Ok people, let's clarify this whole misunderstanding of a ratio being or not being a number. Now, obviously Alex knows that a ratio equates to a number. But I don't think that's what he is referring to in a literal sense. What he means is that wealth is not the same specific number for everybody, it's based on a ratio between expenses and income that is different for everybody. For example, let's say person A makes $50k/year but has $10k/year in expenses, and person B makes $100k/year but has $80k/year in expenses, this would mean that person A is "wealthier" than person B. Why? Because person A nets $40k/year and person B net's $20k/year, they have twice as much money left over even though they make half as much income. So a specific amount of income does not equate to being "wealthy" for everybody, it's a different ratio between expenses and income for all of us. Which is why Alex says that wealth is a ration, not a number, not a specific number. I hope this helps clear things up. By the way, I am not speaking for Alex in any way on this, this is just me trying to help clear things up.
The problem with chasing an expensive lifestyle is that once you normalise expensive luxuries they don't make you happy but anytime you then experience a lower level of luxury it makes you really unhappy. You are just building a golden cage for yourself. It is better to live modestly and occasionally treat yourself to luxury so that you can enjoy it the way a normal person would.
@@disposabull Got a question for you (seriously). If I lower my wants to a minimum, and realize my means for a healthy, comfortable lifestyle is give or take 100k a year, what is the motivation, the reason, to fetch for 8-9-10 figures? What exactly am I missing? Because, at that point of having $100M goals, is the reason and motivation about serving others? Other people? (B2C) or Other businesses? (B2B) is that it? That I have to 'want' to help others? or is there another purpose or reason?
Here from Austin, TX, I hear you!! I was earning $800,000 per year (not really huge money when comparing) expending most of it, paying huge money for our lifestyle, then everything came crashing! lost everything but we learned our lesson, now we are starting from zero but with a different mindset and bigger goals. thank you for this video
Love this channel and the fact you actually respond to ppl is super cool. Youve replied to a couple of my comments in the past so just wanted to say thanks for being an example to the community. Loved the part were you said that applesbees and cheesecake factory are better than $500 dollar steak place. Seems like the more I learn about finances the less money means to me
@@AlexHormozi Got a question for you (seriously). If I lower my wants to a minimum, and realize my means for a healthy, comfortable lifestyle is, give or take, 100k a year, what is the motivation, the reason, to fetch for 8-9-10 figures? What exactly am I missing? Because, at that point of having $100M goals, is the reason and motivation about serving others? Other people? (B2C) or Other businesses? (B2B) is that it? That I have to 'want' to help others? or is there another purpose or reason? I have days that I tell myself that I have nothing to live for an could start even have suicidal thoughts because I have no purpose or reason for anything.
Love the channel!!! Its refreshing to hear from someone that tells you how it is. What I got from this is -If you don't travel alot or its not your passion to travel, don't buy a plane -If your don't feel the differance in a high end vehicle (not a car person) don't waste your money on a Car stuff. -If you don't have passion for food, then going to a high end resturant may not be your thing -if you don't care for clothes, then shorts & t-shirt are all good. -If you're happy living in a middle of the row home then a massive mansion isn't going to make you happy. I guess what I really got from this is spend your extra cash on things/experiances that make you grow/happy/make you feel accoplished. I guess, my question to you Alex would be- what do you do to relax/hobbies do you do outside of work/gym??
My dad always used to say, “Who is richer? The man who has the most or the man who needs the least?” Thank you for your excellent videos! Great insights
I'll save you $312k and a lot of stress. At the end of the day, you're still who you are. If you're a miserable person, you're still miserable. You don't need stuff to make your life fulfilling or happy.
Happiness is generally derived from having purpose, an interest, mastery of a skill, curiosity, a sense of achievement, spending time with friends/family/colleagues and is usually a shared experience. Happiness also tends to inspire giving (like volunteering at charities) as opposed to short term gratification like eating, spending money/shopping, drinking, and binging which is fleeting, addictive and never enough.
It's so frusturating when Alex drops such good advice like this, cuz it makes so much sense to just drop my desire for expensive clothes instead of trying to build a million dollar business, but its a hard battle to change those beliefs. At least I have the larger goal of being my own boss. At 19, I have decided to never live the 9-5 if possible. That's my true motivator for trying entrepenuership.
@@phx-b Yea, I'd rather be able to tell my friends and family I went all out to try and live my best life than have to explain how I settled for less than what I truly wanted and felt I deserved. I think we're in the right place listening to Alex's advice for now bro. Best of luck.
What you are saying is so true. I'm a 2 millionaire and spend $25k/yr to live. I spend my time traveling, going on outdoor adventures, riding dirt bikes, and working on garage projects. I live in a cheap, paid-for house. I have found that spending more on these things does not make it better. I love 4 wheeling and fixing up my '98 Jeep Grand Cherokee. Staying in a hostel where I can meet other travelers is more fun than a 5 star hotel. I can do anything I want, and I do. Having more money would be very little benefit to me. I suspect that is the same situation for you but you seem to get a lot of satisfaction from creating value and making money.
Absolutely true. Don't be impressed by a boat, be impressed by how good of a sailor someone is. Don't be impressed by an expensive car, be impressed by how someone operates that car on a track.
Just had a fancy steak dinner last night. Over $400 after tip. Chilies “Chips and salsa, and fajitas“ definitely feels like a better value. Ha Thanks for another great video Alex!
Completely agree, we're planning on being financially free within the next 5 years. My wife and I pull in about $225k/year but live off $40k, we've been investing the balance for a few years now.
The more I listen to things like this, the more it seems that a more minimalist life is the way to go. Fancy houses, cars, and belonging tend just to way you down with maintenance and stress.
I mean, every time I visit the really affluent neighborhoods [for me being Palo Alto, Los Altos Hills, Woodside etc] I realize why the prices of the homes there are so high. To me its worth it! But everything else - is not! i.e. Cars is one of the most ridiculous thing you can buy - its purpose from taking you from Point A to B ends there - the rest is just the icing on the cake - thats full of sugar and ads no real value.
@@michaelb9940 well at the end of the day a home’s purpose is just to protect you against the elements and/or wildlife so you could apply the same logic there.
@@gunzaJMG didn’t quite understand what you’re said there! In this era we are living in - home is no longer (just a shelter). This is why the current market for the millennials who are actively buying homes (or in the market) leans toward communities that offers more than just shelter. I still find living in areas that have a better sense of community superior / thus the price tag
Thanks for the Enlightenment, If you don't find a way of multiplying money, you will wake up one day to realise that the Money you thoughts to had , had finished.... I'm just saying that people should develop the habit of investing it's really helpful in life. Investing is the key 🔑
Working with Romero pieto is the best thing that can happen to a beginner trader who is aspiring to be fruitful out of the market he is trustworthy and straightforward we surely need more men like him in trading world.
It's very interesting to put all these fancy things into a realistic perspective. Thanks for sharing your perspective and thanks for all the videos you make! I've been enjoying watching them and I've learned a lot. I'm looking forward to learning more in the future!
I learned this on a MUCH smaller scale when I bought my childhood practical dream car (vw Passat... I know) and realized after a couple weeks that I didn't see the outside while I was driving it, but I did worry a ton about it at all times. It's worth it to have a car that works well and is comfortable, but it's amazing how quickly you acclimate.
Great video Alex! Following you for a while and watching your content! Wish that become just 1% as successful as you are and end the struggle with financially and pull something off from the ground.
This video is simple math yet so genius! I hope everyone on youtube gets to watch this video Atleast once to open their eyes. Specially when you mentioned the product testing part and the ratio thing towards the end of the video. Thank you for this incredible video Alex!
These are all superfluous spendings tho. That is like tip of the iceberg extra spending for rich people. I think the real major expenditures would be responsibilities, supporting families, children's schooling (e.g. 4 kids' or grandkids or nephews' private schools or something), personal staff, medical or health related expenses, supporting other initiatives etc. So I mean this isn't an accurate spending profile for a rich person.
He also states that this is the lifestyle that lures most people into wanting to be rich, and he's saying not to listen to it, because ultimately that's his message. There are more important things.
@@juanshaftpatel7488 Don’t assume things about people you don’t know. Private schooling/wet nurses/nannies etc is by far the biggest drain for wealthy people who have kids. The other stuff like private chefs or whatever are more optional but you can’t get away with not having a nanny if you’re still working.
5:58 I have a bone to pick with ya here as a car enthusiast. I really enjoy driving so whatever "little" enjoyment I get from driving is 100% worth it to me. but you don't need an exotic car. Buy a car that is FUN to drive, not something that's just fast. Instead of a Rolls Royce, get a Toyota GR86, instead of $400k you spend $30k on a really enjoyable car that gets 30 mpg and is really fun to drive and is well built, just make sure you get a manual. You get pretty good MPG but you get a lot of enjoyment within the road limits. Get a car that feels good to drive. To me, Priuses just depress me to drive, and I've driven some, it's just not for me. We all have things we like to spend money on, for me it's cars.
I experienced this personally this last year! I wish I watched your video before I spent more money than I should've on all of these things... oh well, live and you learn haha. Was my first time making over $500k in a year lsat year and having some 6 figure months this year 🤪 love your channel btw. Insane value!!
@@kennethporst4359 I wouldn’t say it wasn’t worth it. It’s just I wish I held off until I was making more money so I could play more risky in busy and invest more into the biz. I was balling too hard for the amount of money I was making and unforeseen risks that came that I exposed myself to. Like Alex says, try to keep your expenses as low as possible compared to your income!
Glad I've stumbled upon your videos. Solid dude with awesome advice. I appreciate the shared knowledge and value you're adding, when you have literally nothing to gain.
Rather than premium products I'd rather have high tier products and spend the difference on services that buy back my attention (PAs, independent housekeepers, cooks etc).
Totally understand the car thing. Just rode in Porsche Panamera Turbo ($190k) and just turning on the heat and vents was so complicated... compared to a Honda
Or buy an older model that’s depreciated down a lot and has begun to appreciate due to collectors value. You’re still going to spend a lot on maintenance and that kind of thing but the actual value doesn’t drop very much or sometimes it may go up over time. The only downside is the opportunity cost of tying up your money in a car. A lot of older 911s, some Ferrari’s, etc. barely depreciate at all. I owned a Porsche for like 3 years and it depreciated only $5000 during that time so that came out under $150 a month which is like any car.
Finally!!!!! somebody tells to absolute truth about the actual costs of this lavish lifestyle that MOST of these so called Ultimate Rich Gurus never explain to people. Thank you sir for your honesty and integrity. You’ve earned yourself a new Subscriber 💯.
Love this breakdown, numbers don't lie! Also a huge fan of the ratio, once beyond investing/saving 50% of income it really changes. Getting to just spending 10% is the goal for sure (by earning more) 🔥
This is a great breakdown and reality. From someone that flies A LOT, Private is nice and there is a time and place. But flying commercial with status, first class and convenience is much cheaper. Thank you for great content and the down to earth mindset on this.
While I agree with the majority of this….there is a benefit that comes to living in expensive buildings, going to expensive places and possibly even having an expensive car. And that is that you get to network and meet other wealthy individuals and who you know is an exponential factor and what you will be able to create. Just being surrounded by people who are on your level or doing better than you is usually enough motivation and builds your conviction. Having been financial disadvantaged and now doing well, I would not go back to living where I did before. And moving to a better neighborhood definitely increased my business exponentially.
I really liked the part how you explain that some people could just be using this as a front since it's easy to achieve and that they're not really wealthy. Well done.
I fly on my jet over 300 hours per year, and it is ABSOLUTELY worth it. however I own only one car and that’s a Ford Fusion and I wear car hearts . So to each their own.
Awesome content! I was never in my life considered a "rich person", however, most of my needs were already met by the time. I have pretty much everything I need. However, it wasn't always like this. Not too long ago, it seemed to me that what I have just isn't enough. And so, eventually, I found myself in this never ending cycle of trying to make more for God knows what reasons. It made me sad, misarable and depressive. Funny thing is, the more you make, the more you look at other people, making even more than you! This is some toxic stuff we are talking about. Money is never enough. And if you don't learn to live with what you have, you will never be happy. Even with those millions in your pockets. I am not saying you should be poor. What I am trying to say is that most of our needs are already met. At the end of the day, if there's something you do just for the sake of money, it's not worth it. You can try it but be my guest.
Thanks for breaking down this information and for your insight. It’s so great to have somebody not pushing the superficial. Thanks for not selling anything.
My goal since day one for my ambitions was to be able to just go outside and get anything I wanted without needing to think about it. I was scrapping for loose change on my couch to eat dinner when I was 16 years old and playing on the basketball team with ripped-up shoes. One RU-vid video I watched that was the dream life to me was when this guy saw a nice backpack on a vacation and was quickly able to buy it while throwing out the old bag like it was nbd. Absolutely mind-boggling to me.
I agree with everything except cars. If you absolutely love cars and have been obsessed with them your whole life then it is worth it having expensive cars
Warren buffet”billionaire” says “ live simple and just love what you like to do. I’m a multi multi millionaire who eats simple and drives simple cares and even dresses simple I just try to fit in with the crowd that’s all at the end of your day it’s how you want to live but that’s just me.
Makes the broke guys who drive expensive cars to impress others look like clowns. Like why do they drive more expensive cars than one of the richest men on earth lol
These calculations seem like underestimations - I spend probably $25k/year on food in NYC just as a college student, wealthy people probably spending like $60k. Penthouse? Gotta be like $20k/mo if a studio in NY is 4k. And clothes 3k is way below someone who buys a lot of nice clothes
I was just talking about a dream number couple of days ago with my family. I predicted this but the details really really helped to bring more clarity. Thank you so much alex 🤗.
This is an excellent way to put it. It serves as a public service to shine some light on what these expenditures actually cost. It's ok for youngsters to strive towards things they want. But basing their success on these things can be very disappointing for them once they achieve this level of success. I find that if people enjoy the journey of succeeding then these things become less important. This is crucial because money or any of these things might give them temporary happiness but the long term happiness is all about feeling achievement and knowing that you have security. Happiness is all about security because this frees your mind up and enables you to focus less on, "getting that money" and more on doing the things that you truly want.
This is a brilliant video. I have been there, I was lucky enough to sell my business and live this life, after less than a year it was so obvious that it's all ego and completely unnecessary and draws zero happiness. I would also add that I disagree with earning 10x to do this stuff, in reality there's just no need to earn that much or live that life, at a certain point (after you reach freedom) the additional just isn't worth it. Having a few million and living off 4% a year is more than enough.
Thank you Alex, I enjoyed every bit of your information you put in every videos you uploaded. I’m in the process paying down the mortgages faster and consolidate vehicles from 4 down to 2. We really don’t need too many things to live.
Holy fuck the numbers on this is so off it's ridiculous. 1) PJ - $4,000 might get you a turboprop at best. Try more like $7,500/hr. And 24 hours isn't jack shit. If you're in LA and want to go to NY, that's what 4 hours? Sure flying commercial is cheaper and better but most people are flying more like 100 hours a year. 1 flight per month at 4 hours each way is 8 hours x 12 months is 96. 2) Exotic car - Who the fuck is going to keep just one car? I have 4 myself and leasing at $4k a month also has a massive downpayment of $40-$50k. 3) Penthouse - $10k/mo is average at best in LA or NYC or Miami. Try more like $25k/mo + auxiliary costs. All in, housing and etc. will be close to $40k/mo. 4) Clothes- $3k a year? I don't believe in expensive clothes, but a SINGLE outfit will cost you $3k. Assuming 20 shirts at $150 each, 10 pants at $500 each, 5 belts at $750 each, 20 pairs of shoes at $1,000 each, jewelry collection of say $100k (few watches and etc.) and round it up, you're going to be at around $175,000 easily. Also this wardrobe has to be replenished and replaced every year. 5) Restaurants - a bill at NOBU alone can run $1,000 for 2. Try more like $100k for food for the year, and that's the bare minimum.
@@sanjaymodi3446 and it doesnt change the point at all. most of this shit is a total waste of money and dosent give you a better experience, even if you make 50 million $ a year.
No matter how much money I get, all I want is some beautiful farm land, modest house + big garage, a ford raptor R, a fast AMG, a Yamaha r1M, and some toys (boat/dirtbikes/etc)… maybe a beach rental for use + income
