Original question from Quora:
Why is it so hard for some people to make money, yet so easy for others?
My answer might shock you because it’s so simple. In fact, it’s a huge part of why Warren Buffet is rich and you (and I) aren’t.
A year ago I listened to the audiobook version of The Snowball, a massive biography of Warren Buffet’s life. It’s like 800+ pages printed, so it was a very long listen. I want to say it was 50–100 hours to finish it.
So imagine listening through 100 episodes of your favorite hour long podcast and you have an idea of the scope of this book.
Anyhow, most everybody focuses on how Warren Buffet makes billions of dollars every year. And from that you get witty phrases about holding stocks forever and so on.
Those quotable phrases are mostly useless. They don’t tell you how Warren Buffet got good at what he does.
Warren Buffet has one important skill - he is good at making money. That sounds obvious right? Of course he does.
Stay with me for a minute…
Warren Buffet didn’t start out rich. He wasn’t poor/broke either, but he didn’t have any inherent advantage over the rest of us.
Instead, when he was younger he was what I would call a hustler/entrepreneur. He always found ways to make money. He ran little businesses that threw off cash.
I can’t remember all of them offhand, but basically from a very young age he was deeply interested in making money. This is important. In fact, it’s maybe the most important reason he does so well now.
When he was young he was figuring out how to turn $1 into $2 or $5 or $10. That is a skill, like shooting a basketball or playing guitar.
Making money is a skill that you practice. Warren Buffett practiced making money probably every day of his life.
As he got older his interests in making money turned into investing in the stock market, but he doesn’t invest like you and I do.
Here is how most people think about investing. You hear someone talk about Apple stock and how it’s doing well. You look at the price and you see it’s gone up a lot over the years. You think it might keep going up so you put some money into Apple stock.
That is the extent of your research into Apple.
Warren Buffet spent his life reading balance sheets, financial statements, and everything he could about every company he’s ever invested in. The entire investing philosophy for the first couple decades of his career was built around finding and buying things that were improperly valued.
The short version of that approach is you look for a company or asset priced at $10 that is worth $10,000. You buy it at $10 and eventually when everyone notices it’s worth $10,000 you profit $9,990.
Warren Buffet spent months and years finding those little gold nuggets much the same way that someone panning for gold does. He sifted through company after company in the most painstaking manner to find the best places to put his money.
In the book, it describes how he would often spend his evenings reading the paper or studying financial reports instead of watching TV or playing with his kids.
After a while through the book it becomes obvious why he made so much money. It was his hobby, his passion, and his lifelong obsession.
I don’t even think it’s about greed so much as achievement in the same way that Michael Jordan, Peyton Manning, and Michael Phelps keep doing whatever they can to be the best in the world.
Warren Buffett is good at making money because he practiced making money his whole life. Most people who achieve a lot of monetary success in life spend a lot of time practicing making money until they get good at it.
As it turns out, making money is a skill or a sport just like any other skill or sport. There are rules, there are techniques, there are habits, there is practice.
Those who put the effort in can “run up the scoreboard” of money if they so desire.
And here is the crazy thing…
Anyone can do this. You can do this right now if you want to get better at money.
Here is what to do:
Go to your local Craigslist and list something you have sitting in your garage you need to get rid of. Take pictures, write up a listing, and price it at something you think people would pay (not what you think it should be worth).
Then, wait for the phone/text/email to ring. If it doesn’t ring, adjust the listing until you sell the item.
After you sell the first item, sell another and another until you are making good money just selling on Craigslist.
I knew a janitor who made good money buying and selling old stereo equipment on Craigslist and eBay. Probably cleared a couple grand a month doing it by my estimate.
That might not sound like much, but that practice is the gateway to ever larger money making opportunities as you improve your skills with practice.
Eventually, when you are good enough at making money the people around you won’t understand how you make so much money just like you are asking now. They won’t understand if you tell them the truth…
Making money is a skill. It takes practice.
P.S. I unpack more ideas in Creative Genius.