Don’t be fooled by the title (although it’s possible). The point of the book is not to become rich via passive income, and only work 4 hours a week.
This book teaches you how to work SMARTER, not HARDER. It’s about having the freedom to pursue your dreams. Having already read the book a year ago, revisiting it gave me fresh perspectives which will be shared at the end of this article.
Here is a quick summary of The 4-Hour Work Week by Tim Ferriss:
How can you create the freedom you want?
The author, Tim Ferris describes the “New Rich” as people who abandon the deferred-life plan and create luxury lifestyles. The people who realised that it does not take one to be a millionaire, to live the lifestyle of a millionaire.
Often, people equate money as a measurement of wealth. However, the currency of the New Rich is time and mobility.
To join the “New Rich”, he illustrates the DEAL framework – Define, Eliminate, Automate and Liberate. These are the key insights:
Have some clarity of what you truly want in life.
- What makes you happy? What is your worst fear?
- Define the goal in your life and estimate its cost
- What is the cost of inaction relative to the cost of action?
- Cost in terms of = Financially, emotionally and physically.
Declutter the noisy and focus only on what is essential to you to achieve your goals. There are two “2P Laws”:
(1) Pareto’s Law (80/20 Rule)
20% of efforts, determine 80% of your results
Are you focusing your efforts on the 20%, which delivers the most value and results?
(2) Parkinson’s Law
“Work expands to fill the time available”
It all boils down to time management. For short-term tasks, you can use a simple Pomodoro technique.
He also advocates having a “low-information diet”. Be intentional and selective about the type of information you are receiving.
For instance, during this Covid-19 period, we are bombarded with the news flash every minute. Rising unemployment rates, the possibility of a second wave, and so on. Consuming too much negative news increases our anxiety and stress level, which negatively affects our mental health.
Set a limit on the time spent checking the news. Turn off the push notifications for news apps. Focus only on the information that is relevant and important.
In investing, this concept is extremely critical. Unless you are a trader, watching the stock price movements, and tuning in to the market news every day, would not be helpful in the long run. Ultimately, it is the fundamentals of the company which matters and not the market sentiments.
“In the short run, the market is a voting machine, but in the long run, it is a weighing machine” – Benjamin Graham
Next, Tim gives advice on how to automate parts of your life/business. This frees up time for you to focus on the essential.
The methods are twofold, outsourcing and generating a stream of automated income:
Delegate and automate unimportant task which are time-consuming. The reason behind this is resource maximisation. If you can pay someone to do it, why not?
Use resources effectively by outsourcing task which are mundane and time-consuming but needs to get done. Prioritise your time on the tasks that only you can do, things which makes the biggest impact. (Remember, 80-20 Rule)
He goes into detail about setting up virtual admins. Including tips on picking the type of VA and a list of URLS for you to pick the best one.
(2) Create automated income stream
Moving on, he discusses about entrepreneurship and gave tips on how to run your own business and build “passive income”.
The goal is cashflow for low time investment. Launching a product-based business that is scalable and not a function of time (unlike service businesses). He also mentions about how to create a minimum viable product (MVP) to start your business. More on this in the review of The $100 Start-Up.
To be liberated is to be free from a geographical location, and the 9 to 5:
- Location – Having the mobility to run your business from anywhere in the world
- The 9 to 5 – Able to take “mini-retirements” and breaks in between
This gives you the freedom and power to focus on something meaningful in your life.
On top of the D.E.A.L Framework, here are my 2 key takeaways from the book:
Don’t Mistake Retirement as the End Goal
People often mistake retirement as the end goal. They work hard all their lives in a large bureaucratic organisation, feeling like a cog in a machine. And when they accumulate sufficient wealth, they are excited to proclaim “Finally, I’ve retired!”, as though all their worries will be gone. Retirement is often seen as the light at the end of the tunnel.
However, don’t mistake retirement as the end goal. It’s not going to be great because you’ll be old, sick and bored. You will need to find something to occupy your time with. Thus, people often give the advice that we should try to develop our passions when we are young (and have the energy to do so). Find your purpose early and lead a fulfilled, meaningful life.
On Taking Action
After reading the summary (and hopefully the book itself), you might gain a clearer understanding of the logic and key takeaways. But just like other personal finance books, including “Rich Dad Poor Dad”, it only works if you take it seriously.
There are people who read this book and feel like this type of lifestyle is “for others, not me”. Then, are people who read and understand the logic, but choose not to take action. And finally, there are those who believe in it, and are willing to put in the effort to carve out their dream life.
Leaving you with a personal favourite quote from the book:
“For all of the most important things, the timing always sucks. Waiting for a good time to quit your job? The stars will never align and the traffic lights of life will never all be green at the same time. Conditions will never be perfect… Just do it and correct the course along the way.”-Tim Ferriss
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