The 80/20 principle is your friend

You may have heard abut the 80/20 rule. It is often quoted as a basis for many distributions and statistics results in many facets of life. It was proposed by an Italian economist, Vilfredo Pareto, who somewhere around 1895, noted that about 80% of Italy’s land belonged to 20% of the country’s population. It is applied to many facets of life, like work, where 20% of your efforts will result in 80% of your results. Or 20% of your customers are responsible for 80% of your revenue. This is a naturally occurring pattern, similar to the phi ratio of the fibonacci sequence, that appears in many natural phenomena. Even the stock market has been accused of following a Fibonacci pattern. 

Economic Theory

One area that the Pareto principle is famous for is its ability to explain economic disparity and why a small fraction of the population control the vast majority of the wealth. This is considered a natural result of any trading game, which capitalism is. Like Monopoly®, where eventually one person ends up with all the money and everyone else ends up with nothing, the 80/20 rule seems to create economic disparity eventually as we play the game. This is similar to real-life. We all seem to have agreed to accept that fact.

However, we can use this naturally occurring phenomenon to our benefit. We can play the odds and make sure we are the ones getting ahead. 

How?

We can do TWO very important things:

1. Learn

2. Do something

Learn

We can educate ourselves. We can spend some time learning how money works. We can learn how to invest, and how to buy real estate and how to trade stocks and how to run a business. We can read books, take courses, and get a mentor. 

We are far better equipped to do well in the world when we have some prior knowledge. If we go on a trip without a map we may or may not end up in our destination. This is pretty basic advice, but super powerful. We need to know where we are going. Trial and error is fine, but why re-invent the wheel? If people have already done what you want to do and you would like to have results similar to what they have achieved, then why not learn from them how they did it and repeat it. It will save you time, money and heartache. A small investment in someone else’s knowledge can change your life in a massive way. 

Do Something

This is not a weird as it comes across. The vast majority of people live their lives in a way that really is little more than existing. They go to work, come home and watch TV and repeat the same thing day in and day out. They maybe go out on the weekend or take a vacation once in a while to break the monotony but their hours are spent in unremarkable ways and their results in life are going to be pretty mediocre as well. Unless they fall into some unexpected luck, they are doomed to dream. A proportion of these people read the odd book or talk to their successful acquaintances and maybe get some ideas. But that is usually as far as it goes. Talking about it and actually doing it are light-years apart. 

Just doing SOMETHING is going to get you 80% of the way to your dreams than doing nothing but wishing and hoping. You cannot underestimate the power of ACTION. Even if you screw up royally, you will have learned something and are far better prepared for the next attempt. If you do nothing but pray and imagine your life being different or better, you are putting your life and your happiness in the hands of fate and chance. Last time I checked fate and chance are pretty unreliable when it comes to helping me out. I feel much better being in the drivers seat. 

Being Canadian, I always love to fall back on the hockey metaphors. One old saying in hockey, as in many team sports I imagine, goes something like this:

“It doesn’t matter which system you use, as long as everybody buys into the system”

What I get out of this is there are many ways to improve your life. There are dozens of great strategies to build wealth and make money. Take your pick. The key concept here is to actually pick one. Then do it. You are 80% of the way there just by committing and taking action. The remaining 20% of your success will come from perseverance and adjusting your course to meet the changing tides of the real world. It will not be easy, and we all make mistakes. But the journey teaches us to be better. 

“Never wish life were easier, wish that you were better.” - Jim Rohn

By learning how to make the improvements you want in your life, and executing on your plan, you are now putting yourself in the upper few percentages of people who get all the goodies. You are doing what most people don’t, because they are afraid or indifferent. The world is chock full of information to help you in your quest. You just have to look for it and try it. You can be exceptional just by trying to be, because few people ever even try.

So to be the 20% that make a difference, you just need to be doing what the other 80% are not doing. Those “secret” 20% activities are not hidden from you. You do not need to belong to some insidious secret society to gain access to the path to riches. You just need to seek out the info. 

I recommend my books and courses if you need a step-by-step “paint by numbers” approach to creating a fortune from the money you already earn. I truly believe my plan can help you. 

I also recommend these 5 books to get you started on your journey. If you really want to have your mind blown, read Unscripted by MJ DeMarco. 

There is so much material out there to help you. There is always opportunity if you know what to look for. If you are dreaming and hoping for a better financial life, start making it a reality by using the Pareto principle and actually doing something.