Mental Models That Create Wealth

I want to talk to you about something that completely changed how I think about building wealth and it has nothing to do with working harder or networking better or finding some secret opportunity. It is 100% about mental models and there are mental models that wealthy people have that a lot of us don't have. But stay with me here if you've never heard of the term mental model. I'll explain what it is and why it's so important if you have. I'm going to talk to you about the mental models that have changed my life. And mental models, it's not some abstract concept. It is the actual difference between people who break through and make money and succeed and people who stay stock, which is the majority of us. I want you to think about a chess grandmaster just to paint a picture for a second. A chess grandmaster looks at a chess board for three seconds and they see 20 moves that you'll never notice and it's not because they're smarter than you because they've trained themselves to see patterns instead of just the pieces on the board. But it's the same board that you see. It's the same rules that you understand about chess. It's just a completely different game. That's exactly what mental models do for wealth. They don't give you new information. They change what you see when you're looking at the exact same situation as everyone else. Now the problem is that most of us inherited our mental models about money from people who never actually built wealth. So our parents, our teachers, the conventional wisdom that may have worked back in 1975 but absolutely does not work in 2025. Now the people that build real wealth and real companies, they had to rebuild their mental models from scratch. And again, it's not because they're smarter but it's because they learn to see patterns that everyone else or almost everyone else is completely blind to. So I'm going to show you exactly what they see. See, there's a game happening all around you that most people can't see. Let me paint you a picture. Two people, both working 60 hour weeks, both hustling, both sacrificing weekends and sleep. Player one in this game is a corporate lawyer and they're building 60 hours a week at $200 an hour and that means they're making $600,000 a year and that sounds impressive, right? Well, until you realize one thing, the moment they stop working, the income stops. So you miss one week, you make $0 that week. The income and the effort are completely locked together. Now, Player two in this game is a course creator. They spent six months building one really solid course and now they're working maybe 20 hours a week and they're also making $600,000 a year. But here's the critical difference. The course sells whether they're working or not. Income and effort are decoupled. They're completely separated. So it's the same amount of initial effort to build their business but it's 10 times different leverage on the outcome. You see what happened there, right? Player one is playing checkers and then Player two discovered they were playing chess the whole time, different rules, different possibilities, different game. And this is where most people get completely trapped and this is why this matters so much. See, we are all taught that wealth comes from hard work. That's the story, right? Put in your hours, climb the ladder, get promoted, increase your hourly rate or salary, work harder than the next person and then you'll get ahead. That was the game. And honestly, it worked pretty well for our parents generation but here's why it worked for them. When they entered the workforce in the 70s and 80s, there were fewer people with college degrees. There was way less global competition. If you worked hard and you stayed loyal to a company for 30 years, you got a pension, you got stability, you could buy a house on a single income and your spouse could stay home with the kids. The game was literally work hard at your job for 30 years and you'll be fine. And it was the truth. The game worked but that game doesn't exist anymore. Today, you're competing globally. There are millions of people in other countries willing to do what you do for a fraction of your salary. AI is automating more tasks every single month. The pension is gone. The gold watch for 30 years of service is gone. Job security is basically gone and here's the real kicker. Everyone is working hard now. Hard work is the baseline. It's table stakes. It's not a differentiator anymore. It doesn't make you special. So, we're in this weird situation where effort is abundant because everyone's hustling. Everyone's grinding but leverage is scarce. Most people don't have any leverage at all. That's the game shift and most people are still playing by the old rules wondering why they're stuck but the truly wealthy people, they figured this out years ago. They realized, okay, if everyone's working hard and hard work alone doesn't get you there anymore, what actually matters? And the answer is which game are you playing and are you playing it with leverage? So, let me break down what I mean by that because this is crucial. A freelance graphic designer trades hours for money. That's the game they're in. They work an hour. They get paid for an hour. More hours equals more money. It's very simple math. It's pretty straightforward. But here's the problem with that game. There's a ceiling built into the structure. There are only 24 hours in a day. So, even if you managed somehow to work every single one of them, which you can't you die, but you'd still be capped, right? Now, you can maybe double your hourly rate with experience and skill, but you can't work double the hours. So, you're already maxed out. You're trapped in what's called a linear game. Now, a product creator, whether or not it's an online course or a software or a book or a template or a system whatever they're playing a completely different game. They build something once. Maybe it takes some six months of intense work. Maybe it takes some year. But once it's built, it sells while they sleep. It sells while they're on vacation. It sells whether they personally touch it that day or not. So, it's the same amount of initial effort to build. Maybe even more effort upfront, but completely different multiplier on the backend. And that's what I mean by leverage. So, the product creator built leverage into their business model from day one. Their income isn't tied to their time anymore. They broke the handcuffs, right? And here's what the wealthy understand that most people miss. You can work twice as hard if you really push yourself. Maybe 80 hours a week instead of 40, right? But you cannot work 10 times harder. It's physically impossible. So, if you're stuck in a game where your income is directly tied to your hours, you will never make 10 times more money. The math simply doesn't work. It's not possible within the rules of that game. And that's why people stay broke despite working incredibly hard. They're optimizing for effort in a game where effort alone can't win. They're playing harder, but they're playing the wrong game. And that trap that most people fall into is they see someone else working hard and making good money. So, they think, well, I just need to work harder, but they don't stop to ask what game is that person actually playing? Because the lawyer building 600k, they're trapped. They've got golden handcuffs. They can't stop. They can't scale. They can't sell their time to more people because there's no more time to sell. But the course creator making 600k, they can 10x that by getting better at marketing, by raising prices, by creating a second course, by licensing it. They have options because the game they're playing has room for exponential growth. So, the mental model shift is this. Stop asking, how do I work harder? And start asking which game am I playing and is it even winnable? Because once you see the game clearly, once you see that you're trading time for money in a linear system with a built ceiling, you can make a different choice. You can change the rules of your game or you can switch to a different game entirely. That's what the wealthy do. They don't grind harder at the wrong game. They find a game where leverage is actually possible and they play that game instead. All right. So, you understand that different games have different rules and different outcomes. But, how do you actually evaluate whether a decision is going to work out for you in the long term? And this is where the second mental model comes in. And it's probably the most powerful tool I think I've ever learned. So, let me tell you what actually separates somebody who's worth $100,000 from someone worth 10 million or even 100 million, right? It's not intelligence, it's not connections, it's not even luck, although luck plays a role. It's one question they ask that most people never think to ask. This is called second order thinking. It's the ability to see beyond the immediate consequence of a decision to the entire chain reaction of triggers down the line. So, Charlie Munger, Warren Buffett's business partner, used to say that this is the difference between checkered players and chess players. Most people see step one, wealthy people see the cascade. They see the chain reaction. Now, let me give you a real example that'll make this crystal clear. So, someone is choosing between two job offers. Job A pays $80,000 a year. It's stable, good benefits, decent company, very safe choice. Job B pays $50,000 a year. It's a startup, very uncertain future, but you learn incredibly valuable skills and you get equity. So, first order thinking, which is how most people think, stops at the immediate consequence. So, job A pays more money right now. Job A is obviously better. Take job A. That seems smart. It seems logical. More money is better than less money, right? But second order thinking keeps going. It asks, okay, I take job A for $80,000 and then what? Well, the answer is you're probably capped at $80,000 for at least a year or two. Maybe you get promoted eventually and climb to $100,000. Maybe in five years you're making $120,000 if you're lucky and everything goes well, but that's the track. That's the game you're playing. But what can't you do? Well, you're there. Well, you can't build the skill that would actually create leverage for you down the road. You can't take the risk, the compounds over time. You can't invest your time and energy in something that could be paying you $500,000 a year, five years, 10 years from now because you're comfortable because you're making decent money because you're not desperate enough to build something on the side. You're not hungry anymore. So, the opportunity cost is completely invisible until you ask and then what? But it's real. And it's costing you millions of dollars over a decade. You just can't see it in the moment. Now, let's run job B through second order thinking. So you take the $50,000 job at the startup. Yeah, it's a pay cut. That sucks in your one. Then you ask yourself. And then what? So, well, you're learning skills that are incredibly valuable and rare. You're seeing how businesses are built from the ground up. You're getting equity. It could be worth millions if the company exits. You're building relationships with founders and investors. You're becoming the kind of person who knows how to build companies. And in three years, you could either be part of a successful exit and make life-changing money from your equity or you could leave and start your own company with everything you've learned or you could get hired at a much bigger company for $300,000 because you have skills that most people don't have. See, different chain reaction. The $80,000 job, job A, it looks smart with first order thinking, but it quietly destroys you with second order thinking. It is a trap disguised as safety. And this is why the wealthy, they make decisions that look absolutely insane in the short term. They're optimizing for the chain reaction, not the immediate payoff. They'll take the pay cut to learn a high leverage skill. They'll spend $50,000 on tools or coaching that 10X their output. They'll build something for two years without seeing any immediate returns because they see where the cascade leads. Now, why? It's because they're asking. And then what? Over and over and over again until they see the full picture. Now, here's the pattern that you need to understand. The safe job that actually kills your growth potential, the savings account that quietly loses 3% to inflation every single year, the comfortable lifestyle that prevents you from ever taking the risk or building anything real. First order thinking says that these all look smart. Safety, stability, and comfort. These sound like good things. Second order thinking reveals that they're quietly destroying you. Every year you're in a safe job, you're not building leverage. Every year your money sits in savings is a year it's losing value. Every year you stay comfortable is a year you don't grow. And this is why someone can work half as hard as you and make 10X more money. They're not playing the immediate game. They're playing the game three moves ahead, five moves ahead. They took the risk five years ago and it's paying off today. They built the skill three years ago that creates leverage now. They made the uncomfortable choice two years ago. They compounded into something massive today. And here's with wild. Once you start seeing in second order, you can't unsee it because every single safe choice is going to reveal this hidden cost. Every risky bet is going to reveal a compounding upside. Every decision becomes clear because you're not asking what happens immediately, but you're asking where does this lead over time. Most people optimize for avoiding pain today. The wealthy optimize for maximizing gain tomorrow. Most people ask what feels safe right now. The wealthy ask where does this path actually go? And that is the difference between being comfortable and being wealthy. All right, now here's where it gets really interesting. And honestly, this might be the most important mental model. I know I've said they're all very important and they are all very important, but it's a very important mental model as well. Third one, okay. Most people try to get rich by doing more, right? More hustle, more tactics, more strategies, more opportunities. They're trying to add their way to wealth. The wealthy get rich by avoiding stupidity, by subtraction, by not doing dumb things. Different approach way better results. Charlie Munger built billions on this mental model. He called it inversion. So instead of asking how do I succeed, he asked how do I guarantee I fail? And then he avoided those things religiously. It's a completely backwards way of thinking and it's incredibly powerful. So let me ask you, what guarantees that you stay broke? And I mean like genuinely guarantees it. What are the things that if you keep doing them will eventually ensure that you never build wealth? Well, here they are. Trading time for money with no leverage is number one. If your income stops, the moment you stop working, you will never be wealthy period. Spending everything you make. So if money comes in and immediately goes out, you can't invest, you can't compound your stock. Optimizing for looking successful instead of being successful. So the nice car, the nice apartment, the expensive dinners, you look like you're doing well, but you're broke. All your money is going to status instead of assets. Waiting until you're ready to start. Well, you'll never be ready ever. So if you wait for perfect conditions, perfect knowledge, perfect timing, you'll wait forever. I promise you that copying what worked for the previous generation. This is huge. So following your parents advice about career and money is almost guaranteed to keep you stuck because the world they succeeded in doesn't exist anymore. Those are five things and notice something really important here. Avoiding those five things is way, way easier than figuring out the perfect path to wealth. That's the power of inversion. You don't need to know the exact right move. You just need to stop making the obviously wrong ones. What did you think about it like this? Most people approach wealth like they're solving a maze blindfolded. They try path after path after path, hoping one of them eventually works. And it's exhausting. Most paths are dead ends and you waste years going down the wrong ones. In version completely flips it. So instead of trying to find the right path, you eliminate the dead ends first. You identify everything that doesn't work and you avoid those things. And what's left after you've eliminated all the ways to fail is probably something that actually works. Wealthy people use this constantly. They're always asking what destroys wealth. And then they avoid those things. They avoid high interest debt. They avoid lifestyle inflation. They avoid spending more every time they make more. They ask themselves what kills leverage, right? Well, they avoid systems where they have to touch every single decision. They avoid businesses where their time is the product. They avoid being the bottleneck in their own business. They also ask what prevents compounding. So they avoid starting over from scratch constantly. They avoid chasing shiny objects. They build on what they've already built instead of abandoning ship every six months for the next thing. And here's where this connects back to second order thinking and why these mental models actually stack on each other. See, inversion asks what chain reaction leads to failure and then you avoid triggering that chain. So let me give you an example from that invisible game we talked about at the beginning. Remember player one, the lawyer, building $200 an hour for 60 hours a week making $600,000 a year. So first order thinking says, that's a great income. That's success. But if you run it through inversion, you ask yourself what guarantees that this fails. Well, if you get sick, income stops immediately. You want time off, income stops. You want to scale to a million dollars. You can't. There aren't enough hours. It hits 60 years old and you can't work those hours anymore, income stops. So the game itself has failed your built into its foundation. No amount of hustle, no amount of skill, no amount of work ethic fixes that fundamental structural problem. Now let's go to player two, the course model, right? Let's run it through inversion. Well, what makes this fail? We'll say the course becomes outdated. Okay, so you update it once a year. It takes a few weeks. Not a big deal. Platform goes down. Well, you're on multiple platforms. You're diversified. It's not going to, it's not going to kill your business. A market shifts while you could build another course in the new direction or you could pivot the existing one. See, different game, player two's playing, different failure modes and way, way easier to protect against true failure. This is the mental model. Getting rich isn't about making all the right moves. That's impossible because nobody bats a thousand. It's about not making the obviously stupid ones. So once you see what stupid looks like, trading time for money with no leverage, consuming instead of building, optimizing for status over actual assets, waiting for perfect conditions, you just stop doing it and it sounds simple, right? Because simple is actually not so easy. Your brain is wired to do what everyone else does to seek comfort, to avoid risk, to choose what feels safe in the moment. Inversion overrides all of that programming and it asks, what's everyone doing around me? That keeps them trapped and then you do something else. So you look at all your friends and their safe corporate jobs and you ask, what happens to them in 10 years if they stay on that path? Oh, they're comfortable, but they're capped. Okay, I'll do something different. You look at everyone financing cars and upgrading their lifestyle every time they get a raise and you start to ask yourself, well, where does that lead? Oh, it looks successful, but really they're broke. Okay, I'll do something different. You look at everyone waiting until they have all the answers before they start and you ask, well, do they ever actually start? No, they just keep preparing forever. Okay, I'll do something different. See, inversion gives you clarity. It cuts through all the noise and the complexity and the confusion. It shows you very clearly. Here are the ways people fail. Just don't do those things. All right, we've covered three major mental models today. The invisible game, you have to ask yourself, which game are you playing and does it even have room for leverage? The compounding question. So what's the chain reacts? The second order thinking, what's the chain reaction of this decision over time and inversion thinking or subtracting, right? What's the obvious way to fail? How do I avoid this? Now, look, here's what I need you to understand. Can't just listen to this episode and expect your brain to automatically rewire itself. Mental models aren't tips. They're not hacks. They're not tactics that you implement once and forget about. They're new ways of seeing the world and seeing differently requires practice. It requires repetition. It requires catching yourself thinking in the old patterns and consciously shifting to the new ones. So here's what I want you to actually do this week, not just think about, but actually do. First, catch yourself optimizing for the wrong game. Pay attention to your thoughts over the next few days. When you're working, when you're planning, when you're making decisions about your career or your business, are you trying to work harder when you should be asking, is this even the right game to be playing? Are you grinding more hours when you should be asking, does this game even have room for exponential growth? I want you to write down one specific place where you're playing checkers when you could be playing chess. Just one. Maybe it's your freelance business where you're capped by hours. Maybe it's a job where there's no real path to leverage. Maybe it's a side project that's inherently linear. Just write it down, look at it, and start thinking about how you could change the game. Second, run one real decision that you're facing right now through second order thinking, because you got a decision to make this week. Maybe it's about a job, maybe it's about a project, maybe it's about how you should spend your time. So before you decide, ask, and then what? Three times. Map out the chain. Don't just ask what happens immediately if I do this, ask, and then what happens after that? And then what happens after that? And then what? And see where the chain actually leads. Not where you hope it leads, but where it actually goes if you follow the logic all the way through. Most people make decisions based on the first domino. You're going to make your decision based on where all the dominoes fall. And last thing I want you to do is use inversion once. So pick one goal you have right now. Something you're trying to achieve could be financial, could be career business. And instead of asking yourself, how do I achieve this? Ask yourself, what would guarantee that I fail at this? I want you to list everything every possible way you could screw this up, every obvious mistake, every trap that other people have fallen into. Write them all down and then just don't do those things. Sounds too simple, but I promise you most people fail because they keep doing obviously stupid things, not because they failed to find the one perfect strategy. And here's what I need you to understand. Mental models are compressed experience. They are the patterns that wealthy people learn through decades of wins and losses through millions of dollars made and lost and through thousands of decisions that worked and thousands that didn't. And they are available to you right now for free. So you can ignore them. You can spend the next 10 years learning these lessons a hard way, making all the same mistakes, falling into all the same traps, wondering why you're working so hard and getting nowhere. Or you can start seeing differently today. Same chessboard, same pieces, different game.