market by selling our labour in the form of a 9-5 job, this doesn’t mean our ability to produce stops there.
YouTube channels like Graham Stephan, or Dave Ramsey are great for learning about personal finance, and reducing your expenses. But these people don’t rely on cutting coupons/living frugally to be making millions. They are utilising a means of production at mass scale. Graham Stephan uses YouTube as a vehicle to produce finance videos at mass scale.
Attempt to identify ways in which you can produce value to the market. For example, I utilised my skills in acting, storytelling, video editing, and presenting, to create videos like the one on my channel. I saw YouTube as a vehicle to be able to produce value to the market at scale.
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All materials in these videos are used for educational purposes and fall within the guidelines of fair use. No copyright infringement is intended. If you are or represent the copyright owner of materials used in this video and have a problem with the use of said material, please contact me via my email in the “about” page on my channel.
AFFILIATE DISCLOSURE: there may be a few links in this description that, at no cost to you, will earn me a commission if you choose to click them and make a purchase 🙂 Don’t worry – I only ever promote things that have genuinely helped me.
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Prologue – 00:00
Part 1: What is Money? – 02:06
Part 2: Production vs Consumption – 4:00
Part 3: The Money Trap – 5:50
Part 4: Production – 11:08
Conclusion/Credits – 15:40 “
Full Video Transcript Below
In 2003 professional boxer and heavyweight champion Mike Tyson vowed for bankruptcy with 30 million dollars in debt despite accumulating over 300 million dollars during the course of his career which poses a great question about money itself because a great deal of our actions or our motivations in life have an underlying desire or need to acquire it but what’s the point in acquiring it if the great issue seems to be with our ability to manage it Americans now have the highest credit card debt in history translation you didn’t learn anything debt is an invisible burden being carried by the country’s most vulnerable of course these statistics are reflective of the UK and the US but consider for a moment your own attitude towards money and how money exists in your own life what is money to you does it seem to enter your life and immediately leave once you have it has it ever placed you in a vulnerable position a vulnerability that drew you closer to a get-rich-quick scheme or a guru telling you that you can get rich if you just bought their course whilst my entire channel aims to tackle these topics to some degree or another I realize that our perceptions of money are sometimes more crucial than our ability to generate it especially when our very brains are wired in such a way that prevents us from being financially sensible does it really matter if you’re earning more than six figures a year if by the end of that year you have nothing left to show for it where is the disconnect it’s time we solved that mystery and not only that but explore a better framework for understanding money a framework commonly taught in personal finance but oftentimes missed in formal education a question what is money or rather what does money represent when you make a purchase from amazon when you’re paid for your time working a job what is the significance of money in these transactions money is commonly defined as a medium of exchange an instrument that facilitates the sale purchase or trade of goods between parties but I don’t think this says much about what money actually represents I think a better way of looking at money is an expression of value you hand over a certain amount of money to purchase something because you perceive its value to be equivalent to the amount of money that you handed over of course the price is often not determined by you as an individual but the market as a whole but hone in on this one point money equals value why is that so important because often we give money a moral significance a quote that I’m sure you’ve heard money is the root of our evil we look at someone who seems to have a large amount of wealth and think they got lucky who did they take advantage of to get to that position who had to lose in order for them to gain and never what value was created in order to generate that money understanding that money is simply value is the best way to understanding that money is not necessarily evil nor does it make a person evil sure there are things such as scammers who convince you that what they have to sell is worth value but that doesn’t say much about money more so than it does their own morals money simply opens your options and broadens your horizons the choices you make with that money have everything to do with your own moral dispositions so money is an expression of value now what how does this change the reality of a person living paycheck to paycheck or someone who is consumed by credit card debt the simple mention of money equals value changes nothing it may make me see money in a different light but what part of that is actionable advice to answer that question I’ll post you another question what is your relationship with money, money will come into your life and it will leave this is a relationship that is often expressed by your income and expenses another practical way of expressing this which I particularly like is your production versus your consumption for the most part money will enter your life because you have produced some form of value and for most of us this value will come in the form of labor a job money will leave when you have consumed something a Netflix subscription a new car a house in many ways we can look at the net worth of an individual as a metric for determining their relationship between consumption and production now cast your mind back to those statistics I mentioned at the start of this video what part of the consumption versus production relationship do you think is at fault here consider yourself for a moment think about all the money that has entered your life and left how much of that do you still have in possession today or invested into some sort of asset and which part of this relationship do you feel is unbalanced or needs improving the likelihood is both but for most of us the biggest issue lies in our consumption remember the career builder study that found that 78 of American workers were living paycheck to paycheck well it also found that of the workers who made a hundred thousand dollars or more a year one in ten of them were living paycheck to paycheck now you could argue that someone earning six figures a year may still like to earn more but when you are paid a figure that is well above the average wage and the cost of living and yet you still somehow find a way to spend it all I’d argue that your relationship with consuming must be fixed before you even consider your relationship with production as any wealthy celebrity who has filed for bankruptcy can show us production means nothing when you have a problem with consumption a rat race an endless self-defeating or pointless pursuit sometimes the rat race is conflated with working a nine-to-five job it’s a comparison often used by certain individuals to guilt you into buying programs and books for them but this seems extremely unfair mostly because it aims to villainize a job and excludes the fact that there are those who either love or are perfectly fine with their jobs or have other aspirations aside from their nine to five a real rat race is one that is living on a financial edge being one paycheck away from broke constantly a feeling as though the moment money enters your life it immediately disappears and the more responsibilities you have the more dangerous this relationship becomes the loss of a job an unexpected health accident or any unexpected circumstance for that matter can throw your entire financial position into turmoil and consider the mental consequences of living on this financial edge your job no longer becomes an option it becomes a necessity in order to keep funding your lifestyle or to keep paying off debt to quote Tyler Durden from fight club the things you own end up only you what’s the silver lining it doesn’t have to continue like that the first stepping stone in personal finance will have you drawing an awareness to your relationship with money this is often done by journaling your monthly expenses categorized as housing transportation food utilities entertainment and so on it’s about understanding yourself as a consumer but this part is tough in behavioral finance this feeling can often be labeled as the ostrich effect which is our tendency to want to avoid negative financial information it’s that feeling you get when you refuse to look at your bank account after a night out fearing what it might show and yet once you pass this stage it’s time for you to take control over your behavior as a consumer this often involves the idea of budgeting deciding each month how much you aim to spend on each of these categories and sticking to it it’s about systematically looking at what you consume and finding ways in which you can minimize these things to ultimately live below your means in other words having a lifestyle that still leaves you with enough money to save and invest in some form or another it’s also important to note that before you ever decide to invest one of the most common practices in personal finance is to keep an emergency fund a specific amount of savings that you hold onto in case of an emergency this fund would typically hold three to six months worth of expenses the idea however of living below your means is an important one because why would we choose to do otherwise why would we choose to live a lifestyle that we cannot afford or one that places us on this financial edge I could make an entire video on our cognitive biases the ostrich effect is just one of which can affect your financial position then there’s hyperbolic discounting a tendency to favor short-term rewards as opposed to greater rewards in the future this is you choosing to purchase a new pair of shoes instead of saving that money towards a future investment or their social proof our tendency to think and act as others around us think and act when the people around you are buying one thing you buy it too or when the people around you establish money as a means of evil you’re likely to assume the same thing too the phrase keeping up with the joneses summarizes this great problem of consumption it’s a phrase defined by Google as trying to emulate or not be outdone by one’s neighbors they buy a new Porsche you buy one too they have nice clothes you get some too they renovate their home you do it too all in the attempt of impressing or trying to keep up with others due to some form of social pressure only in today’s world the joneses are not literal neighbors they’re far more present than that we are all vulnerable to social approval we really care what other people think of us but the problem is we’re measuring our self-worth by how many people like what we’re posting governor of the bank of Canada stated it’s succinctly for most Canadians debt is a fact of life at least at some point to be clear I’m not saying that purchasing an expensive piece of clothing jewelry or sports car is a bad thing nor do I think consuming is a bad thing the aim of this video isn’t to philosophize about the repercussions of a materialistic view of the world it’s about drawing an awareness to who you are as a consumer do you care more about appearing as though you have money or actually having money the rat race isn’t about working a nine-to-five job but living life on such an edge that it means that you are chasing the next thing whether a paycheck or a material possession such that your greater life goals and ambitions are placed in the background in order to continue this race a budget and keeping account of your expenses have proven time and time again to work and draw you out of this race it’s fun to talk about making money or imagining having as much wealth as possible but what’s the point when your relationship with money as a consumer means losing it all or having to work non-stop in order to fund that lifestyle that is the real rat race but with all of that being said let’s talk about making money now the stuff we teach here and have for almost 30 years is proven what’s up you guys it’s graham here so we got to take a moment and talk about what’s going on in the stock market because as we’re finishing up the week stocks personal finance channels like graham Stefan or Dave Ramsey are great for learning how to work on your consumption side of the equation but if there was one thing I wish they spoke more about it would be their ability to make money and I understand why they don’t do this it’s easier to reduce your expenses in the amount that you consume than it is to increase your income when speaking to a mass audience giving the advice that will work for most people is typically the best choice we see that there are entire communities built up around focusing on frugality the fire community is one example of this a movement that adopts the strategy of living extremely frugally saving and investing as early as possible with the intentions of retiring as early as possible minimalists also share a similar view to the fire community although more deep-rooted in philosophical positions about the world and materialism at large people like Graham Steffen or Dave Ramsey promote strategies that fall in the spectrum of living frugally saving a lot of money and investing in the long run and there’s nothing inherently wrong with this strategy it works for a wider range of people with varying degrees of income but let’s be honest Graeme Stefan doesn’t rely on cutting coupons or living an incredibly frugal lifestyle to be making a hundred to two hundred thousand dollars a month from YouTube nor does Dave Ramsey rely on these strategies to have an estimated net worth of 55 million dollars these people are utilizing a means of production at mass scale in my video the untold truth about money I talked about money being equivalent to your perceived value in the market and the most impactful way of increasing your value is finding a problem in the market creating a solution for that problem and selling that solution to the market at scale this is the entrepreneurial route a successful business at scale is able to produce a large amount of value to a society such that your production side of the equation grows exponentially in comparison to a standard job but this isn’t a route that everyone can take nor should they try to it’s about reflecting on your own capabilities and whether entrepreneurship is best suited to your direction with that being said increasing your production doesn’t have to just come from the strict definition of a business Graeme Stefan uses YouTube as a vehicle to produce something in this case videos about personal finance at mass scale it’s one reason that I chose to create videos on YouTube as well it’s a vehicle to produce something in this case documentary style videos at a mass scale to a point where I can now do it full time and build a business around it producing is about providing relative value to the market in some shape or form I utilized my skills with acting presenting storytelling and video editing to create videos that I hope to be somewhat entertaining and educational and thankfully the market responded positively your form of production may be developing an app or software that is solving a problem you believe the market would pay money for its solution or perhaps a fitness brand that is branded extremely well and utilizes its community better than most other fitness brands as I believe is the case with Ben Francis and what he did with gymshark for most people labour in the form of a standard 9-5 job will be their means of production but this doesn’t mean that your ability to produce stops there understanding yourself as a producer is about understanding ways in which you can produce value to the market if you can produce value at a large scale then it means earning money at a large scale the internet has thankfully provided a great deal of opportunity for us to be able to produce something and put it out to the market whether the market actually wants what you have produced can only be determined once you’ve released whatever it is that you’ve produced so to summarize it’s first important to bring awareness to yourself as a consumer understanding what you purchase and why you purchase by journaling your consumption and then giving yourself a budget to manage and control that consumption producing then becomes a matter of maximizing the amount of value you can bring into society through a job a business or some other means of production this is a framework that has helped me greatly as i’m sure it’s helped countless others who have a vested interest in making money like this isn’t just sushi we’re talking about anymore like this is this is substantial yeah and then to go from that to like this focusing is that 170 454 dollars yeah that’s insane hello hello my friends before you click off the video just yet I want to say one thing thank you so much for watching to the end of this video you watching to this point is hopefully proof that I’ve provided some kind of value to you in some way or another so be sure to hit the like button and if you want to see more videos around the topics of business money finance in general then be sure to hit the subscribe button I’ve also got a Patreon where I post behind the scenes stuff and I do questions and answers and I’ve got a bunch of other exciting plans for it so if that interests you and you’d like to support the channel further do check it out the link is in the description below now for me personally combining what I know about personal finance and entrepreneurship has really helped me the most and as I mentioned this YouTube channel was one way in which I knew I could produce some kind of value into the market at scale if you want to do more extra reading on these subjects if it interests you there’s two really good books on personal finance related stuff the millionaire next door and your money or your life these are really good personal finance books and of course if you know me you know I really love MJ Demarco’s work so check them out if you want to also see the entrepreneurship side of stuff but with all of that being said my friends I hope you have a wonderful rest of the day I will catch you in the next video or on my Instagram or Twitter if you have me on there as usual hands ahead salute too many days is yet to come too many times has come to pass too many moments put aside getting out alive getting out of letters in the sand
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