The Uberconomy: How Traditional Jobs Are Being Replaced By On-Demand Employment

Your job is going to disappear.

It might not be today, it might not be tomorrow, it might not be for 10 years. But eventually, the job that you’re in now won’t exist.

Why?

Traditionally your job would disappear if it got outsourced overseas. Indian MBAs or Chinese manufacturers could do the exact same job that you did, but for less, so your employer moved your job overseas.

That still happens, and it will continue to happen.

But that shouldn’t be your biggest fear. The worst case scenario isn’t that your job just goes overseas.

The worst case scenario is that your job becomes irrelevant.

If you’re a black cab driver in London, that job won’t be outsourced – but it will be made irrelevant by Uber. No matter how much you protest against it.

If you’re a hotel manager, that job won’t be outsourced – but it will be made irrelevant by AirBnB. Hotel revenue is down by 10% in some places already.

If you’re a truck driver, that job won’t be outsourced – but it will be made irrelevant by self-driving trucks (like this one).

And so on, and so forth. Blue collar jobs are most affected, undoubtedly, but the middle class will be gutted too. Average is over.

No longer should you seek a steady, 40 hours a week job for a company that’s been around for 50 years and plans to be around for another 50. If you do, you are a fragilista in a world of rapid change, just waiting for something to happen that will make your job irrelevant.

The new model is on-demand, freelance work. It’s a new model of entrepreneurship in which you are a company of one, doing five different things to earn money.

You might work 10 hours a week for Uber, rent out a spare room on AirBnB, do some freelance consulting work on the side via Freelancer.com or PeoplePerHour.com, be a runner for Instacart or Favor on the weekends and, if you want to try something a little bigger, raise money for it on Kickstarter or IndieGoGo.

Don’t believe me? Uber reckons they’re creating 50,000 new jobs per MONTH. Kickstarter has had almost $2bn pledged towards projects. These are not numbers that will go down. The future is the Uberconomy, and it’s here to stay.

So what are you going to do about it? Moan to the government in the hope that they delay the inevitable? Or accept the reality of the situation and get to work?

 

How to make money blogging

That’s right, “blogging” is a career these, so much so that popular personal finance blogger Mr Money Mustache put it on his list of 50 jobs that pay over $50,000 per year.

Maybe you’ve decided that you want to get in on this gold rush. Who can blame you? It’s the 21st century, everyone’s making money online! So you go to WordPress.com, sign up for a free account, and just start writing. Maybe you even buy your own domain name, and start tweeting about all your new posts. If you build it, they will come, right?

And don’t forget to sign up for an affiliate account at Amazon. That way, when you link to all the books you’re reading and thinking about, your readers will go and buy those books, and you’ll get a nice cut. Money in the bank!

Oh wait, that’s a terrible idea. Here’s a screenshot from my Amazon affiliate account this morning. I’ve been blogging for over 6 years.

I expect to retire around 9126 AD - maybe a decade sooner if my investments perform well.
I expect to retire around 9126 AD – maybe a decade sooner if my investments perform well.

So what can you do instead?

Here’s an idea: use your blog to think and write about new ideas, things you’re learning, books you’re reading, decisions you’re making. Write it for yourself, not for an audience. You’ll get smarter. Use your blog to showcase your skills, the fact that you can think and write coherently.  Then make connections with people, point them towards your blog, and see what happens.

It’s much less glamorous and interesting than chasing the dream of “passive income”, but it’s much more reliable.

7 weeks in Austin, TX

I came to Austin, Texas in mid-January, leaving behind my girlfriend, family and friends back in the UK for a couple of months while I’m here to meet a bunch of new people, try the food, see some culture and go to SXSW. I’ve been here for 7 weeks now, and I’m heading back home at the end of the month.

Austin is a fantastic city with great food, drink, music, nightlife, and weather. There’s a reason it’s one of the fastest growing cities in the US. A typical conversation will include the question “When did you move to Austin?”, mainly because no-one is actually from here (a bit like LA).

Some thoughts on the trip so far:

  • I’m surprised that I haven’t been very homesick. Maybe I’ve just been keeping very busy. But I do really miss my girlfriend. This is the longest we’ve been apart since we’ve been together (nearly 7 years now) and it’s tough.
  • But everyone here is SO friendly and has made me feel at home. I don’t know whether it’s the city in particular, whether it’s a southern US thing, or it’s just all of the US. But here, it’s weird to get on a lift (aka elevator) with other people and NOT talk to them. The exact opposite is true in the UK.
  • The building I live in is great. Pool on the roof, and a gym, and free coffee.
This is the view from the gym balcony. Pretty sweet.
Just your standard roof pool.
Just your standard roof pool.
  • Meeting people out at events or bars is much easier because of my English accent – Love Actually was right all along – but the number of people who have accused me of putting on a fake accent is worrying.
  • The weather here is weird. The first few weeks it was amazing: 18-25 degrees pretty much every day, and plenty of sun. Now it’s gone cold again. In fact it’s colder here now than it is in the UK at the moment. But by the sounds of it, summer would be unbearably hot here.
This is my office, on the roof of our building.
This is my office, on the roof of our building.
I actually got sunburn, having been sat on the roof of our building for an hour or so. It was January. This is odd to me.
And having been sat on the roof for about an hour, I actually got sunburn. It was January. This was odd to me.
  • The food is INCREDIBLE. My first taste of proper Texas barbecue was at a place called Smitty’s in Lockhart, TX, which is about 30 miles south of Austin. There is no food like this in the UK at all. Franklin’s BBQ here in Austin has sold out every single day since they opened in 2008, so you have to get in line at about 8am to have a chance of actually getting something. But it’s so worth it.
This place has the best barbecue in all of Texas, and therefore the world. Seriously.
This place has the best barbecue in all of Texas, and therefore the world. Seriously.
Here's the line outside Franklin's. Waiting in line has actually become part of the authentic Franklin's experience.
Here’s the line outside Franklin’s. Waiting in line has actually become part of the authentic Franklin’s experience.
They start cooking this brisket at about 2am, and cook low and slow for about 10 hours. It's incredible.
They start cooking this brisket at 2am, and cook low and slow for about 10 hours. It’s incredible.
  • Given that we’re in Texas, the Mexican food is great too. I’ve never eaten tacos as good as what’s available from a random food truck on the street. Favourite’s so far: Taco Deli and Veracruz on E Cesar Chavez St (get the breakfast taco with egg, cheese and chorizo).
So good. And so fresh.
So good. And so fresh.
  • I’ve also got to give a shout out to the Beef Cake Food Truck on Rainey St that does the best sliders I’ve ever had in my life. Get the original and the barbecue.
  • This will seem like sacrilege to some people back home, but the beer is better here, especially in Austin. There are so many microbrews and craft brews to try that you’re bound to find something to suit your taste. I like The One They Call Zoe.
  • I feel like I haven’t done enough tourist stuff yet. I haven’t visited the Capitol building, I haven’t shot a gun. I haven’t even seen that many fat people.
But I have tried on a stetson hat, so that's cool.
But I have tried on a stetson hat, so that’s cool.
  • Living in a city with Uber available is great. I’ve taken some Uber trips that have been insanely cheap (and some that were ridiculously expensive, like the 5.7x surge pricing at 2am on a Friday night). They also have Car2Go here, which is like the Boris bikes in London, except they’re cars. That’s America for you.

Despite all of these amazing positives, I’m looking forward to going home. But if I was going to move to the US, I’d move to Austin in a heartbeat.

A simple mental model for business and finance

This is the simplest mental model in all of business and personal finance. Any business or personal finance issue, and the solution to it, is inevitably contained somewhere in this model. You ready? Here it is:

Profit = Revenue x Margin

Let that sink in for a minute.

Every issue your business faces, and everything you hope to accomplish with your own finances, can be tackled with that one equation.

First, let’s look at how this applies in business.

Business

So you’re running a business, and you want to make more money. Good for you. Well, how do you do that? You can either increase revenue, or increase margin.

Increasing revenue means either increasing the number of customers, increasing the number of transactions per customer, or increasing the average order size per customer.

Increasing margin means either increasing prices while keeping costs the same, or decreasing costs while keeping the price the same. It’s that simple.

Increase revenue while keeping margins the same, or increase margins while keeping revenue the same. Either way, the result is more cash in your hand.
Increase revenue while keeping margins the same, or increase margins while keeping revenue the same. Either way, the result is more cash in your hand.

That is almost every single business problem contained right there. In fact, it’s what a management consultant would call a Mutually Exclusive, Collectively Exhaustive set of solutions. Of course, there are multiple ways to increase the number of customers, or their transaction frequency, or the average order size, just as there are multiple ways to decrease costs. But this gives you a framework to think about your problem.

Personal finance

Most people don’t think about their own personal finances as if you were a business, but you should. You might not think that profit, revenue or margin are relevant to you as an individual, so let’s substitute in some words that you might recognise:

Increase in net worth = income x savings rate

There it is: everything you need to know about getting richer. Your personal income is your revenue; your savings rate is income minus expenses, aka your margin. And the difference is your profit.

So if you’re living paycheque to paycheque, spending money on credit cards and slowly racking up debt, you’re no different to a business that continually spends more money than it brings in through sales. You will inevitably go bankrupt unless you either a) increase your income, or b) decrease your expenses.

More to the point: in a business, you might be able to blame other people for this. “Sales aren’t hitting their quotas!” “R&D spent way too much money and produced nothing!” But when it’s just You, LLC, then you’re the only one responsible for the result.

Income can take many different forms: the income from your job, a bonus, a severance package, an increase in the value of your assets, like your home, or your stock portfolio, rents, dividends, royalties, unemployment cheques, etc. They all count towards your top line.

And everything else–mortgage interest, credit card interest, food, drink, petrol, tuition, student loan repayments, clothes, DVDs, movie tickets–eats into your margin.

Therefore, the fastest way to get rich is to increase the gap between income and expenses.

This may seem obvious, and in many ways, it is. But like a lot of mental models, its simplicity is part of what makes it so profound.

Anyway, now you have a framework to start thinking about every problem in your business or your personal finances. You’re welcome.

How to land a job you love

Most people are delusional about their own abilities.

If you apply for a job you really want, and on your covering letter you say anything along the lines of “I don’t have any experience in this field, but this looks like a great opportunity because it’s exactly what I want to do”, then you are a moron. You’re all me, me, me, and not thinking about what you can actually offer.

Why would that person hire you over someone who instead says “You want someone to do X, Y and Z. I have done X, Y and Z in the past in these other places, and here are the results I delivered. I can do the same for you.” That guy is offering something valuable.

Do you know how you get a job in a field you’re interested in? It’s really simple.

– Do shit related to that field. Do it well and keep getting better. Do it for free.
– Document everything.
– Build up a track record of delivering results and improving abilities.
– Start charging money for what you do.

That is all. It’s really fucking simple. Not easy, but simple.

Read Recession Proof Graduate or watch Charlie’s speech here if you need more information. Also, check out Cal Newport’s great book So Good They Can’t Ignore You: Why Skills Trump Passion in the Quest for Work You Love, which will absolve you of the notion that good jobs are handed out to people with nothing to offer in return.

I’m glad I worked terrible jobs

Working in a meaningless corporate cubicle job for 3 years was the best experience of my life.

It seems to be in vogue today to argue that rather than working for a big company straight out of college, smart, ambitious graduates (or dropouts) are better off striking out on their own and starting their own company.

They may or may not be right — I’ve never started a company so I don’t have the authority to talk about that. What I will say is that I followed a traditional path out of university and went to work in a classic, corporate job (insurance company with 4000 employees and >£1bn revenue). I did it for a few years, learned some skills, and then made the jump to becoming employee #1 at a startup. And I wouldn’t have been able to do it, nor would I be nearly as valuable to my new company, if I hadn’t spent all that time working in a corporate job. Here’s what I learned:

A) Repeatable processes are what count. You might have a great value proposition that and a great marketing plan that means customers are beating your door down. That’s great. Now you need to scale it up. And that means building a clear, repeatable process with checklists and clear action items, so it’s clear who needs to do what and when. And you need to write all that down and properly codify it, otherwise you’ll spend your whole life so busy training new hires that you won’t be able to run the company. Or worse, you’ll be so busy DOING the process that you won’t have time to codify it and teach it to new people – so you will never scale. You need to be working on the business, not in the business.

B) Not everyone thinks like you. Don’t assume that everyone reads Tim Ferriss’s blog, knows what “lean startup methodology” means and is ultimately aiming to found a company, scale it, sell out and become an angel investor. You need to know how to deal with people that aren’t like you. I’ve worked with senior managers who have been doing their job longer than I’ve been alive, young people who just aren’t that bright or ambitious, middle-aged women who are already working towards retirement, and everything in between. To get shit done, you need to know how to work with all of these — because if you scale, at some point you’ll either hire them or sell something to them. Learning how to connect with people is one of the most valuable skills you can have.

C) Stuff gets done when it’s clear who has to do it and by when. Yes, meetings are usually a waste of time — but the good ones have a clear agenda, a lead, and when the meeting ends, there is a clear list of action items with owners and deadlines. I remember the first time I heard someone say in a meeting “let’s assign that action to Jamie, with a deadline of two weeks from now.” I thought, “Huh, that’s smart. I never would have thought of that.” Admittedly, I’m pretty slow.

D) Accounting. My company had a generous training budget. So they paid over £15k for me to learn accounting, which I never would have had the time or discipline to sit down and learn on my own. Turns out, having a great understanding of things like cash flow, margins, forecasting, income statements and balance sheets is useful in any company.

E) Continuous improvement and lean methodologies. We had a whole department, led by an expert who used to work at McKinsey, dedicated to rolling out continuous improvement across the company. The guy was a genius, and was happy to talk to a young buck like me about it all the time, lend me books, and all that. Then Eric Ries took lean methodology and applied it to startups. Instantly I have a great background in that, and I know how to build great processes from the ground up.

F) Public speaking. Like I said, we had a generous training budget, so my company paid £1k for me to have a day’s training from a professional actor and speaking trainer (he had trained multiple politicians and a Prime Minister). It was fantastic. Now I love speaking in public.

And finally, I learned:

G) You should leave and start your own thing. The highest paid people in our company were all guys who had learned what they needed to know in a corporate role and then struck out and become one-man band freelancers, or started their own companies. I saw guys doing exactly what I was doing and earning twice the money. They had more autonomy, more freedom, more money and enjoyed their work more.

So I left. I took all the skills and experience I’d gained at a shitty job, and found one that was much more exciting and fulfilling where I can actually have an impact on real projects. But I never could have done so if I hadn’t worked a shitty job first.

Why your New Years Resolution will fail – and what to do about it.

I completely failed. I set a goal and fell so far short of it that it’s embarrassing to talk about. And Nike decided to rub it in my face.

I did what you’re supposed to: I set an ambitious goal that was a SMART goal: it was specific, measurable, attainable, relevant and time-bound. I wrote it on an index card that I kept close to me at all times. I read a lot about the topic and knew exactly the steps I had to take to reach my goal. I tried to stay “motivated”.

And still, it didn’t happen. Not even close.

I wanted to run more, so I decided to run 3x per week, with the ultimate goal of being able to run a 10k race in less than 50 minutes.

How did I do? Well, here’s how.

nike 2014
Thanks for the reminder of my failure, Nike. I really appreciate it.

I ran an average of 0.28 times per week, aka less than 1/10th of what I wanted to do, and the fastest 10k I did, I didn’t even break an hour, let alone 50 minutes.

So what did I do wrong, and how can I fix it?

Mistake #1: Made a huge, unsustainable change

I went right out of the blocks trying to run 3x per week from the beginning, which was a) a huge increase in the amount of exercise I was doing at the time, and b) a huge increase in the amount of sweaty laundry I created, both of which were an added hassle that I had to deal with. It was unsustainable, such that I’d run 3x per week for 1-2 weeks, then not run at all for a few weeks, feel shit about myself, get motivated again, then run 3x in one week, then take another month-long break, and so on. This cycle repeated itself a number of times until I just gave up.

What I should have done instead: eased into it by starting off exercising 1x per week, to make it easily winnable to begin with, so I’d feel good about myself, and begin to create a habit of running. Then slowly increase the frequency until eventually I was hitting the goals that I wanted to hit.

 

Mistake #2: No accountability

I wrote down my goal on an index card, and put it in my wallet. That’s what people recommend, right? That should be a daily reminder of my goal, right? No, not when you put it in a hidden part of your wallet that you never look in. And I didn’t tell anyone about this goal, so I didn’t have any skin in the game. There was no pain or forfeit if I didn’t make it. So it wasn’t a big deal.

What I should have done instead: told multiple people about my goal and had them check in with me on a regular basis to ensure that I was following through. Or even better, put some money on it and have friends and family bet against me achieving the goal, which provides a carrot (I win money and get to show off to people that I hit my goal) and a stick (I have to pay out and everyone knows I lost).

Mistake #3: I tried to do it alone

Not only did I not tell anyone about this, but I was always running alone. And I was the only one chasing this goal. I didn’t talk to anyone about it, I didn’t have a running partner to motivate me to go out, and I didn’t join any sort of running club. No-one would miss me if I didn’t lace up my shoes and head out the door.

What I should have done instead: joined a running club or found a running partner, or at least someone another runner I knew that I could talk to about running that would keep asking “Been running recently?” which would make me embarrassed to keep responding, “No, I’m a lazy shit”, so I’d actually go running.

 

Mistake #4: I picked something I hate doing

I don’t like running. It’s boring, it’s always cold and raining here in England, and you step in dog shit all the time. You have to avoid cyclists and old people and you’re always out of breath and you get injured all the time. Running sucks. I chose it as a goal because running is what you’re “supposed to do” if you want to get into shape and lose few lbs, right?

What I should have done instead: pick an exercise activity that I actually enjoy, like lifting weights, or cycling, or football, or boxing. Any of these would have been good as I would actually look forward to doing the activity, rather than dreading it.

This is how I felt on every single run I ever did.

 

So, I picked a goal and an activity where I:

  • tried to do too much too fast
  • on my own
  • with no accountability or stakes
  • at an activity that I don’t like doing

I don’t think I was ever really going to succeed.

So this year, with the same aim of exercising more and getting healthier, I am going to:

  • start off slow and build the right habits
  • in a group or community setting
  • with some stakes or public accountability
  • at something that I like doing

Basically, I’m going to start doing Crossfit.

For more on building the right habits and making positive changes, check out The Power of Habit by Charles Duhigg, Willpower by Roy Baumeister and Mindless Eating by Brian Wansink. All fantastic books.

Notes and quotes from The Hard Thing About Hard Things by Ben Horowitz

I read The Hard Thing About Hard Things in about a day and a half – it’s incredibly well-written and I read it just as I am transitioning from my nice, comfortable, corporate gig to a much more exciting (and risky) role at a startup, so this book had a lot of relevance to me.

In the book, Ben Horowitz, formerly of Loudcloud and Opsware, and now a leading Silicon Valley venture capitalist, talks about the lessons he learned as a successful tech startup CEO. It’s all here: finding a product, pivoting, building out a sales team, dealing with company politics, coping with your own psychology when the whole company is counting on you, and selling your company. It’s one of those well-written, first-person accounts from someone who has been there and done that, in an area that I’m really interested in (which, incidentally, is why I also love I Am The Secret Footballer).

Below are my notes and quotes from the book.

There are no shortcuts to knowledge, especially knowledge gained from personal experience. Following conventional wisdom and relying on shortcuts can be worse than knowing nothing at all.
Former secretary of state Colin Powell says that leadership is the ability to get someone to follow you even if only out of curiosity.
Looking at the world through such different prisms helped me separate facts from perception. This ability would serve me incredibly well later when I became an entrepreneur and CEO. In particularly dire circumstances when the “facts” seemed to dictate a certain outcome, I learned to look for alternative narratives and explanations coming from radically different perspectives to inform my outlook. The simple existence of an alternate, plausible scenario is often all that’s needed to keep hope alive among a worried workforce.
…until that point, I had not really made any serious choices. I felt like I had unlimited bandwidth and could do everything in life that I wanted to do simultaneously. But his joke made it suddenly clear that by continuing on the course I was on, I might lose my family. By doing everything, I would fail at the most important thing.
In my mind, I was confident that I was a good person and not selfish, but my actions said otherwise. I had to stop being a boy and become a man.

Note: often we ourselves by our intentions and others by their actions, when in fact your actions are what really counts.

During this time I learned the most important rule of raising money privately: Look for a market of one. You only need one investor to say yes, so it’s best to ignore the other thirty who say “no.”
No matter who you are, you need two kinds of friends in your life. The first kind is one you can call when something good happens, and you need someone who will be excited for you. Not a fake excitement veiling envy, but a real excitement. You need someone who will actually be more excited for you than he would be if it had happened to him. The second kind of friend is somebody you can call when things go horribly wrong—when your life is on the line and you only have one phone call. Who is it going to be? Bill Campbell is both of those friends.
“Gentlemen, I’ve done many deals in my lifetime and through that process, I’ve developed a methodology, a way of doing things, a philosophy if you will. Within that philosophy, I have certain beliefs. I believe in artificial deadlines. I believe in playing one against the other. I believe in doing everything and anything short of illegal or immoral to get the damned deal done.”
An early lesson I learned in my career was that whenever a large organization attempts to do anything, it always comes down to a single person who can delay the entire project.
It turns out that is exactly what product strategy is all about—figuring out the right product is the innovator’s job, not the customer’s job. The customer only knows what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but often must go against what she knows to be true. As a result, innovation requires a combination of knowledge, skill, and courage.
Note to self: It’s a good idea to ask, “What am I not doing?”
Startup CEOs should not play the odds. When you are building a company, you must believe there is an answer and you cannot pay attention to your odds of finding it. You just have to find it. It matters not whether your chances are nine in ten or one in a thousand; your task is the same.
I thought that it was my job and my job only to worry about the company’s problems. Had I been thinking more clearly, I would have realized that it didn’t make sense for me to be the only one to worry about, for example, the product not being quite right—because I wasn’t writing the code that would fix it.
In business, intelligence is always a critical element in any employee, because what we do is difficult and complex and the competitors are filled with extremely smart people. However, intelligence is not the only important quality. Being effective in a company also means working hard, being reliable, and being an excellent member of the team.
Want to see a great company story? Read Jeff Bezos’s three-page letter he wrote to shareholders in 1997. In telling Amazon’s story in this extended form—not as a mission statement, not as a tagline—Jeff got all the people who mattered on the same page as to what Amazon was about.
Note: The Everything Store is a great book to learn more about Amazon and, in particular, Jeff Bezos, who is one of the best CEOs around.
Some employees make products, some make sales; the CEO makes decisions. Therefore, a CEO can most accurately be measured by the speed and quality of those decisions. Great decisions come from CEOs who display an elite mixture of intelligence, logic, and courage.
If you are a sports fan, you know that world-class athletes don’t stay world-class for long. One day you are Terrell Owens and the next day you are Terrell Owens.
If I was so inclined I could literally have typed out whole sections of this book – how to respond when one of your top execs questions the performance of another, what to say to your company if someone complains about bad language, how to give great feedback to employees – but I’d probably be violating some sort of copyright law. These are just the quotes that I really liked.

Cutting your own path

A friend of mine at work was talking about starting his own company. Understand, I work at an old, conservative, very corporate company. He mentioned this idea, this risky play, which could end up making him a ton of money.

This other girl heard him talking about it and said “Why would you want to do that? You’ve got a good, safe job here where you could be really successful.”

His reply was fantastic.

He said, “You can’t expect to follow the same route as loads of other mediocre people and expect to be wildly successful. It’s just not going to happen. You have to cut your own path.

Cutting your own path is always going be harder than following one that already exists. People will question you, wonder why you’re bothering, and convince you to do otherwise. You have to ignore those people. That path is a path to mediocrity – a plain of sheep where it is impossible to stand out from the flock. It’s easier, more comfortable, and much less rewarding than cutting your own path through the forest and seeing where you end up.

How to get rich

I was reading some of the Warren Buffett’s older letters to Berkshire Hathaway shareholders. I love the clarity in thinking that they display. The true mark of an expert is someone who has the ability to take a complicated topic and distill it into simple language, and these letters display that virtue in abundance.

I was reading the 2008 letter because I wanted to see what Warren wrote about the turmoil in the financial markets in that year. This letter contains the following passage, which I immediately saved to Evernote:

In good years and bad, Charlie and I simply focus on our goals:

1) maintaining Berkshire’s Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources of earnings and cash;

2) widening the “moats” around our operating businesses that give them durable competitive advantages;

3) acquiring and developing new and varied streams of earnings;

It’s wonderful in its simplicity. But the best part: you can apply this exact model to your own life.

1) Get your financial house in order. Know where your money is going (I use You Need A Budget, which is fantastic). Make sure you’ve always got enough cash on hand to cover any short-term liquidity problems – and I mean cash on hand, not home equity or available credit cards or money invested in index funds. Don’t get into credit card debt, and limit your other obligations as much as possible. Then, start investing the spare cash to produce additional income.

2) When applied to an individual, this basically means: find ways to increase your earning power day-to-day. For most people, myself included, your main economic engine is your day job. So this means getting great at your job, and taking advantage of the opportunities that arise because of this – promotions, pay rises, and so on. Being great at your job not only means you’ll get paid more, but also means you’re a lot less likely to ever be laid off – a great, protective moat around your earning power.

3) Now that you’re in a healthy financial position and earning good income, you need to redeploy this capital in ways that generate yet more income. That could be shares, bonds, peer-to-peer lending, starting a side business – whatever suits your particular talents and expertise. It’s your job to collect assets that generate excess cash for you, as the owner, to do with whatever you please.

A simple, three step model to becoming fabulously wealthy over time. Get your ship in order to avoid wipeout risk, increase earnings, and invest excess cash into assets that produce even more excess cash. Not easy, but simple.