Education appreciates over time
Hormozi’s philosophy is about looking at education as an investment. If you learn math, for example, then you can learn accounting. And if you learn accounting, then you can learn how to invest.
Education isn’t about collecting degrees, but rather about gaining credentials with utilitarian value, which can be used immediately.
Hormozi cited the following example to Ramsey: if you’re working a minimum wage job and put aside $500, you could invest that money to get a decent return over time via compound interest. Or you could spend that money on a two-day course to become a phlebotomist (a medical professional trained to perform blood draws) and dramatically increase your income in a matter of days.
“That’s a micro example of how skills can give you more cash flow to invest in everything else,” Hormozi said. “Always keep reinvesting in skills because that raises your lifetime baseline of earning potential.”
More: Check out the best investing apps of 2023
Don't miss
- Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here's how even ordinary investors can become the landlord of Walmart, Whole Foods or Kroger
- Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
- These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
The microcredential approach
Malcolm Gladwell popularized the 10,000-hour rule in his book, Outliers: The Story of Success, about what makes high achievers different. Gladwell offered up the idea that it takes around 10,000 hours of deliberate practice to achieve mastery of complex skills — though he does point out that no one succeeds at a high level without innate talent.
However, another approach is microcredentials, which emphasizes competency-based learning of specialized skill sets. These credentials take much less time to acquire (and are usually less expensive) than a diploma or degree.
One of the key benefits of this approach is that learners can “stack” microcredentials, building additional skills over time, according to the World Economic Forum (WEF).
Thanks in part to a drive toward automation and the adoption of technologies such as generative artificial intelligence, employers estimate 44% of workers’ skills will be disrupted over the next five years, according to the WEF’s Future of Jobs Report 2023. Six-in-10 workers will also require retraining between now and 2027.
Microcredentials “have the potential to accelerate skills-based talent management and open new pipelines of talent,” according to the report.
They may be able to open up new career pathways — and higher earning potential — to those who don’t have a college degree (or can’t afford one).
Why sadness is ignorance
Yet, many people stay broke because “they subscribe to what everyone else around them who is poor tells them about how to get rich. So they take poor people’s advice on how to make money,” Hormozi told Ramsey. “So as a result of that, they keep doing the wrong stuff.”
Or they don’t do anything at all, remaining in a state of “paralysis analysis.” They’re always searching for that perfect money-making opportunity, but find themselves still searching — and still broke — years down the line.
“I define sadness as ignorance, as in, you don’t know what options you have. So, whenever you feel hopeless, it’s because you don’t know what to do,” Hormozi said. But not knowing what to do is a problem that can be solved.
Hormozi pointed out there’s so much information freely available on the internet to learn a variety of employable skills. In some cases, it can take a matter of days or weeks, not months or years. So for those willing to put in the time, he says, “you can get way ahead.”
It takes experience to become proficient, and some might find the prospect of entering new territory overwhelming. For example, anybody can get into sales, but many people will wait years to make those first series of cold calls because they’re afraid.
“Fear is holding them back. They don’t want to fail,” Hormozi said. “They don’t want the judgment that they think is coming from people who aren’t actually paying attention to them to begin with.”
More: What is the 'Boots Theory' of socioeconomic unfairness?
Sponsored
This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024
Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.
There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.
