In “Unscripted”, MJ DeMarco argues that an entrepreneurial mindset is the only way to achieve financial success, but most people are held back by unproductive beliefs about money. He offers practical solutions to remove these beliefs and cultivate an entrepreneurial mindset.
The guide is divided into two parts: the first explains the three financial mindsets and why an entrepreneurial mindset is the most effective for achieving financial goals, while the second covers eight beliefs that hinder an entrepreneurial mindset and how to overcome them. The guide also includes insights from financial advisors and successful entrepreneurs.
Part 1: Beliefs About Money Fall Into One of Three Mindsets
DeMarco believes that your money beliefs shape your wealth accumulation, as they impact your financial behavior. He categorizes these beliefs into three mindsets: consumer, employee, and entrepreneurial.
DeMarco identifies three mindsets regarding money.
- First, the consumer mindset focuses on flaunting wealth rather than acquiring it, leading to debt and financial instability.
- Second, the employee mindset prioritizes saving for the future and working for others, but this approach does not guarantee wealth.
- Third, the entrepreneurial mindset involves taking accountability and creating unrestricted income streams, leading to short-term financial success and long-term wealth.
Part 2: Identify and Overcome Unproductive Beliefs About Money
DeMarco suggests that your financial mindset determines the state of your finances. Therefore, to achieve wealth, you must adopt beliefs that align with an entrepreneurial mindset. However, he emphasizes the importance of identifying and overcoming unproductive money beliefs before cultivating an entrepreneurial mindset.
DeMarco suggests that unproductive money beliefs hinder the cultivation of an entrepreneurial mindset, resulting in limited wealth.
He identifies eight such beliefs, including luck, innate capabilities, and shortcuts to wealth. However, DeMarco believes these beliefs can be overcome, and he provides practical advice on doing so throughout the guide.
Unproductive Belief #1: Only Lucky People Get Rich
DeMarco challenges the belief that luck is the sole determinant of wealth. This belief implies that you are not accountable for your financial success or failure, disregarding the role of your actions and choices.
According to DeMarco, this misunderstanding makes you feel helpless and discourages you from taking steps to better your financial situation. He highlights the importance of perseverance and learning from failures by citing his own experiences.
Build Your Own Chances to Develop an Entrepreneurial Frame of Mind:
Create prospects for riches by making decisions that might lead to good results in order to develop an entrepreneurial attitude.
DeMarco argues that financial “luck” is a result of the choices you make. By spending your free time constructively, such as developing business ideas or improving yourself, you increase your probability of achieving financial success by creating multiple opportunities to improve your finances.
Unproductive Belief #2: Your Innate Capabilities Determine Your Level of Wealth
Belief two, “Your innate capabilities determine your level of wealth,” suggests that your intrinsic skills dictate your earning potential. DeMarco argues this belief discourages financial success in two ways:
1) It convinces those who’ve had easy success that they don’t need to improve their skills and
2) It convinces those who’ve struggled that they lack the necessary talent.
Develop an entrepreneurial Outlook by Making Small Changes
DeMarco suggests developing an entrepreneurial attitude by constantly honing your talents. Even small progress can disprove the belief that your abilities are fixed and unimprovable, empowering you to achieve financial success.
For instance, if you struggle to come up with profitable business ideas, start small by reading business books for inspiration and aim to generate one new idea each week, gradually increasing to one daily.
Unproductive Belief #3: Frugality Creates Wealth
Frugality may not be enough to create wealth. This is because it can limit your focus to reducing expenses instead of increasing income.
According to DeMarco, simply saving every penny won’t magically turn into sizable wealth in the future. Additionally, inflation might lower the value of your investments. As a result, you should concentrate on raising your revenue rather than merely cutting costs if you want to develop an entrepreneurial attitude.
Develop an entrepreneurial Outlook by Using Time-Based Income Generation
To build wealth, DeMarco advises abandoning the belief that frugality alone is enough and instead focusing on creating passive income. He argues that relying solely on a wage or salary restricts your earning potential and savings.
Instead, investing time in creating a product or system that generates recurrent income expands your income potential and ability to accumulate wealth.
DeMarco recommends investing in assets that appreciate over time, such as physical or intellectual property that you can lease, sell, or distribute, as the best way to grow your net worth and earn millions.
Unproductive Belief #4: It’s Okay to Spend More Than You Earn
The belief “It’s okay to spend more than you earn” leads to a consumer mindset and reliance on credit to buy what you can’t afford.
DeMarco argues that this mentality hinders your ability to create wealth, as debts incurred from credit can destroy your chances of financial security by redirecting future income towards loan repayment instead of investments, savings, or a business.
Act Like an Entrepreneur to Develop an Entrepreneurial Frame of Mind
Develop an entrepreneurial attitude by taking the producer’s vantage point. Instead of thinking like a consumer, focus on the value and processes involved in creating a product or service. Ask yourself how the company generates profits.
DeMarco asserts that this shift in perspective will help you transition from a consumer to a producer mindset and identify profitable opportunities.
Unproductive Belief #5: You Can Make Money Without Creating Value
The belief that you can make money without creating value is flawed, as the amount of money you earn is directly proportional to the value you create.
Pursuing activities that offer no value only wastes time and offers no chance of generating wealth. Instead, focus on creating massive value to achieve massive wealth, rather than constantly switching jobs or trying get-rich-quick schemes.
Develop a Mindset of Entrepreneurship through Adding Value to Others
Develop an entrepreneurial attitude by focusing on delivering value rather than generating money. According to DeMarco, the amount of wealth you generate is directly linked to the amount of value you create for others.
To create value, evaluate your skills, knowledge, or assets and consider how they can benefit others. Identify problems or inconveniences you can resolve, and think of ways to improve upon products or services you already use. By doing so, you can align your abilities with valuable money-making opportunities.
Unproductive Belief #6: The Rich Prevent You From Acquiring Wealth
Debunk the belief that the rich obstruct your path to wealth and instead take responsibility for your own financial situation. Don’t waste your time blaming others for your financial struggles, but focus on taking action to improve your situation.
Develop an Entrepreneurial Mindset by Understanding the Value That Wealthy People Create
Instead of blaming the affluent, adopt an appreciation attitude and concentrate on how they have benefited society in order to develop an entrepreneurial mindset. Blaming others for your financial situation creates a negative mindset that prevents you from generating constructive ideas.
Instead, recognize that the wealthy have made valuable contributions and appreciate their efforts. This positive mindset will empower you to develop your own profitable ideas and make a valuable contribution to society.
Unproductive Belief #7: There’s a Shortcut to Wealth
The belief that there’s a shortcut to wealth makes you underestimate the hard work and effort needed to create wealth, according to DeMarco. It also leads you to waste time and energy on get-rich-quick schemes instead of taking constructive actions to improve your finances.
Develop an Entrepreneurial Mindset and Put in the Work to Become Wealthy
DeMarco advises setting a quantifiable financial goal and committing to the work necessary to attain it in order to develop an entrepreneurial attitude and get rid of the misconception that there are quick ways to wealth.
He outlines three practical methods: setting a measurable goal, creating a daily routine, and identifying and removing distractions.
- Setting a measurable goal provides a clear target to move toward and allows you to measure progress.
- Creating a daily routine involves breaking the goal down into daily tasks.
- Identifying and removing distractions means eliminating anything that might prevent you from working on your tasks.
Unproductive Belief #8: Relying Solely on Compound Interest Makes You Rich
The belief that “compound interest alone makes you rich” suggests that investing small amounts of money over time will result in significant wealth.
However, DeMarco argues that this belief can be risky since it relies on unpredictable market forces to generate wealth for you.
While investments may provide predictable returns in theory, the markets are unpredictable and rates are often too low to make a significant impact. Additionally, factors like poor financial management and inflation can lead to losses rather than gains.
Develop a Mindset of Entrepreneurship and Use Compound Interest to Increase Your Profits
To overcome the belief that compound interest alone can make you rich, DeMarco suggests using it to supplement profits instead. He advises developing a profitable business first and then investing the profits to generate passive income.
By investing more profits, the value of large investments will be dramatically increased over a shorter period, even with low rates of return.