In the following video summaries of the 4-Hour Workweek, learn the vital lessons which can help you escape the 9-5, live anywhere, and join the new rich.
Animated Summary by the Swedish Investor
What does money create? It creates time, mobility and options.
The new rich is a group of people who have realized that living like a millionaire doesn’t require that one is a millionaire. They have also realized that you can live like a millionaire without working your ass off until age 65, building a fortune 500 company or consuming millions of annual reports.
1: The Step-By-Step Process of Joining the New Rich
Create time, mobility and options without having an abundance of money. Sounds like a great deal. Am I right? That’s why the strategy to get there is abbreviated DEAL.
Life is negotiable. Just because everyone else follows the nine-to-five Dogma, doesn’t mean that you have to do it too. I hate the but what if everyone else does so two-argument? Don’t worry. Everyone won’t be willing to do this, but hopefully you will. Follow this and you’ll be ready to join the new rich in no time.
DEAL
D stands for definition. First and foremost we must redefine the goal of the game that we’ve been fooled to play for so long. Money in itself is not the end goal, relative income trumps absolute income once certain essentials are met. (more on this in takeaway number 2)
E is for elimination. Being busy 24/7 is trumpeted as ambitious, but Tim Ferriss disagrees being busy. All the time is lazy, lazy thinking. To become truly productive—which is essential to have a 4-hour workweek—You must eliminate unimportant activities. (discussed in takeaway 3)
A is for automation. Outsource, outsource, outsource. No more wasting your time with repetitive tasks. If you estimate your hourly to be say 20 dollars, it probably makes a lot of sense to have someone else do it for seven dollars an hour. (More on takeaway 4)
L is for liberation. Skiing is better in Italy. Surfing is better in Costa Rica. Diving is better in Australia and meatballs definitely taste better in Sweden. Why tie yourself down to a single location? In takeaway number five, I’ll discuss some of the tips that Tim Ferriss gives for the final piece of the puzzle mobility.
2: Relative Income Trumps Absolute Income
D is for definition and it’s all about redefining how we think about money. Who is richer in your opinion?
A. The investment banker with an annual salary of $500,000 who works 80 hours a week.
B. The e-commerce entrepreneur with his whole business on autopilot. Who earns $40,000 per year with a 4-hour work week?
Tim Ferriss talks about something he calls a freedom multiplier consisting of four variables. Depending on how many of them that you can control, the practical value of your money multiplies. They are:
- What you do?
- When you do it?
- Where you do it?
- and whom you do it with?
An investment banker is typically very restricted in these regards which is why the e-commerce entrepreneur may be richer when we consider what money can do for this person.
And here we shall introduce a very important concept Relative income Trumps absolute income once you have a cash flow that’s enough to support your desired lifestyle.
Sure, the investment banker beats the e-commerce entrepreneur in absolute income. He earns four hundred and sixty thousand dollars more per year. But is this a bit excessive? The e-commerce entrepreneur beats the investment banker once time is introduced to the equation as his relative income is $200 per hour versus a hundred and twenty dollars for the banker.
The investment banker may be able to stack up that five hundred thousand dollar salary for an early retirement. But he should question himself on why he wants to do so. So that he can move to a nice and warm Paradise Island and just go surfing all day? Well, the ecommerce entrepreneur can live that lifestyle already. He doesn’t have to wait until retirement to do so and there’s every reason not to save it all till the end.
3: How to Be More Productive
What’s the difference between being effective and being efficient?
- Being effective is about doing the right things.
- Being efficient is about doing things, right.
To join the new rich and reach a four hour workweek, we must focus on the former. Remember this: doing something unimportant does not make it important.
It’s time to eliminate the activities that are not getting us where we want. There are two great principles to keep in mind here Pareto’s law and Parkinson’s Law.
Pareto’s law states that 80% of the effects comes from 20% of the causes. 80% of company profits come from 20% of the customers. 80% of results comes from 20% of effort and time 80% of consequences stems from 20% of the problems etc. Our mental energy must focus on these 20%.
- For example, keep the top 20% customers happy and put the remaining 80% on autopilot, and get rid of them if they complain. In general keep updating priorities and focus each day on one to two big tasks. Small bad things will happen when you start to ignore certain tasks, but this is necessary to get the big things done.
Parkinson’s Law states that a task will grow in perceived importance and complexity in proportion to how much time that is allowed for its completion. It’s all about deadlines to become as productive as possible. Cultivate the habit of selling short ones both for yourself and for others — 24 to 72 hours is preferred. And if the task seems too big for that chunk it down. This is closely related to the students syndrome.
4: Become the Ghost in The Machine
What’s the greatest obstacle towards management free money? Yourself. No matter if you’re an employee or an entrepreneur, to join the new rich, you must learn how to define and delegate tasks. Replace and multiply yourself. Outsource tasks either to machines and software or to people to have them automated from your perspective.
Elimination precedes automation because just like doing something unimportant well, does not make it important. Outsourcing something unimportant does not make it important either. But they also go some what hand-in-hand.
By paying someone else to do an activity for you, you can quickly determine if it’s something that should be done or not. Would you pay someone seven dollars an hour to manage customers that you only profit five dollars an hour from? Of course not and it’s even crazier for you to handle these customers yourself as you probably value your own time much more than seven dollars an hour. These customers should be eliminated. Not outsourced.
Tim Ferriss talks about Geographic arbitraging. It’s all about earning in dollars, living on pesos and compensating in rupees. Get a virtual assistant from for instance Fiverr or Upwork for time-consuming and repetitive tasks and remember the following:
- Focus on cost per task completed and not cost per hour.
- Test you don’t know how well you will work with anyone before you try it.
- Set short deadlines One task at a time.
- Apply it, try it, and hopefully you can multiply yourself down the line making you the ghost in the machinery.
5: Create Unrestricted Mobility (Even as an Employee)
For the entrepreneur, unrestricted mobility follows from eliminating and automating, if you start with the right business.
An example of such a business is an internet-based one. For the employee, However, it’s a bit different. You can’t just tell the boss that from now on you’ll be working from the beaches in Rio de Janeiro. Instead you should follow these five steps to gradually allow yourself to pull a disappearing act from the office.
Step 1 Increase Investment Look for courses and additional training available for employees. You want the company to invest as much as possible in you because no one understands sunk costs.
Step 2 Show Increased Output Call in sick and do work off-site for a day or two, make this period ultra productive.
Step 3 Quantify Company Benefits Showcase just how productive you’ve been during these days to your boss emphasize the company benefits that this has.
Step 4 Suggest a Revocable Trial Ask the boss for a revocable trial of working remote for two weeks two days per week. Your fallback plan is one day per week if this request is denied. Again, make these days the most productive ever.
Step 5 Expand Time Spent Remotely after a success for trial Gradually increased time spent outside the office in additional trial periods until you don’t have to be in the office at all.
Video Review by Better Than Yesterday
Key Takeaways
This is how today’s society thinks your life should look. You have go to school for the first 20 years of your life. Then you have to find a high paying job that you’ll work for the next 40 years. And after that, you can retire and finally enjoy your life for the last 20 years. If you’re lucky to live that long of course.
This is basically the life plan. Work hard now, so that someday in the future you can kick back, relax and enjoy when you have the money. The 40 years of soul-crushing work has been accepted as the default path. But is this the only way? Not at all.
Today we’re going to challenge this notion by summarizing one of my favorite books. The Four Hour Workweek by Tim Ferriss. This book is about working smarter and not harder. It’s telling us that we can accomplish a lot more if we manage our time more effectively.
Although, if you’re doing something you’re truly passionate about, you’re inevitably going to work hard anyways. In fact, probably much harder than you would working a job you don’t care about. So the real objective of this book is to help you avoid doing what you dislike, and to also have the freedom to pursue your dreams.
1. Retirement and Why It Sucks
So let’s first talk about retirement and why it sucks. If you’re currently working a 9-5 job in exchange for occasionally relaxing weekends, you might think that retirement is the end goal. A light at the end of the tunnel, as you finally have the freedom to enjoy yourself.
However relying on retirement should be nothing more than the absolute worst case scenario. If you think it’s going to be great when you retire, then I have to tell you something right now; it’s not going to be great, your current job straight up sucks and you’re wasting the best years of your life. Who the hell wants to wait until they’re old, before they start living life on their own terms?
Let me add that over 50% of people, over the age of 65, have some sort of disability. So those last 20 years of your life, are basically a coin flip. You’re not really free if you’re old, sick and fragile.
A good question to ask yourself is this:
- What would you do if retirement wasn’t an option?
- How do your priorities change? It really makes you think.
- Do you keep working at a shitty job for the rest of your life? Or do you find a different one? Maybe you start your own business?
You’ll have to find the answer to that question yourself.
Another problem with retirement is that one week into it, you’ll be so damn bored.
Suddenly you have 8 extra hours in a day, but nothing to fill this empty void. You’ll probably want to look for a new job or start a company. Which kind of defeats the whole purpose of waiting, doesn’t it? I’m not saying don’t plan for the worst case. But don’t mistake retirement for the end-goal.
2. Relative Income vs. Absolute Income
A dollar, can sometimes be worth more than just a dollar.
Absolute income doesn’t take anything else into analysis. It’s just a raw number of how much someone makes per year. In relative income however, we look at the money earned per hour and how much freedom someone has.
Freedom meaning: controlling what you do, when you do it, where you do it, and with whom you do it.
3. Avoid work for work's sake.
Some people are really good at being busy. They shuffle papers and check email all day long. When you meet them on a Friday night, they’re so proud of it as well. They say: “I worked 70 hours this week! just to make themselves feel like they’ve accomplished more than the other person.
And yet they seem to get nothing important done. They are busy and even efficient, but they’re busy with the wrong things. You don’t want to be like them. A lot of people work at a job where they could finish their work in 4 hours.
But because their employer thinks they have to work for 8 hours, a completely arbitrary number, they become extremely good at deceiving themselves and others that they are productive. Otherwise they could get fired from their job or wouldn’t get paid.
And the same problem applies to self-employed people. Instead of doing 4 hours of quality work, they’re busy for 8 hours, but accomplish the same amount.
In today’s world, doing less is considered laziness. But that’s simply not true. Doing less meaningless work, so that you can focus on things of greater importance, is NOT laziness. This is hard for most to accept, because our culture praises being busy, instead of being productive.
In the book Tim talks about efficiency and effectiveness. Efficiency is performing a given task, whether important or not, in the best way possible. Effectiveness is doing the right things, which get you closer to your goals.
- For example: The best door-to-door salesman in the world is efficient. Refined and excellent selling without wasting any time. But he’s completely ineffective. He would sell much more of his product using a different method, such as e-mail or any other type of advertising.
Efficiency is important, but it’s useless unless it’s applied to the right things. So first be effective, then be efficient.
4. Pareto's Law
The Pareto’s Law states this: 80% of consequences come from 20% of causes. This means that 20% of your efforts produce 80% of your results. But the inverse is also true. Which means that if you want the last 20% of results, you’ll have to put in 80% more effort.
What you want to do is to identify those 20% that produce 80%. You then want to focus on the 20% and become efficient at them.
Eliminate the other 80% which produce only 20% of value. There is no point in spending your time on them. If we eliminate the things that don’t produce a lot of results, we could then use that extra time, to focus on the 20% that produces the most results.
5. Outsourcing
Let’s say you have an online business and you make 50 dollars an hour. However your lawn needs mowing and you really don’t feel like doing it. You could: A.) mow the lawn yourself, but it’s going to take 1 hour of your time, or B.) pay someone else to do it for you, for 20 dollars.
Since you don’t want to mow the lawn and your hour is worth 50 dollars, paying someone 20 dollars for 1 hour of work is a good trade-off for you. You basically buy yourself extra time.
Now you might be thinking; I know I can do a better job than the guy I hired, so why shouldn’t I do the job myself? Again the point is to free your time to focus on bigger and more important things.
You can always do something more cheaply and get it done the way you want it done, by doing it yourself. However this doesn’t mean you want to spend your time doing it. If you spend your time, worth 50 dollars an hour, doing something that someone else is willing to do for 20 dollars, it’s simply a poor use of resources. That’s assuming you dislike mowing lawns. If you get enjoyment out of it, then go ahead and do it yourself.
However you should never outsource something that can be eliminated in the first place. Don’t forget the Pareto’s law. So it’s better to focus on doing the tasks only YOU can do. Let others do the easier tasks for you.
When you look at millionaires, they all have personal drivers, chefs and maids. Someone could say they are lazy, but really, they’re simply using their resources more effectively by outsourcing tasks that are not important to them.
Since they basically buy more time, they can now focus on the 20% of things that will make them even more money. Or they could spend more time with their families, whichever they choose.
The basic idea here is to get in to the habit of outsourcing unimportant things and to buy yourself time so you can focus on the things that are important to you.
6. Fill the Void of Retirement
Why are a lot of millionaires and old retired people, depressed and unfulfilled with their lives? Both the retired and ultra-rich are often depressed and neurotic for the same reason: too much idle time.
When you remove all the bad and unimportant things in life, you are not left with everything good. Sunshine and rainbows isn’t what remains. Far from it. You’re actually left with an empty void. Doing nothing isn’t the goal. Doing what excites you and brings you joy is.
If you free yourself from your job, but you haven’t filled the void with anything non-business, like a hobby, you’re just going to continue to work to keep yourself busy. Otherwise you’ll be bored out of your mind.
Knowing how to spend your free time is also something that needs developing. It’s not something we’re automatically good at.
The media might tell you that sipping a cocktail on a sandy beach will get rid of all your life problems. Sure, you can do that for some time. However there will come a stage, whether it’s two weeks or two years later, when you won’t be able to see another beach and drink another cocktail ever again. You’ll be over it.
So what should you do with your free time?
To live is to learn. You want to continuously challenge yourself, not be idle.
- Start playing a sport, learn a new language or play an instrument. Read more books, focus on improving yourself and your relationships with other people.
- Basically, try out different things and see which hobbies you like or enjoy.
- You could also start making an impact in the world. Help out your local community, donate to charity or create a company that shoots rockets into space.
Always keep on improving yourself and do what excites you.
The 4 Hour Work Week Animated Review by OnePercentBetter
Key Takeaways
“The 4 Hour Work Week” is about time management and understanding how to focus on the important things of life. The approach to time management that most people take is the wrong one, trying to fill every moment with productivity.
Being busy is a form of laziness, lazy thinking, and indiscriminate action. We mistake activity for productivity and end up doing work just for work’s sake, which distracts us from doing what’s most important.
12 Vital Lessons
1. Define Fear what is the worst case scenario? What is it costing you financially, emotionally and physically by not chasing your dream?
2. Automate Income 3 popular ways: create a product, license a product or resell a product.
3. Be effective, not efficient don’t fool yourself you’re being productive, elimination is key. Decide what’s important and follow the 80/20 principle.
4. Outsourcing hiring a virtual assistant has a huge ROI, eliminate before you delegate.
5. Relative Income make more by working less.
6. Mini-Retirements & Geoarbitrage you can improve your finances by taking mini vacations in countries where things cost less. Leveraging the economic differences between markets to generate a high return.
7: Challenge the Status Quo 1. retirement planning is flawed 2. the timing is never right 3. ask for forgiveness, not permission 4. money alone is not the solution.
8: Dreamlining list five things you want to have, be or do. Calculate how much it would cost to afford these things. Aim to reach these goals in 6 months and start taking action immediately.
9: Cultivate Selective Ignorance ignore all information that is irrelevant, unimportant or unactionable because less is more. If you’re half-way through a shitty book, just stop reading it.
10: Interrupting Interruption 3 things that interrupt us:
- Time Wasters unimportant email, phone calls, meetings, etc. Turn off the notification on your email as well as the auto send/receive, and check email only twice per day, at noon and 4:00. never check emails first thing in the morning and set up an auto-responder.
- Time consumers selecting the important information that will be beneficial to you, repetitive tasks that could be done more efficiently by batch tasking
- Empowerment Failure cases where your approval is required in order for something to happen. When someone has to come to you before they can take the next step in their task. Or, in the case where you have to go to someone else before you can proceed with a task.
11: How to escape the office consider negotiating how to work remotely, telecommuting. Use hourglass approach.
12: Filling the void Idleness is what kills you. Always be on a continuous mission of learning. Be of Service: something that improves life besides your own.
Don't follow a model that doesn't work. If the recipe sucks, it doesn't matter how good a cook you are.
Animated Reviews by FightMediocrity & Productivity Game
Key Takeaways
Elimination 80/20, Pareto’s Principle
Outsourcing get into the habit even if you don’t need it. What is your time worth?
The Pareto Principle famously observed by Italian economist Vilfredo Pareto: in any field of endeavor, 80% of results come from 20% of actions. Majority of results come from a select few efforts.
Ask yourself the following questions:
- What 20% of sources are causing 80% of my problems and unhappiness?
- What 20% of sources are resulting in 80% of my desired outcomes and happiness?
Think about these two questions and how it can apply to your life. You need to make the fundamental mentality shift to “being busy is a form of laziness – lazy thinking and indiscriminate action… lack of time is actually lack of priorities.”
Parkinson’s Law work expands to fill the time available for its completion. Meaning that if you give yourself a week to complete a two-hour task, (psychologically speaking) the task will increase in complexity and seem more difficult that week. It may not even mean fill the extra time with more work, but just the stress and tension about having to get it done.
- By assigning the right amount of time to a task, we gain back more time and the task will reduce in complexity to its natural state.
- These two laws are synergistic: only do the 20% to shorten your time, and shorten time so you focus on the 20%.
Most things don't matter and what matters most needs less time to complete than we think.