Transcription
Have you ever wondered why dumb people make more money than you? How do people like Kim Kardashian or Tik Tockers make millions of dollars doing nothing while you're busy grinding away at work? In today's video, I'm sharing three reasons why dumb people make more money than you and three things you can do today to get ahead financially.
So, I grew up thinking that you had to be smart to get rich. But in retrospect, if that was true, then every PhD candidate would have a private jet and Richard Branson, who dropped out of school at 15, would be working at 7-Eleven. But the reality is the wealthiest people in the world aren't necessarily smarter than you or me. For example, the average college GPA for the average millionaire in the US is 2.9 out of five, which isn't failing, but pretty damn close to it. And research shows that those who earn the most money actually scored lower on intelligence than those who earned less than them. Meaning getting rich nowadays isn't about being smart. And instead, it comes down to these three things.
Number one, have you heard of the Dunning Krueger effect? It's a psychological bias where people who know very little about a subject often think that they know more than they do. So, if you think about it, do you consider yourself an above average driver? I bet you tree fitty that you said yes. And studies show exactly that, right? 93% of Americans rate themselves as better than average at driving, which is statistically impossible. We can't all be above average at driving, but that's basically the Dunning Krueger effect in action. Our brain works very hard to convince ourselves that we are more competent than we are. And the irony is is that the more quote unquote dumb someone is, the more they think they can succeed in what they do. You get more confident and then all of a sudden you think you can start a YouTube channel about personal finance, grow it into a media business helping millions of people every month make smarter money moves, and before you know it, you're doing it. That's me.
On the other hand, for most smart people, the moment you even consider starting a big endeavor like this, you're going to start researching, right, with 316 tabs open where you try to analyze every possible approach for weeks and that you never actually start anything, aka analysis paralysis. And it happens when you spend too much time thinking about doing something, which just paralyzes you from making actual progress in doing that thing. The point is, dumb people often don't know what they don't know, so they get more confident. They believe in themselves, right? That they can actually succeed. So, they actually start and take the first step. But most people, they want to make sure that they have all the information first, right? They want to have the best strategy and the best plan. And then they overthink and they second guess themselves and end up not doing anything.
Which brings me to the second reason that prevents smart people from getting rich. And it's that you have the wrong understanding of risk. And this is something that I've seen firsthand because I kind of lived on both sides. My first job out of college was in finance and I'd say 90% of my co-workers, right? 90% of them went to Ivy League colleges. Uh, they were top of their class. They were very academically smart people. And whenever we talked about how much our job sucked or how much we hated them and then we would like plan when we'll quit and start our own company, nearly all of them would agree with me and they'd say, "Yeah, I'm down." And then we spend hours talking about entrepreneurship and our business ideas and yada yada. And this isn't like a one-time conversation, right? It would span across multiple multiple weeks. And what really blew my mind is that I will check in again with them later, like a month or two months later, and then I'll find out that they haven't done anything to try and reach their goals despite all the conversations we literally just had.
And now that I've been in this entrepreneurship space for a few years now and meeting really cool people, ranging from someone just starting a new business to someone who raised tens of millions of dollars, I would always notice that a lot of them either never went to college or if they did, they went to less well-known schools. And it's not just my experience. Research actually founds that people with higher cognitive scores were more willing to take risk in a controlled environment. But when real money was involved and was on the line, that boldness pretty much disappeared. And if you really think about it, it kind of makes sense cuz like back in the day and when we were hunters and gatherers in the wild, it were it was the smart people who were the ones that survived, right? If you heard some noise in the bushes, in the grass, it was the smart hunters who would be like, "Oh, that's scary AF. Let's get out of here." Whereas it was the less than smart hunters who decided to stay and get eaten alive. So over time the people who survived were people who overestimated their risk and kind of imagined the worst case scenario. And if we fast forward to modern times right, the smart people are still instinctually conditioned to take on fewer risk and kind of follow the safe traditional path. But the difference is nowadays taking on a risk that isn't like illegal isn't that serious, right? Maybe you'll lose some money, maybe you'll lose some time, but you're not going to die. You're not going to get eaten by a lion. But still the fear of some risk is enough for most smart people to kind of stay on the safe path. The point is, dumb people tend to underestimate the risk. Whereas smart people tend to overestimate it and then follow the conventional route. But if you want to get rich, you can't follow conventional wisdom and expect to get non-conventional results.
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The next reason why dumb people make more money than you is that smart people are scared of looking stupid. And this is something I've noticed actually happens a lot for people um who go through life being labeled the smart kid. Growing up for me, I was never considered the smart kid in my class, but I had a lot of smart friends. Um, probably because I looked like I was a smart nerd. Um, but that was a catfish. People who grew up being the smart kid, they get a lot of uh external validation from it, right? And it kind of becomes this new identity. And when your self-image is built on being intelligent or being always right, then the thought of starting a business and failing publicly, it's kind of scary and is in a way pretty much just all downhill. In fact, studies show that kids who were praised for being smart were more likely to avoid challenging tasks because they were afraid of failing. Which is kind of ironic because if you're smart, you should always want to improve as a person and you don't really get better when things are easy. It's basically like when you're lifting weights, right? If you lift a half a pound dumbbell, you can move your arm up and down as much as you want, but you're not actually going to build any new muscle.
On the other hand, people who didn't grow up being the smart kid in class, like me, I I was pretty average. Um, you don't carry this type of baggage and burden around and people tend to underestimate and think that you're never going to achieve much anyway. And this does two very interesting things, right? So number one, it kind of motivates you because it makes you want to prove everyone else wrong. Um, and number two, you technically have less to prove and less to lose. So it's all upside from here.
So keeping all these reasons in mind, right, what are some things you can do if you're smart and you want to get rich and not get left behind? Number one is you need to embrace a B+ mentality. Let's say there are two people at the bottom of a mountain, right? A smart person and a dumb person. Before taking even a single step, the smart person is going to sit down, take out a map, weather instruments, climbing manuals, the whole shebang. Meanwhile, the dumb person is just going to start climbing, right? Maybe he goes the wrong way. Maybe he's going to make a mistake. Maybe he slips a few times. But every time he messes up, he's going to get back up and he's going to keep on going. At the end, even though the dumb person messed up a lot, right? He's the first one to make it to the top, while the smart person is still at the bottom making sure he's wearing the right hiking boots. If you want to get rich, you need to stop trying to always do A+ work and be okay with doing B+ work. Mistakes are a part of life and often times they are the best ways to learn something, right? And to be honest, there's a really solid chance that what you consider B+ work is actually pretty damn good already. Very quick, three books that I found really helpful for me when I'm in a slump or when I'm in analysis paralysis um is the the practice, show your work, and getting things done. The point is, at some point perfection is just another fancy word for procrastination, right? You don't get any better by thinking about doing something. You get better by doing it. And each imperfect action that you take teaches you something that you couldn't have learned otherwise, right? And all these like small improvements eventually compound into expertise and success.
Number two, find and use your comparative advantage. Now, I know this is going in a little bit of a different direction, but the truth is not everyone should be an entrepreneur. What I've noticed is that it takes a very specific personality, but that still doesn't mean that you can't get rich not being an entrepreneur. Part of financial success is finding out what you can do better than the average person or better than most people and really focusing on doing that thing. For example, a really talented plumber who's well-known throughout the city, right? He can earn way more money than a lawyer who is terrible at his job. And sometimes it can be really tough to find out what you're good at if you've been doing something else um for a very long time. Um, but the easiest way to find that out is one, you can check out Gallup's Clifton Strengths Assessment or uh, VIA's character strength assessment. Both of these assessments are pretty comprehensive and the results are pretty eye-opening. The point is, if you go down a career path that doesn't align with your strengths, um, and you do it just because you feel like you're supposed to do it uh, because of prestige of of stability or money, then you're going to underperform compared to other people and you're never going to reach your full potential.
The next tip is to avoid the heavier weight. And this is something that really helped me make the leap from uh corporate America to starting my own business. And it's realizing that no matter which of the two choices I made, right, it's going to suck. For example, I hated my job, right? And I felt like I was going nowhere. And if I stayed, then I would experience the pain of staying where I was. On the other hand, if I left and I did my own thing, right, I would experience the pain of going into the unknown and potentially failing and looking stupid or getting judged from my friends and family. So, I had two choices and either choice would lead to some sort of pain. Um, so how did I figure out which choice to choose? For me, what I did is I tried to imagine my life in 5, 10, 15 years from now and look at it and see which pain would hurt the most. And I realized that the pain of staying where I was and not doing anything, that pain was far greater, would be far greater for me than if I forced myself to get out of my comfort zone and take the jump. The point is, even if you have the tiniest, tiniest inkling of wanting to do more, give it a try. Because the absolute worst thing that can happen is you fail and then you end up in the same exact spot that you are in right now.