IWillTeachYouToBeRich - COVID and The Freedom Class

Hey Reader,

Earlier this year, I shared a new way to think about the “poor, middle class, and rich" — a better framework for understanding how money impacts our lives. I called it The Trapped Class, The Treadmill Class, and The Freedom Class.

As we head into 2021, with COVID cases surging across the country and unemployment climbing again, I expect we’ll see a large number of households that thought they were safely in the middle class be forced to reevaluate their status. The mortgage and car payments and loans — safely managed during good times — can become suffocating and overwhelming in an instant.

I wanted to revisit this framework and show you how you can take action today.

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"Are you middle class?"
The way we think about economic class in America makes no sense. We divide society up into the poor, the middle class, and the rich, with one big problem...

Everyone thinks they're middle class! Nobody wants to say "I'm poor" or "I'm rich" — but people routinely say, "I'm middle class,” even when they earn multiple six figures.

And God forbid you actually tell someone who earns $300,000 that they’re actually not part of the middle class anymore. Suddenly, you’re going to hear them ranting about their HCOL city, taxes, cost of kids’ activities, etc.

They may be right about all those high expenses...but according to the poor/middle class/rich framework, they’re still rich. Yet to them, it genuinely doesn’t feel like it.

This is why we need another way to look at economic class.

Rich isn’t simply about money. There are people earning $500,000 a year and drowning in bills. There are also people making $50K who feel happy and free. Income and net worth is incomplete.

What's really important is LIFESTYLE.

A Rich Life is about FREEDOM and FLEXIBILITY. You can be rich on $50,000/year if you’ve created a life where you can do the things you love — whether it’s spending time with family, eating sushi every week, or teaching drawing.

Yes, of course, more money makes it easier. But what's important isn't the money alone — it's the freedom and flexibility.

That's why I proposed this new framework for thinking about class, one built on lifestyle, which you can intentionally design for yourself.

Note: These classes don’t justify massive inequality and systemic problems, which are extremely real problems. This framework simply provides a back-of-the-napkin “lens” through which to view your financial state.

See if you can spot yourself in the framework below...

TRAPPED CLASS: In The Trapped Class, you’re stuck working paycheck to paycheck, one accident away from financial disaster. There is no “buffer,” no time to think ahead and plan for the long term.

TREADMILL CLASS: People on the treadmill have a decent job and a small bit of savings. If you live in America, the treadmill isn’t bad — The Treadmill Class has a roof, a car, internet, pizza delivery any time, and they can take a vacation once a year. But they’re stuck, and getting off the treadmill is more of a dream, not a plan. They usually have some credit card debt. They aren’t saving enough for retirement. They’re likely to spend most of their lives working their job just to stay afloat.

FREEDOM CLASS: These are the people who have the ability to do what they want, when they want. Money is no longer a major constraint in their lives. In fact, cost is rarely the first thing they consider. More often, it’s time, quality, experience, relationships, or simply “I want it.”

I’m not just talking about billionaires and trust fund babies, even though they get all the spotlight. There’s actually a growing wave of people who are living this life by building small, automated businesses that support their lives.

The key insight here: It’s not simply about how much money you have. It’s how much FLEXIBILITY and FREEDOM you have.

Rethinking The Freedom Class & coronavirus
In normal times, most of us would love to be able to do what we want, when we want — without focusing on cost.

But when a crisis hits, like coronavirus, having that flexibility and freedom can be more than a “nice to have” — it can be the difference between safety and risk.

What's it like to be in The Trapped Class when a disaster hits? Or The Treadmill Class?

I asked people living paycheck to paycheck how coronavirus changed their views of money. A few months ago, one 32-year-old woman from Australia living on $20k/year summed it up well:

"I would be struggling a lot if the government hadn't doubled one of the support payments in response to the coronavirus. My normal tricks for getting by, such as public transport and buying on special, were taken away from me. I didn't have money for initial outlay like masks. 

Basically: 
- it has shown me that I'm placing myself at risk, both financially and health wise, by not being more strategic with money. A lot of this hasn't been my fault as I wasn't well. This year though I could have been more strategic with building a business and how I spent money. 
- Having back up savings and resources are a lot more important than I would have believed. Others may not always be there to help out."

Are you dependent on "tricks for getting by"? Is your financial situation putting not just your money, but your health at risk?

It is if you're in The Trapped Class. And a disaster like coronavirus only highlights how trapped you are.

Or take this reader outside Washington DC making $40k/year...

"I’ve been so obsessed with getting rid of debt that I had lost sight of saving money so I don’t go further into debt. Even with coronavirus here, it’s so hard to get myself into a saving mindset. I almost put myself in the hole again with unexpected car expenses. The importance of a full and detailed plan is so essential for times like this when you start to panic. Your brain goes into survival mode and you access to rational thought.

I definitely made some impulsive financial decisions in a panic that I wish I could take back. I need to sit down and write out my financial plan and include worst-case scenarios so I am prepared in the future."

I heard this story again and again — being one accident or misstep away from disaster, or taking one step forward and two steps back.

This is life in The Treadmill Class, which can seem fine day to day...until disaster hits. One small expense, like a medical bill or car repair, becomes a large, cascading problem. A series of large setbacks, like coronavirus, can drop you into The Trapped Class.

I also wanted to hear what people in The Freedom Class have been experiencing.

I'll give you an example that one of my students DM'd me:

This student was a new grad and had just started working. They only saved up a few months of emergency savings — I recommend 12 months now — but that cushion still made all the difference. Instead of wondering how they'd pay the rent or buy groceries, they could adjust to a drop in their work without worry.

That's real financial freedom: the freedom from worry.

People in The Freedom Class who have even more money were even more protected from the financial impacts of coronavirus. When I asked how coronavirus affected the finances of high earners, they were much less concerned.

What can you do about it?
Step 1 is to focus on what we can control. This isn't theoretical — if you lose your job, things could unravel quickly.

Please note: I also believe in focusing on systemic problems.

So build a plan for taking control of your money:

1. Build up your emergency savings. (I recommend 12 months.)

2. If you have that, and you can afford to, keep investing, just as I cover in my book.

3. Start thinking about earning more. Nobody’s coming to rescue us, and nobody knows what the economy will look like in the short term, so don’t wait. Think about how you can create your own income.

I hear from people who wrote to me years ago saying they had no time for a biz. Now those same people say they still have no idea — even though I've repeatedly told them you don't need an idea to start.

If you want to start something, START NOW so you can benefit later.

You don't have to have every detail figured out in advance. It's actually BETTER to start small, follow a system, make mistakes and learn as you go.

My first sale was for just $4.95. Just a few bucks. But I didn't care. That sale felt amazing because I knew if I could sell 1, I could sell 10. And if I could sell 10, I could sell 100. The same is true for you. You could build a second income stream this month and completely change your life’s trajectory.

Think of all the things you could do with an extra $1,000 a month...or $10,000 a month.

Think of how it would feel to know you were safe, secure, and didn’t have to worry. I know this is possible, because I’ve asked so many of my high-earning students what it feels like.

Next week, I’ll show you how to get started.

This is for people ready to build one of the most powerful and flexible types of assets — a business that PAYS YOU to live your Rich Life.

I’m opening my premium online business course, Earnable. This is for people ready to build one of the most powerful and flexible types of assets — a business that PAYS YOU to live your Rich Life.

As we head into 2021, you’ll have the opportunity to build flexibility and freedom into your life. Stay tuned.