Many desire to be millionaires to enjoy a luxurious lifestyle, but Tim Ferriss suggests in The 4-Hour Workweek that you don’t need a million dollars to achieve that. Ferriss’s steps for creating a “millionaire lifestyle” will be discussed, along with the effectiveness of some recommendations and counterarguments to others.
Ferriss identifies two ways non-millionaires try to live like retired millionaires: postponers work for decades before retiring, but may not have the health or means to enjoy it; lifelong retirees alternate between short work periods and long retirements.
The 4-Hour Workweek offers a different approach: build a business that generates enough income to sustain your lifestyle, while freeing up your time.
Ferriss outlines a four-step process to achieve a millionaire lifestyle, which he calls DEAL: Define, Eliminate, Automate, Liberate. Each step will be explored in this guide. First, determine what you want to do with your newfound time. Second, streamline your schedule by getting rid of time-consuming activities. Third, create your own business, which can eventually provide passive income. Finally, retire and start living like a millionaire.
Step 1: Decide What You Want to Do
Ferriss’s initial phase involves discovering your dream activities if work was not a time constraint, and conquering any fears that hinder you from pursuing them.
Envision Your New Lifestyle
To start, imagine your ideal lifestyle with Ferriss’s dreamlining technique. List five specific items for each category of things you want to have, do, and be, and choose your top four dreams. Determine the monthly income needed to achieve those four dreams and add a 30% buffer for unexpected expenses. Focusing on a limited number of clear and specific goals, as explained in Good Strategy/Bad Strategy, is more effective than having too many vague goals.
For each dream, create three action items: one for today, one for tomorrow, and one for the day after. Start with the first actionable for each dream immediately. According to Mark Manson in The Subtle Art of Not Giving a F*ck, taking even small steps towards a goal can create a positive feedback loop of motivation and action, which can help overcome procrastination.
Identify what fears may prevent you from achieving your dream lifestyle. According to Ferriss, people often choose to stay unhappy in a familiar situation because of fear of the unknown. To confront your fears, ask yourself:
- What’s the worst possible outcome?
- How can you fix it if it happens?
- What’s the most likely outcome?
- And what’s your escape plan if needed?
Step 2: Streamline Your Life
Ferriss’s next step to achieving lifelong retirement is to eliminate time-consuming activities and commitments. Cut down on time spent on emails, calls, and meetings, and remove unimportant commitments from your schedule.
Do Only What’s Important
Ferriss suggests that instead of managing time, we should focus on doing only things that matter and eliminate tasks that don’t. He recommends applying the 80/20 rule and Parkinson’s Law to save time.
The 80/20 rule states that 80% of your results come from 20% of your efforts, so prioritize that 20% to maximize your outcomes. Parkinson’s Law suggests that a task will take as much time as you give it, so give yourself short deadlines to increase efficiency. By applying both laws, you can do the most important tasks and free up time for more profitable activities.
Minimize Unnecessary Time-Consumers
Ferriss suggests avoiding time-wasting activities such as busywork, routine work, and work requiring input from others. To limit busywork, he recommends restricting access to yourself through email, phone, and in-person meetings. For emails, set up an auto-reply with limited access and check them only twice a day.
For phones, set up two numbers, one for urgent matters and the other for non-urgent, and check voicemails only twice a day. For in-person meetings, avoid those without a clear agenda or end time, suggest emails as an alternative, or excuse yourself early. Avoid informal chats by using a “do not disturb” sign or wearing headphones.
Ferriss advises tackling routine tasks by scheduling them all at once instead of doing them as they come up. This helps save time and reduces the risk of interruptions.
For instance, instead of going to the store every few days, buy a week’s worth of supplies in one go. This approach is similar to Peter Drucker’s idea of dividing your time into blocks and devoting each block to a specific task. By setting aside time and focusing your efforts, you can handle tasks more effectively and reliably.
Work That Requires Someone Else’s Input
To save time and minimize interruptions, Ferriss recommends establishing clear rules that empower others to act without your input as much as possible, such as creating blanket rules for routine tasks. Additionally, he suggests transitioning to remote work to save time and increase productivity. If remote work isn’t an option, Ferriss recommends finding a less time-consuming job.
Step 3: Create and Automate Your Own Business
Ferriss’s third step to living a retired millionaire lifestyle is to create a self-sustaining business that generates income with little input from you.
Find Your Niche
To earn income without working, Ferriss suggests starting a “muse” business. This type of business aims to generate steady income with minimal effort, rather than to improve the world or make a lot of money to sell the company later on. Ferriss outlines three essential steps to creating an automated business, advising not to start manufacturing until all three steps are completed.
Step 1: Choose a small niche market with demand for your product and little competition, and where you can advertise effectively. Avoid crowded markets where you’ll have to compete with big companies.
Blue Ocean Strategy recommends finding a “blue ocean” with little competition where you can innovate and create demand. Many companies mistakenly enter “red oceans” with fierce competition, thinking they have to follow the demand instead of creating it with a unique product or service.
Step 2: Create a product that serves your niche market, such as an information product like a book or online course that you can easily create yourself. You don’t have to be an expert, just know more than your customers.
These products are ideal for a muse business because they’re cheap to make, sell at high markups, and are hard to copy. For example, you could create a martial arts-themed workout video that’s easy to distribute online or on DVD once you’ve filmed it.
Step 3: Test your product ideas by studying your competition and finding ways to differentiate your product. Create an ad that highlights those differences and reach out to your target market to gauge interest. Determine if your product will be profitable by comparing advertising costs to potential income.
If the numbers don’t work out, revise your product or advertising and try again. For example, you could create a martial arts workout DVD that includes specific exercises for increasing the power of your side kick, and conduct market research using tools like SurveyMonkey to determine interest.
Automate Your Business
Ferriss suggests automating your business in three phases based on sales.
- In Phase 1, where you’ve shipped 0-50 products, your business is too new to automate. You’ll be personally involved in every aspect of the business. Use customer feedback to refine your website and advertising, and get a merchant account at a small bank.
- In Phase 2, you’re shipping a few products per week, and you can bring on a local fulfillment company that meets specific criteria.
- In Phase 3, with over 20 weekly shipments, Ferriss suggests automating your business to the point where you can step back almost entirely. Your goal is to reduce your involvement to just a few hours per week, while generating enough profit to support your lifestyle without a day job.
To fully automate your business, follow two steps:
1) sign up with a large fulfillment company, credit card processor, and call center, and
2) decrease interactions with customers and focus on a small but loyal customer base. It’s important to choose companies that work well together to avoid communication issues.
While outsourcing can save you time, it may not be realistic to fully disengage from your business. To maximize profit, focus on deepening your relationship with existing customers who frequently order and don’t require a lot of attention.
Step 4: Start Living Your New Life
Ferriss’s last step to achieve the retired millionaire lifestyle is to make your dreams a reality. You’ll quit your day job, experience retirement, and embrace your new lifestyle.
Retire and Live the Millionaire Life
Ferriss advises taking a “mini-retirement” to disconnect from your old lifestyle and settle into the new one. Spend time in a different country to avoid getting drawn back into your old routine. Learn that it’s okay not to be busy all the time, make anonymous donations, learn a new skill, take up a new hobby, or volunteer to stave off boredom and find fulfillment. When you return, review your list of dreams and timelines, and update it as needed.
I’m founder and director of The Digital Agency; a certified Google Partner and Shopify Partner digital marketing agency operating in London and Istanbul. The Digital Agency has a solid track record of delivering high growth in eCommerce, Facebook & Google advertising, social media communication, search engine optimization, eCommerce and website production through 16 years of experience with 140 brands in 500 projects. Visit The Digital Agency here