The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich is a 2007 New York Times Best Seller self-help book written by Timothy Ferriss that offers the formula of escaping the rat race, outsourcing a business, and living your life to the fullest. Ferriss developed the ideas in the book while working 14-hour days and 100-hour weeks at his sports nutrition supplement company. Frustrated by the overwork and lack of free time, he took a 3-week sabbatical leave to Europe and ended up extending that trip to a year throughout Asia and South America. Ferriss developed a streamlined system of operating his business without his presence, that was able to yield 10 times more income than when he was personally involved in it.
5 Main Takeaways:
1. The Deferrers and The New Rich
Tim Ferriss wrote about two different groups of people - The Deferrers and The New Rich. The Deferrers are the people who live the deferred lifestyle plan which is to study for 20 years, work for 30 to 40 years then finally enjoy retirement in their 60s. On the other hand, the New Rich, are those who spread out mini-retirements throughout their lives, and persistently aim to have more, if not full control, of their time, money and location. The major differences between these two groups are for example, the Deferrers work for themselves while the NRs aim to have others work for them. The Deferrers aim to work when they want to, while the NRs want to prevent work for work's sake. Deferrers decide on a certain age of retirement, usually between 50 and 65 years old, while NRs distribute recovery periods and mini-retirements throughout life on a regular basis. Deferrers work to buy more things while the NRs aim to do more things and experience more exciting things. Finally, Deferrers normally want to be bosses instead of employees, while NRs neither want to be the boss nor the employee, but rather the owner - to own the trains and have someone else ensure they run on time.
2. Being Efficient versus Being Effective
Ferris strongly wrote that doing less meaningless work, so that one can focus on things of greater personal importance, is not Laziness, which is hard for most to accept, because most cultures tend to reward personal sacrifice instead of personal productivity. Efficiency is defined as the ability to accomplish something with the least amount of wasted time, money, effort or competency in performance while Effectiveness refers to the degree to which something is successful in producing a desired result. In The 4-Hour Workweek, Tim Ferriss points out the need to be effective, rather than efficient. For example, Peter develops a generic sales email he can send to 100 potential clients each day, to which 2% of his emails lead to a sale - this is efficient. On the other hand, John researches potential clients and crafts a tailored email for each person and sends only 10 emails per day to which 40% of his emails lead to a sale - this is more effective.
3. The Timing is Never Right
Ferriss wrote that people stay trapped in the 9-5 because they are constantly waiting for the right moment to do something new, whether it is to move to a different place to take a better paying job or to start a business. He also discovered that more people choose to be unhappy rather than uncertain, because of the fear of getting out of their comfort zone. Ferriss wrote that no matter how hard you try to plan these things perfectly, the stars will never align, and the traffic lights of life will never all be green at the same time. The universe doesn't conspire against you, but it doesn't go out of it's way to line up the pins either. Conditions are never perfect. Someday is a disease that will take your dreams to the grave with you. If it's important to you and you want to do it eventually, just do it and correct course along the way.
4. Focus on Strengths, not Weaknesses
A 2016 study found out that people tend to see weaknesses as more changeable than strengths - which means we're more prone to focus on improving our weaknesses. However, a separate study also found out that people who focus on developing their strengths grow much faster. Basically the idea here is that by leveraging your strengths, you can achieve and become more successful in that aspect, rather than spending a lot of time and energy optimising your weaknesses to an acceptable normal level. For example, if you're good at Maths, and crap at History, instead of wasting 90% of your time improving your knowledge in History, focus on reaching that next level of expertise in Maths, which brings you closer and closer each day to operating at a Mastery level.
5. Absolute Income versus Relative Income
Ferriss also wrote about Absolute Income versus Relative Income, which he said is quite important in the understanding of how why one should leave the deferred lifestyle plan and join the New Rich. Absolute Income is basically the economic term that simply describes the amount of money that an individual is compensated for his or her work. On the other hand, Relative Income doesn't solely focus on the money factor, but rather includes time in the equation. Tim Ferriss describes that a person who gets paid $200 for an hour of work is wealthier than someone who gets paid $100k per year but works 60-80 hour weeks because of the inclusion of the time factor. In this particular example, the amount of time where you are not shackled to the chains of labour, matters.
The Formula to the 4-Hour Workweek - DEAL:
Define
The first letter of the acronym DEAL stands for definition. Define is sort of the planning phase of your escape plan. It is in this part where you define the lifestyle that you want to have, what kind of work you want to do, where you want to live, how much money it is that you need to sustain this lifestyle, and how you are going to do it. Ferriss talks about the principle of Leveraging. For instance, $2,000 US Dollars would be worth P101,481 in Philippine Pesos, which is the salary of a Bank Executive in that country, and where 5-bedroom mansions in a small island in that country would only be worth P15,000 per month in Pesos. If you successfully create a business that yields $2,000 USD per month, you'd be living like a king in the Philippines by leveraging your USD to PHP.
Eliminate
The second letter of the acronym stands for Eliminate, and focuses on productivity principles like Pareto's Law, Parkinson's Law and Batching. This part of the formula is more applicable in the business aspect of your plan. Pareto Principle, or the 80/20 Principle, named after esteemed economist Vilfredo Pareto, states that 80% of consequences come from 20% of the causes, or the other way around. He also stated that there is always an unequal relationship between inputs and outputs and one should focus on doing the lesser 20% that yields the 80% effective output rather than wasting too much work and time doing the 80% that only yields 20% results. On the other hand, Parkinson's Law states that work expands to the fill the available time for it's completion. The idea is that in the accomplishment of things, time is sort of irrelevant. If you give yourself an hour to clean your house, then there is no doubt you would finish the cleaning in one hour. However, if you only give yourself 15 minutes to clean your house because you are in a hurry to go somewhere else after 15 minutes, then the task gets completed regardless, because you will be forced to do the job quicker, and forced to eliminate the unnecessary aspects of doing the job. Lastly, Batching is basically grouping similar tasks to save time and effort. This applies to checking emails, phone calls, meetings, etc. Tim Ferriss checked all of his emails only once per week while sitting in a café by the beach in Thailand, but has paid a virtual assistant to filter the emails beforehand according to urgency and importance, so that he only gets to read the critical emails when he opens his laptop, and not waste time reading other useless emails.
Automate
The third letter of the acronym stands for Automate. Tim Ferriss wrote that to be able to upscale a business or an operation, systems have to be created to achieve better results but at the same time, also aim to make you less and less involved. Ferriss wrote about things like Outsourcing where you basically pay 10 times less the amount you would be paying from within the US to someone from India or Pakistan, to manage the administrative aspect of your business. For example, nobody would do any sort of data entry or administrative work for $5 in the US, but hundreds of people from India or Pakistan would offer these services as their main occupation. Once again, the principle of Leveraging is at play, where you're leveraging the strong USD against weaker currencies.
Liberate
Finally, the last letter of the acronym DEAL stands for Liberate. This is the part where you've finally built-up an effective system running like clockwork, where you have totally liberated yourself from putting any kind of work or labour to earn time and money. By putting in multiple systems in place, every aspect of your business is covered and is programmed to continue functioning without your involvement. With an income-generating operation like this, you have basically full control of your time, location and money. It doesn't have to be a lot of money though, it only needs to be the right amount of money that will fund your desired lifestyle which you've defined earlier in D.
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