Here's the harsh truth. Most people will stay broke their entire lives. Not because they're dumb, not because they're lazy, not because they don't work hard, but because they're taught the wrong game. Go to school, get a job, budget, save, put a little in your 401k, and then hopefully it all works out 40 years from now. And this is the exact formula that keeps 99% of people broke. Trading time for money, barely getting ahead, and hoping inflation doesn't eat them alive.

But here's the good news, there's a way out. It starts with understanding one thing, something the wealthy know, but most were never taught. You don't get rich by budgeting, you get rich by owning. So in this episode, I'm gonna break down exactly why 99% stay broke and how the system keeps it that way, the three wealth levers that you must pull to escape, and then a simple roadmap to go from being stuck to building real wealth, real freedom, and real options.

So here's my promise to you, by the end of this episode, you're gonna know how to shift from being a worker to being an owner, from trading time to building wealth that works for you while you sleep. So if this sounds good to you, get ready, let's go ahead and jump in.

Let's first talk about why 99% of the people out there stay broke. And I think the first reason has to do with being trapped in this time for money cycle. So you work, you get paid. You stop working, the money stops. There's no leverage, and there's no scale.

So when I was first starting out in consulting, I left the big four accounting firm, Ernst & Young, and I decided to go off on my own to start Coltivar, because I realized in the market there's this massive gap between strategy and finance. On one side, there's these strategy professionals, proclaimed consultants, whatever experts, and they're teaching mission, vision, and values, and getting everybody excited about the upcoming initiatives they're going to take on. And then on the other side, you had the nerds, right, building these financial models, and basically putting in whatever numbers the CEO would say to match the strategy. So basically, the CEO would be like, all right, we're gonna grow 20%. Go model this out. And then they'd go model it out, and it's like, there you go, there's our numbers, that's our strategy. And it's like, a financial model is not a strategy, and mission, vision, values, or a SWOT analysis is not a strategy either.

So that's where I realized, if I can combine the two, if I could teach people the story behind the numbers and show them how to pull certain levers in their business, and then the strategies to actually do to drive value, oh my gosh, I could build a business.

So off I went, I started Coltivar, and early on, I was charging an hourly rate for my services. And this was problematic, especially for a guy who's type A and super ambitious, because I was thinking in my office, I'm like, okay, I should go work out after work. But then I thought of my hourly rate, and I'm like, okay, I could just book one more call instead of go work out, and I could make more money. Because if I go to the gym, oh my gosh, it's gonna cost me a lot of money to go work out, because I'm forfeiting this hourly rate.

That's when I realized, okay, I need to change up the way I do things at Coltivar, because if I stop working, the money stops, and I don't wanna swap time for money. The only place where doing time counts is in prison. That's where I always joke with my employees. So nonetheless, you have to get out of the trap time for money.

So at Coltivar, I changed things up, I put clients on retainer, then I started charging a fixed amount for certain engagements, and then I got out of that whole time for money thing. Even today, I was working with a client recently, and he's like, hey, so can you help me with this, and I'll pay you hourly, and I'm like, I don't even know what to charge you hourly. I said, if you just want an hour of advice, then let's just hop on a call. I'll give you a free hour of advice, but if you're looking for real transformation, that's really what I do, we could talk pricing from there.

But yeah, I don't charge by the hour, and neither should you. And if you're in a job right now where you're working for wages, hey, no harm, no foul, just don't get stuck there, because it's really hard to get ahead when you're getting paid for the hours that you're working, because like I said, you're not working, you're not getting paid, so the money stops, there's no leverage.

The second reason why 99% of people stay broke is because of financial illiteracy. So you think I just do boosting your financial IQ, because I think it's fun, it is fun. But I'm passionate about this topic, because so many people were never taught how money actually works. This should be like a crime, right?

I cannot believe schools in the United States will allow people to graduate, whether it's from high school or college, and be financially illiterate. I mean, it's crazy to me. Money is what drives our economy. Money is what's gonna feed your family. Money is what's gonna sustain you. And most people don't know how money works. It's crazy, right?

So school, they taught you about algebra, but not how to read a P&L, not how to buy assets. I didn't learn about this until I got to college. And even going through a lot of my accounting classes during undergrad, and even my finance classes, they didn't prepare me for what's ahead.

They didn't teach me how to turn around a company, or how to build a valuation model, and then pull certain levers to maximize firm value. They didn't teach me that. So this financial illiteracy, it's what's keeping you stuck.

So imagine this. Let's say you make $100,000 a year, okay? You wanna be making a million. That delta, that gap between the two, that $900,000 gap is your ignorance tax. That's how much it's costing you to not know how money works.

And you can think about this at whatever level. Maybe you're making a million, and you wanna be at 100 million. The gap between the two numbers is your ignorance gap. So you wanna work hard to close that gap as quickly as possible.

That's why I'm so passionate about this topic. I could tell you some of the best business leaders out there, they get tripped up because they don't know how to read financial statements. I was in a financial meeting the other day with a room full of executives, and they could look at the numbers, but then when I talked about how do they influence the numbers, that's where they got stuck.

So that's what I'm talking about, being able to understand the story behind the numbers and know, okay, these are the three levers I could pull, and these are the 10 actions I can go pursue in order to move the needle. And then you go out there and you execute, then you look at your numbers in the following period and see if they moved.

So if you could get good at looking at numbers and then making them move in a positive direction, you'll be worth so much more. But financial illiteracy is a killer. I mean, think about it. Think how many people are out there trying to get people to invest in crypto, and those who are investing in crypto have no clue how cashflow from an asset even works. They don't even know how valuation works.

So I'm not saying crypto is good or bad. I'm just saying if you're going to invest in something like crypto or in a stock, you should know how it's valued. I mean, the fundamental valuation method in stocks is understanding its intrinsic value, the amount of cash it's going to spin off over its useful life.

The business is really what I'm saying here, not the individual stock. But if you don't know how business works, or if you're going to invest in a real estate property and you don't know how cashflow is going to come from that property and service your debt and give you a return, I mean, you're just speculating. You might as well just go to Vegas and play craps. It'd probably be a lot more fun than trying to invest in a stock and losing your money anyways.

So financial literacy is critical. That's why I boost your financial IQ. I have the financial pro course, it's totally free. It's like free, it's 100 videos of me as a CFO teaching you about financial literacy. And if it's not me, okay, go check out another channel or another podcast, but learn how money works. I think that's a super important skill.

Okay, number three, the third reason why 99% of people stay broke is because they follow the saver's myth. And the whole idea is save your way to wealth. But savings lose to inflation, three, five, even 8% a year. A high yield savings account pays 4% while your groceries went up 22% over three years and you're losing money.

So here's the thing. I remember in my ecclesiastical responsibilities, I was the financial clerk of our ward at church. And so I worked together with the bishop who is kind of like the pastor, right, of our ward, of our congregation. And under his direction and guidance, I would disperse funds to families who were in need.

So I thought it was a great program. But here's the thing that I realized is a lot of these people that needed financial help, they didn't have a spending problem. They had an earning problem.

And so when you relate this back to savings, let's just say you make a hundred grand a year. You're gonna have to pay taxes. Then you're gonna have expenses, all your living expenses, just all the basic necessities. And maybe you can save 10% of your gross. You save 10 grand. But even 10 grand a year, and if you put that in an index fund or real estate or some other type of asset that's yielding a higher return, it's gonna be really hard to build a giant nest egg.

I mean, that's what's crazy to me. The whole education scam, you know, that's probably one of the biggest lies to the younger generation. Go get a college degree, and then you'll get a great job. And a lot of people came out of school with say $200,000 of debt. Then let's just say they did get a job for a hundred grand and they're able to save 10% off the gross, the 10 grand, it's gonna take them 20 years to pay off that student loan. And that's without even accounting for interest, right?

So trying to save your way to wealth is gonna be really difficult. That's where you have to have leverage in other areas. And that's what we're gonna talk about with number four, which is no ownership. That's why 99% of people stay broke is because they don't own stuff.

They just rent stuff. They just lease stuff. So no ownership equals no leverage. If you don't own the business, you are the business. You're the laborer, right? If you don't own the asset, then you're probably renting the asset and it's a liability to you, right? Versus an asset that's producing income.

And it's not like you have to start big. It's not like in your 20s, you save up all this money and then one day you go buy a $5 million company in cash. But there are different ways to get ownership.

I mean, you can start a business, right? And have 100% ownership. But there's a high percentage of businesses that fail. So you have to be careful with that path.

You can join a startup and get equity ownership. You can partner with somebody in split ownership. You can go to somebody who is gonna retire or who wants to retire and you can take over their business and work out a creative deal structure so you can get ownership. I just did a podcast about this last week. So be sure to check that out. The last episode I did, I talked about buying a business.

But there are a lot of ways to do it. But if you don't have ownership, you're not gonna have leverage. You're just gonna be trapped in that time for money cycle.

And number five is learned helplessness. Believing the system works even when it doesn't. So it's that victim mentality where you think, I guess this is just how life is. And that's what you gotta break free from.

I can tell you the mindset is so critical. I grew up poor, all right? I grew up rich as far as my mom loving me to death. But we didn't have any money. And it was super embarrassing. I remember being a teenager and we didn't have money. We had to rely on the church for sustenance sometimes.

It was just like eating church food, which I'm grateful for. But I'd go over to my friend's house and they would have Lucky Charms and all these other brand name things, Ding Dong Zingers, Hot Pockets, whatever it was. And here I was like eating beans out of a can.

And like I said, I was grateful to have food because a lot of people in the world, they don't have access to food. But for me, it was tough. My mom is a single mom. She's working multiple jobs just to pay the bills. And I was scrappy. So I'd go out there and shovel snow. I'd mow lawns. I'd do whatever I could to earn a buck. But I could tell you it was tough.

But I never thought, oh, this is just my destiny. I'm gonna be poor because my mom was poor. Instead, I thought, you know what? I'm gonna make a difference. I'm gonna get out there and educate myself and do something about it.

So many times we fall into this victim mentality, I think because it feels good. It's like you're in this state, right? And it's not a good state. But when you're in this victim mentality, temporarily people around you may shower you with praise or show you extra attention or give you affection or love, whatever it may be. And that keeps you in the victim mentality.

But if you stay there too long, people are like, oh my gosh, I don't wanna be around you. And they avoid you. But also you give your power away because you're like, I can't do this. I didn't go to Harvard. I can't do this. I never had this job. I didn't have a mom. I didn't have a dad. I was addicted to drugs when I was younger. I got unemployed. I don't have any skills. Whatever the excuse is, it's like, stop, stop.

And I'm speaking to myself because this is me early on. And I still fall into this trap sometimes. Like, oh, woe is me. Work didn't work out. I didn't win that engagement. The deal fell through, whatever it is. But then I'm like, Steve, you need to knock it off because you're not a victim and don't give your power away.

And that's what I'm saying to you is like, don't give your power away. Don't believe in this like helplessness or that the system is rigged or whatever it is. You just have to figure out the formula because if you don't and you play the victim role, you are gonna stay broke.

So let me just say this. The system isn't broken. It's built like this. The system is designed to create workers, not owners. If everyone became financially free, who would clock in at 8 a.m.? This is why nobody taught you this.

So I wanna talk about the way out.

Here are the three levers.

Lever number one is ownership, okay? Wealth doesn't come from wages. I remember looking at an IRS study years ago and it's like the majority of millionaires earned their riches, their wealth from assets, right? Not from W-2 wages. They're earning it off their capital.

So the same thing is true for you. Your wealth is gonna come from your assets. Assets that make money while you sleep. A business, real estate, a share of another business, so having equity in another business. So just remember, no ownership equals no freedom, period. That's it.

All right, lever number two is cashflow. Cashflow is the ultimate wealth metric. You know I love cashflow. I talk about cashflow all the time. So forget net worth for a second. Net worth is just a snapshot. It's the balance sheet, right, that you're looking at at a given point in time where you look at a balance. That's what it is right then.

But cashflow is what feeds your family. It pays your bills. It buys your freedom. It pays for your cat, if you have a cat, whatever, okay? But cashflow means that you're paying off debt faster, you're funding growth, and you're living life on your terms.

So if you own something that throws off 5,000, 10,000, $20,000 per month consistently, you've escaped, as long as you keep your expenses in control, all right? Because remember, wealth, I believe, is a ratio. It's not a number, it's a ratio. You can make a million bucks a year and spend a million bucks a year. I know a lot of people like that, and it's called being broke. But if you're making 30 grand a month and your living expenses are at 10, you could do pretty well because you're gonna stack cash pretty quickly.

All right, lever number three, leverage, the good kind. Not hustle, not working 100 hours a week. That's not the leverage I'm talking about. Leverage means people having employees, teams, contractors. So in other words, you're paying other people to help build your business, to help build your dream, to help build your vision, to get stuff done.

Money can be another point of leverage. Using debt correctly, not to buy liabilities, but to buy assets. Investor capital is part of that money leverage point. And then you have systems, processes, technology, automation that can make things scale.

So just know that wealthy people, they don't do everything themselves. They design systems where money and people work for them. That's the key.

All right, so either you're nodding your head at this point or you're thinking in your head, that won't work for me. So let me talk about common objections and then some truth bombs for you.

All right, here's one potential objection. But Steve, I don't have money to buy anything. Well, neither did most business owners when they started. A lot of business owners started out broke or they had like 10 bucks. So I'm sure you have $10 right now.

You can use creative financing, debt, partnerships, seller financing. There's so many opportunities out there to get started. Even opportunities that I didn't have when I got started in business. So there are so many things out there.

And even when it comes to building skills, like when I was growing up, it was school or maybe it was some like seminar that somebody was putting on. Now you have YouTube, you have podcasts, you have so many things at your fingertips where you can build skills to go out there and get money, use the money to buy assets.

And like I said, there's creative financing. You can go to a business owner and say, look, I'll take over your business, show me the ropes and I'll pay you 50% of the profit over the next five years. And just try it. I mean, there's things out there that will work if you just get creative.

Here's another potential objection. Isn't debt risky though, Steve? Well, not if the asset produces cashflow. Bad debt is for cars. Good debt buys businesses, real estate and assets that are gonna spin off cashflow.

So sure, if you're gonna invest in something and you don't even know how cashflow works, if you can't build a cashflow model, then yeah, debt can be risky. But if you build out a model and you factor in a margin of safety and the model still works, there you go.

That's why finance can be beautiful because you can model out different scenarios and sure, not everything's gonna work out perfect in the real world, but at least you'll know whether or not it makes sense economically.

All right, here's another objection. I don't know where to start. Literally, people reach out to me and they're like, Steve, I don't even know where to start when it comes to financial literacy. Do you have any courses or ideas for me? And I'm like, maybe you're new to the podcast. I get that. I'll give you a little bit of grace.

But literally, I created 100 videos and quizzes in this entire program that I'm just giving away for free. I used to charge over $1,000 for this thing and now I'm giving it away for free. It's at BYFAQ. You can check it out. If you don't like me or like my style or if you don't think my information's relevant for your goals, there's other stuff out there, but that's why this podcast exists.

Every episode you listen to, if you take notes and if you implement this stuff, you're gonna get smarter and smarter and you're gonna be able to break free from this gap that we were talking about earlier.

So here's a simple roadmap out of being broke. Number one, get financially literate. Learn how to read financials, understand profit, and most importantly, learn cashflow.

Number two, shift to ownership thinking. So start looking for ways to own assets. That could be a business, it could be rental property, it could be equity in someone else's business, or it could be your own company. But start thinking about ownership. Like I said, it doesn't have to be anything big. Sometimes people have these side hustles and they'll reach out to me and they're like, yeah, Steve, I started this side hustle. I do it at night and I pull in $100,000 a year. I'm like, good for you, that's great. So just get started, which goes into point number three.

Start small, but start. Buy a small business, start a micro business, invest in a cash flowing asset, whatever it is, just start small. You don't have to wait until you do something big, right?

Number four, use good leverage. You can use financing, investors, or partnerships. You don't need to do this all alone. That's the key. So there are resources out there at your fingertips, just tap into them.

Number five, reinvest, stack, grow. So don't flex, don't inflate your lifestyle, stack cashflow, buy more assets, scale. Like I was saying before, I know so many people, I was working with this founder years ago, he had about $25 million in assets. He had the fancy car, he had the boat, he had the plane, he had all this stuff, right? But then he also had like 25 or 26 million in liabilities. He actually had negative net worth. So stay humble and keep your spending low, all right?

But ultimately, here's the bottom line. 99% of people stay broke because they play their own game. The wealthy don't trade time for money, they trade ownership for cash. And the only way out is to stop being the labor and start being the owner.

This is how people buy back their time, this is how people escape the rat race and this is how real wealth is built.

So if you're serious, I put together tools, checklists, resources, calculators, everything you need to start thinking, acting and building like an owner. You can go to byfiq.com and grab those resources there.

All right, and if you got value out of this, share this with someone who's ready to escape broke and I'll see you in the next episode. All right, take care, cheers.