Does it make sense to pay money to make money?
On the surface, it's a bit of a head scratcher.
If you’re trying to do better with money, why give it away?
That seems like a logical question to ask.
This article will help you answer it.
Because the truth is, there are times when it does not make sense to hand over your hard earned cash.
And there are other times when it absolutely does.
Knowing the difference is critical. It’s what sets the speed at which you can achieve your goals.
In this article, I'll show when you should and shouldn't spend money on financial education. And how to spend wisely when you do.
Let’s begin...
The Hidden Price You're Already Paying
First, let’s establish a fact you might not be aware of…
You’re already paying a price.
You just can’t see it, because it’s not an out of pocket cost.
It’s a tax.
Let me explain…
I spent three years reading books, going to workshops, and consuming information. All to avoid making a mistake investing my money.
Then I met Ryan. The information he exposed me to showed me that I was already making a mistake. The biggest mistake actually.
Sitting on the sidelines had cost me more than 30k in forgone passive income.
My ignorance had cost me 30k.
And that’s not even considering what reinvesting that money might have meant over the next three to four decades.
I’ve never done the math, because I don’t want to.
Let’s just say the number would be well over six figures. Ouch.
This is an example of paying ‘the ignorance tax’.
Like the taxes the government imposes on us, we can’t avoid it. It comes with the territory.
But we can minimise it. And most of time we should.
Other times it’s better just to pay it (more on this later).
Fortunately, minimising the ignorance tax is a simple fix…
Get educated.
Education is always the cure for ignorance.
But nothing comes for free. And there are two ways you can pay...
The Two Ways to Pay
You have two resources you can use to fund your education.
You can pay with time. Or you can pay with money.
So when should you do which?
Again, the rules are simple:
- If you have no money, pay with time.
- If you have money, buy time.
Paying with time.
All the information you’ll ever want or need can be accessed for free on the internet.
There are no real secrets.
It’s all there. I promise you.
And if you’re reading this, you probably have the work ethic and intelligence to figure this out on your own.
It’s simply a matter of sifting through the ocean of noise to find the best sources.
Then you’ll need to consume as much good information as possible to sort strategy from tactics. Then principles from popular trends.
The next step is uncovering the specific configuration of principles needed to achieve the result you want.
Finally, you’ll need to figure out how to put these principles into practice.
Then test, iterate, and evolve your approach to discover what works. Then what works best for you.
But here's the but...
You’d need to do all this knowing the answers you seek have already been found. And that the problem you’re looking to solve has already been solved.
Don’t get me wrong. There are free paths that can absolutely get you a result.
We spent 6 months creating ‘build your cash cushion’. And it’s 100% free.
This collapses the time you'd have to spend reading the books, finding the principles and learning the tools before you get started saving.
Why did we do this?
To help as many people as possible get beyond paying with their time.
Because here’s the brutal reality…
Time is more expensive than money.
See you can always make more money. But you never get back one second of your time. So trading time instead of money is more costly.
And the longer you pay with time, the harder it is to achieve your big ambitious goals. Here’s why:
The longer your money is at work, the harder it tends to work.
It’s true.
The visual below shows the best known example. 99% of Warren Buffet’s wealth came AFTER his 50th birthday.
Money loves time.
Time costs more than money.
So while it makes sense to pay with time if you have no money, if you have money it makes more sense to buy time.
Buying time.
When we started the Cashflow Co. We had no idea how online business works.
We only knew we wanted to build the kind of business that allowed us share what we'd learned and work from anywhere.
And we wanted a predictable way to find and serve the people we loved to spend time with.
So we asked ourselves, who knows how to build and run online businesses?
That question led us to a guy called Sam Ovens.
We’d been reading his posts on Facebook for a while. And watched a few videos.
So we jumped on a call and went through the process.
The course cost over 9k. At the time, this was not a small chunk of change for us.
We knew we could probably figure it out ourselves, but we also knew we’d get there much faster by buying time.
The second we got access to the program we saw exactly what an online business looked like.
We saw all the components and how they fit together.
We saw how we could package the knowledge.
How to structure the learning sequence.
And how to deliver the promise.
We also learned valuable skills that unlocked the biggest constraints for our growth.
The very next month we doubled our revenue.
And that became the new ‘floor’ we normalised as a business.
Buying time means using money to skip endless study.
It means stealing proven solutions from those in the know.
Typically, this is done by paying people who have already figured out what you want to figure out.
When you use money to buy time, you are buying all the effort, energy, and lessons it took to amass the insights required to get the result you want.
I think of it like ‘cheating the test’.
I get to piggyback off someone else’s hard work. And if I’ve chosen the right person and pathway I’m much more likely to get the outcome I want.
See life isn’t like school. It’s the opposite.
It doesn’t matter if you did it all yourself.
There is no badge, no award, and no recognition for the hardest worker. Or the most impressive solo act.
The only thing that matters is the result.
What we’ve been trained to think of as ‘cheating’ is actually the formula for winning.
Because the sooner you can solve the challenge you're facing, the sooner you can solve the next challenge.
And the more challenges you can solve, the further you go.
That’s why ‘who not how’ is one of the greatest hacks I’ve ever come across.
Instead of asking ‘how do I do this? I ask: 'who knows how to do this and how can I work with them to get the result?'
That is how you buy time. It's also how you build wealth.
But how much should you pay?
Let's take a look...
How to Value Financial Education
To answer this question, let’s tap into Warren Buffets' investing wisdom.
He is famous for saying
Price is what you pay, value is what you get.
When studying how he has outperformed his peers, I discovered a pattern in his observations...
Those who don’t know how to assess value fixate on price.
And this causes them to compare the price of the opportunity in front of them to the price of other things they know.
In other words, poor performers preference what is known over what is unknown. And more often than not this causes them to:
- Conflate cheap deals with good deals.
As as result they:
- Miss the true value of a given opportunity.
And that causes them to:
- Overlook the best deals.
And these are the deals Warren gobbles up unchallenged.
See in Warren's eyes, the best deals aren’t always cheap. And cheap deals aren’t always best.
The best deals are those that compound in value and pay massive dividends over time. And they all have one thing in common.
The value far exceeds the cost. Even if the cost is substantial.
If there is a ‘secret’ to his investing success it is this. He is better at assessing the true value of an opportunity than anyone else on the planet.
Now, let's use Uncle Warren's insight to value financial education.
There are two questions that can help us determine the true value of financial education:
- How useful is it?
- How often will you use it?
It’s useful to know how to fix a blown head gasket on your car.
But unless you’re a mechanic. Or you work in the primary industries. Or you live in a remote regional area, you’re probably not going to need this knowledge often or at all.
That’s why it’s not ‘high value’ for most of us.
So it makes sense to pay for roadside assist. We pay not to know it (i.e the ignorance tax). And we should happily pay it
So, how much should you pay for financial education?
Let me show you how I think about it…
The Bottom Line
My rule of thumb when buying education and or expertise is simple:
→ It should save and or make me at least 10 times what it costs.
So I follow three simple steps to assess the true value:
- Consult with primary sources of information to find out what it means for me.
- Go through a thoughtful decision making process.
And if after this I want to do it:
- I pay whatever price I can reasonably afford.
This allows me to more precisely compare value to price. And it helps me ensure I’m thinking logically about the opportunity at hand. Because I know that good education always makes you more than it costs, and the cost of not being educated is far greater.