Becoming a millionaire in your 20s might sound like a far-fetched dream, but it’s a goal that many have achieved. What’s the secret? Well, it’s not about having a huge initial investment or striking it rich overnight. Instead, it’s about adopting simple habits that can guide your behavior, help you make better decisions, and solve problems more effectively.
Habits that created millionaires are known as “mental models.” These models are the same principles that have been used by successful individuals like Jeff Bezos and Warren Buffett. In this article, we’ll explore six millionaire habits, or mental models, that can help you on your path to financial success.
Game Theory
Game Theory is a strategic way to maximize rewards and limit consequences when multiple people are involved, each with their own interests. It’s not just about games. It’s used by governments, and CEOs, and can be applied to everyday life, like eBay auctions or stock market investments.
Imagine you’re an employee who wants a raise, and you’ve assessed your situation. You know that not asking for a raise would result in a 5-happiness score for you and a 10 for your boss. If you ask for a raise and your boss rejects your offer, your happiness score would be 4, and your boss’s would still be 10.
If you left the job, your happiness would be 1, and your boss’s 5. So, it seems like asking for a raise isn’t the best option. Your happiness in the scenario where you don’t ask is higher than the one where you do.
However, by obtaining another job offer, your happiness level can jump to 7 if you leave. Now, if you inform your boss about this offer and she still doesn’t grant you a raise, her happiness score drops to 5, which incentivizes her to give you a raise to maintain the 10-9 value scenario. This is how applying Game Theory can help you negotiate for a raise successfully.
Thinking in Systems
Thinking in Systems is a mental model that encourages a holistic perspective. It’s seeing the world as a complex web of interconnections, rather than a linear sequence of isolated events.
In essence, it’s about recognizing that every facet of life is intricately intertwined. When you can grasp these interrelationships, you’re empowered to make more informed decisions.
Consider this: whether you’re embarking on a side hustle or crafting a daily routine. Systemic thinking compels you to acknowledge the broader context in which your actions unfold. It transforms the way you approach various aspects of life.
For instance, when conducting competitor analysis, it’s not merely about gathering data; it’s about comprehending how this information integrates with your product development and marketing strategies.
The beauty of systemic thinking is that it equips you with the ability to pinpoint critical leverage points within the intricate systems that govern your life. Just as a sink’s faucet and drain are the focal points in controlling water flow, recognizing these critical junctures in your own life can empower you to make adjustments that create a lasting impact across the entire system.
The Two-List System
The Two-List System is a remarkable strategy that revolves around the twin concepts of prioritization and elimination. Instead of spreading yourself thin by attempting to manage a multitude of tasks simultaneously. This approach encourages you to streamline your efforts for maximum efficiency. It’s a technique that not only empowers you to make the most of your time but also to remain focused on what genuinely counts.
Picture this: in the pursuit of your goals, whether it’s launching a business or gunning for a promotion, the Two-List System acts as your compass. It’s about separating the wheat from the chaff, identifying the top five most critical tasks, and categorizing them under List A. Everything else, all the peripheral to-dos that might beg for your attention, find their place on List B.
Two-List System isn’t just a time management hack; it’s a profound method for maintaining a razor-sharp focus on your aspirations. This approach applies to anyone, from budding high school students who want to excel in academics to seasoned professionals striving for excellence in their careers.
Regret Minimization Framework
The Regret Minimization Framework is a concept pioneered by Jeff Bezos. It serves as a compelling compass for navigating life’s pivotal junctures. It’s a mental model that invites you to project yourself into the future and ask a fundamental question: when you look back on your life, which decision would you regret the least?
This framework isn’t merely about making choices based on immediate gratification or present circumstances. It also encourages you to cultivate a profound sense of perspective. By envisioning your future self, you gain the ability to weigh the long-term implications of your decisions against the fleeting allure of the moment.
Imagine you’re at a crossroads, facing a monumental career or life choice. Rather than succumbing to the allure of the here and now, you transport yourself into the future. You take a mental journey to a point in your life where you’re looking back on the choices you’ve made. From this vantage point, you can assess which path, which decision, aligns more closely with your long-term goals and ambitions.
Innovation and Building on Existing Ideas
Innovation is a concept that often sprouts from the rich soil of pre-existing ideas. The truth is, there’s no such thing as a wholly original creation that materializes out of thin air. Rather, innovation is a dynamic, evolutionary process—a continuous journey where new concepts and breakthroughs emerge from the fertile groundwork of old ones.
Consider this: throughout history, some of the most groundbreaking inventions and ideas have sprung from the seeds of their predecessors. It’s akin to the concept of genetic mutations—new traits arise from variations on the existing genetic code. In the world of innovation, these mutations manifest as fresh interpretations of old ideas.
Success, as it turns out, is not rooted in the pursuit of reinventing the wheel. Instead, it thrives on the ability to build upon the bedrock of existing knowledge and ideas. By embracing the evolutionary nature of innovation, you’re empowered to leave your mark, not by creating something entirely new, but by taking existing concepts and molding them into fresh, distinctive creations.
The Pareto Principle is often referred to as the 80-20 rule. It serves as a powerful lens through which you can examine the relationship between effort and results. According to this principle, approximately 80 percent of outcomes are generated by a mere 20 percent of the effort invested. But how can you apply this principle in your own life to propel yourself closer to financial success?
Consider your daily pursuits and endeavors as an example. Instead of perpetually remaining busy with a multitude of tasks, the Pareto Principle encourages you to identify the select few activities that carry the greatest leverage. In other words, pinpoint those vital endeavors that can significantly impact your journey toward financial prosperity.
Once you’ve identified these high-leverage activities, direct your focus and energy towards them. Channel your resources into the 20 percent of actions that genuinely matter. This shift in approach allows you to maximize the impact of your efforts without drowning in the minutiae of less consequential tasks.
These principles are not exclusive to certain age groups; they are universally applicable. High schoolers, seasoned professionals, and individuals from all walks of life can use these concepts to set themselves on the trajectory to financial success and security.
