After I finished my Ph.D I was unsure what to do next. I felt I needed another mountain to climb. When I thought about it, it seemed there were a few obvious things I needed to learn.
One of those was fitness. Another was nutrition. A third was money.
I picked money. Partly because I knew we'd be starting a family and I wanted to provide for us, and partly because it seemed if I understood money I'd have time for the other two.
So for the past 7ish years I've studied money. I'd like to share what I've learned.
Most people struggle with money problems. If what I've learned can help, then I want to help. I don't want people needlessly suffering when a solution exists.
So I've distilled what I've learned into what I call the 9 Laws of Money Mastery. I believe the laws laid out below are so powerful that I'll probably be a millionaire by 2032.
Here are the 9 Laws of Money Mastery. I hope they serve you.
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1 The Law of Independence: The goal of money is financial independence.
Financial independence is when you have so much cash and assets that they can cover your spending for the rest of your life.
This is the goal of money and why you work.
This, for some reason, is a hard sell in my circles. When I mention this to most people, they don't seem interested.
It's like people don't want financial independence. Or maybe they don't believe it's possible. Honestly though I've no idea why it's such a hard sell. Baffles me.
The ironic thing is we all know this. At some point we will all stop working. We'll hit 65 or whatever and then live off of our investment, pension, savings, social security, or some combination thereof for the rest of our lives.
So we know the goal of money is to have enough that you don't have to work anymore.
By acknowledging that there is an finish line we can be proactive instead of reactive. Instead of waiting until we are forced into retirement, and hoping we have enough, we can identify our number now and work towards that finish line.
So how do you get there?
2 The Law of The Gap: You can either lower your expenses or make more money.
To become financially independent you have to grow the gap between what you spend and what you earn. There are only two ways to do this.
The first way is to lower your expenses.
I know Americans who've moved to South East Asia where it's dirt cheap to live. With a couple grand in the bank they live like kings for years.
You could also lower your expenses right here in the states. You can live in an RV and only eat home cooked meals and never watch movies and only dream of avocado toast.
For most people, living on less is not the best option. Yeah, if you're a 26 year old tech worker you can cut expenses to the bone and save 80k a year.
But if you're, say, a dad of 3 who wants the option to put your kids in private school, then you can't cut enough to reach financial independence.
You've got to use the second way: make more money.
So how do you make more money?
3 The Law of Problems: You make money by solving problems.
You make money by solving problems.
For me this was a really hard idea to understand.
In school the homework never connected to real life problems and at work the computer tasks were removed from any real result. So the idea that everything I was doing was really to solve a problem, and that's why I was getting paid, well it just didn't make sense. It was like saying the grass was angry.
I understood the words, but the sentence had no meaning.
So I'm going to walk you through an example. Maybe this will help.
If I for some reason lost my job and needed to make money I'd buy a power-washer for 400$.
Then I'd go door to door and tell people I was power-washing driveways.
On my street there are like 40 houses. If I knocked on all of them I'd probably get 2-3 sales.
Power-washing for medium-sized driveways run about 300$. So I'd make 600$-900$ dollars.
Then I'd go to the next street and do it again. And make 600$.
And then I'd go to the next street and do it again.
And then I'd do it again.
Let's say I averaged 4 driveways a week. Max.
Well, then, if I worked 48 weeks...
300$ x 4 per week x 48 weeks in a year = 57,600$
I'd make 57,600 a year.
Solve a problem. Get paid money.
Think about the therapists you know.
Are they worried about passing the NCE?
Are they struggling to find office space?
Are they confused about how to start their own private practice?
Do they struggle with accounting?
Did they miss their deadline for CEs?
Do they want to get more clients?
Do they complain about insurance panels?
Do they wish they could get private pay clients?
There are literally dozens of problems therapists have.
Solve one and you can make a living. But how do you know which problem to pick?
4 The Law of Value: You don't get paid based on hard work. You get paid on how valuable the problem is.
A lot of my friends complain about how hard they work and how little they get paid.
I'm going to tell you something I don't have the heart to tell them.
It doesn't matter how hard you work. Hard work won't make you money.
You get paid in proportion to how valuable the problem you solve is, and a huge part of value is the skill required to solve the problem and how scarce the solution is.
For instance, air is really important. We all need it to breathe. But air is abundant and easy to produce. So as long as you're healthy you're not paying money for air. It has no value to you.
The flip side is that something that takes skill to produce and is scarce is super valuable. So if you're having trouble breathing, well, your body doesn't have the skill to absorbed oxygen.
Which is a problem.
So you'd be willing to pay tons of money for one of those medical oxygen systems.
This is why the therapist gets paid more than the front desk staff. The desk staff at the group practice does important work, but when you look at it through the lenses of scarcity and skill, they're easily replaced. In fact many EHRs do much of what secretaries used to do.
On the other hand to do therapy you have to have a masters degree and a professional license, which not everyone has, so there's scarcity.
Both are working hard. In fact the desk staff might be working harder.
But it doesn't matter. Because that's not how the game works.
Pick the problems that require skill and scarce solutions.
Then apply leverage.
5 The Law of Leverage: Once you can solve a problem, apply leverage.
A friend of mine ran a Walmart. He made something like 80k a year with the potential to bonus 40k.
So his annual pay before taxes was about 120k.
Sounds like a lot of money right?
He was working 100hr weeks.
That's 2 and a half jobs.
If you do the math his hourly pay was 24$ an hour.
That's common for "high paying" jobs. You get paid a ton but then you work constantly, which means you're not really getting paid a ton. You just have 3 jobs.
Most people I know hope they can work hard enough to make a ton of money. But the truth is, the more you're paid, the more work your employer expects from you and you very quickly run into an upper ceiling.
The alternative is to use leverage. Leverage is anything you use to amplify your efforts. So if you're a therapists you could:
Use money to amplify your efforts by buying another therapy practice.
Use labor to amplify your efforts and hire someone to do your billing and a few interns to see clients.
Use code to amplify your efforts. Every week Simple Practice saves me time on billing. This allows me to spend more time on seeing clients which actually brings in more money.
Use media to amply your efforts. I could create an online course about how to start a practice. Anyone with an internet connection could be a potential customer. [1]
Leverage is the key to becoming rich.
So once you're rich, what do you do with your money?
6 The Law of Safety Margin: Save for a rainy day. Avoid Debt.
Once you're rich you got to stay rich. Which means saving your money.
The purpose of savings is to have a margin of safety.
When I worked in the geriatric psych ward I had to run group. So I'd ask the patients an opening question like, "how many siblings do you have?"
They'd respond, "you mean alive or dead?"
That's when it struck me, if you're lucky enough to live a long time, you will be struck by tragedy.
You'll get cancer, or your house will burn down, or you'll lose your job. Something will happen.
In those moments you don't want to worry about money. You want to be able to take care of yourself without worrying about if it will bankrupt your family.
To do this, you need a margin of safety, which in money means having savings.
There are different ideas about how much you should save, but my general rule is you have enough saved that you won't touch your assets.
7 The Law of Assets: Take the money earned and store it in assets.
So you can make money because you can solve a problem.
And you got rich because you applied leverage to your solution.
And you stay rich because you have substantial savings.
The next step is to build wealth. Wealth is when you have your money make you more money.
You create wealthy by buying assets.
Assets are things that go up in value and/or give you cash.
For instance, say you bought a house and rented it out. Well houses over time go up in value. If you bought it for 250k in 10 years you could sell it for more. Let's say 500k [2].
Also, while you rent it out you're collecting all the cash from the rent. So if rent is 2k a month, each year you're collecting 24 k in cash.
That means in ten years you made 240k from rent and 250k from the sale of the house.
You made half a million dollars from buying that home. That's why real-estate is an asset. And assets are the path to wealth.
In the US there are three main types of assets. Real Estate, Bonds, and Stocks.
Most people are confused by investing. It is complex, but it's also learnable.
For example if you're a therapist you could buy a house and rent out rooms so other therapists use it as an office space. A guy I know does that and clinicians pay 500$ per month. He's got about 8 rooms.
So he's making 4 grand a month or 48k year. That's real estate
Bonds are a fancy word for a loan. When you use your credit card you borrow money from Visa, and then you pay them for the privilege to borrow their money. That's interest. You could do the same thing with a counseling practice. If you know someone starting a practice you could loan them 10k. And they would pay you for the loan. Say 500$ a year. Then in 10 years, they'd give you back the 10k.
If they paid you 500$ for 10 years, that's 5k. So you made 5k by giving them a loan.
Stock is just ownership in a company. If you know someone starting a practice you could say "I'm going to give you 10k and I get 5% of all profits because I'm a co-owner with you."
If their practice makes 100k a year. You get 5k a year. Cause you're a co-owner.
So take your riches and store them in assets.
That's how you make wealth.
8 The Law of Enough: What's your enough number?
For some people talking about wealth feels greedy.
I want you to put a number to what you think when I say wealth.
When I've asked other people to do this, they usually can't do it. They say things like:
"I don't know, like maybe 100k a year?"
"Well you know a million isn't what is used to be."
"I think it's soo much that you can't screw it up. Like a billion dollars."
So let's talk hard numbers. What's your wealth number?
You'll miss out on the full impact of this exercise if you don't write down your number before hand.
Okay, so I'll run you through my numbers (roughly).
I live with a family of 5 on 50k a year. I feel like I live like a king. I invest conservatively in a Stock Index which matches the average return of the stock market.
If you google "what's the average return of the stock market?" google says 10%.
50k is 10% of 500k. That means if I can have 500k invested in an Stock Index it will give me (on average) 50k per year.
So If I can get 500k I could theoretically live on my investments FOREVER [4].
Problem is that wouldn't leave me with a buffer. If the returns were ever less than 10% I'd be screwed.
However, as a therapist in private practice its totally possible to make 100k a year seeing 20 clients a week.
So I could work 10 hours a week and make 50k. That would still cover my expenses without touching my investments. And my investments would still compound.
So what's my enough number?
Well 500k is plenty of money and a year of savings is 50k so my enough number is 500k.
Granted you still have to get to 500k. Which I'm not at. But getting to 500k is totally possible. If you can solve a problem and then apply leverage.
9 The Law of Giving : Teach others how to make money. That's you making the world a better place.
I don't think the point of life is to get wealthy. I do believe that until you have wealth, money is almost always a barrier to the more important things of time, options, and freedom.
I want the option to send my kids to private school. I don't know if we will, but I want the option.
I want the freedom to spend as much time with my mom as possible. She's not getting any younger.
I'm not there yet. But learning this stuff, having some savings, and having a good job has put my mind much more at ease.
For me, understanding all of this has made me much more grateful.
And so I want to give back. That's why I wrote this, so that you can benefit from all I've learned and hopefully you can live a more free life.
My hope is that when you arrive you do the same. You pass on what you've learned so you can help the next person ascend the mountain a little quicker than you.
Conclusion: Practically what do I do?
So what do you do? What's your next step?
Honestly, I don't know. I'm not a financial advisor.
Here's what seems to make sense to me.
Level 1: Get more education.
I'm under no illusion that this post is so perfect that you know everything you need to know. This is just be bedrock. Check out this interview by Vicki Fountain. She does an excellent job helping people understand how we trade our time for money every day, and help us put what's really important into perspective.
Level 2: Find your number.
You need to understand your personal money flow. So look at your bank statements and credit card bills and see how much you spent last month. Then multiply that number by 12. If you want a bit extra, then multiply it by 15. Now you know how much you need per year.
Follow that up with learning more about financial independent. I recommend this video from JL Collins. Then use this calculator to determine your Financial Independence number.
Level 3: Solve a problem.
About two year ago I saw this tweet from Jack Butcher, about making 1 dollar online. It totally changed the way I thought about money. And in many ways, was the begging of everything. I invite you do to the same. Do something for someone else who you find through the internet and ask them for a dollar in exchange.
If you're struggling to come up with ideas here are a few:
Maybe you can build a website
Maybe you can run social media
Maybe you can teach public speaking
Maybe you can run consultation groups
Maybe you can break down solo practice accounting
Maybe you know a lot about ethics and legal issues
Maybe you really understand the insurance system
Maybe you know how to get private pay clients
Maybe you know how to work with a specific niche
Maybe you know about email marketing
Maybe you're good at converting callers into clients
Maybe you can coach people to pass their licensure exam
Maybe you can give CE trainings on your niche
Maybe you can do Search Engine Optimization
Maybe you know how to network with other clinicians
It doesn't really matter what it is. Just do one thing, for one person, and charge 1 dollar. It's the beginning of everything.
Best,
Jordan (the Counselor)
-FIN-
[notes]
[1] This idea of leverage comes from Naval Ravikant. You can learn more here.
[2] I'm not promising that if you buy a house for 250k it would double in value. I'm using this as a simple example to explain a concept.
[3] It's actually a little bit more complex than this, but I don't want to explain the complexity and lose the point. I'm writing an article to clarify this. However, the point still remains that I believe 500k to be my enough number.
[4] All the art for this article was generated by Artificial Intelligence Dall-e 2. You can check them out here.
My business partner and I run a coaching program called Private Practice Incubator. If you're interested in launching your practice, check us out here.
Great read!
As a newly licensed therapist in NC/ PhD student, thank you so much for this! It was very personable and easy to follow. I shall pass this on😆