There are three skills you need to be financially successful: making money, keeping money, growing money. James Altucher is mostly only good at making money.
"I’ve had several instances where I’ve started a business, sold it, made a lot of money, and then basically lost everything I made, whether it was $50 million or $5 million or whatever," he tells Fast Company. "I always have a tendency to lose everything I made."
At some point, Altucher started thinking about the routines and habits he kept while he was making money starting and running more than 20 companies, investing in over 30 companies, advising another 50 private companies (ranging from $0 in revenue to a billion in revenue), publishing a handful of books, including the upcoming The Rich Employee, and hosting a number of podcasts, including an upcoming one with Freakonomics’ Stephen J. Dubner called Question of the Day.
There are some simple rules, like drink coffee first thing in the morning and 20 minutes before you write so that it "sets your brain on fire, makes you go to the bathroom, cleans your body out before you set your heart on fire." Then, there’s his 30% rule, which basically says that everyone should cut or rewrite at least 30% of their masterpiece after they think they’ve finished it. Next, there are some complicated rules that require some math, like the 4/64 rule and the 30/150/millions rule. But, specifically, there are two rules that have always brought Altucher back to success every time he falls down and loses everything.
Below are his two rules to live and work by:
Altucher has been focused on making slight improvements (about 1% every day) in four specific areas of his life on and off for the past six years. When it’s "off" time, he finds that he fails quickly. So, for the past six years, he’s been steadfast in working on improvements in his physical, emotional, mental, and spiritual health.
"These four things contributed so much to my success and then when I stop doing them, I would lose everything and then have to start from scratch," he says.
"If you don’t do this, nothing else works," he asserts.
Here’s how it works:
1. Physical: An improvement in physical health could mean anything from better eating, sleeping, or exercising habits. According to Altucher, your body is the average of the five things that you eat. If you’re eating junk food, your body is made of junk. If your unhealthy habits are making you ill or keeping you weak, you’re not going to have the energy to be successful anyway.
2. Emotional: An improvement on emotional health means making an effort to only be around people who support you. Another one of Altucher’s rules is that you’re the average of the five people around you, so if you’re not around people who aren’t supporting and inspiring you, then you’re wasting your time.
"If you’re around people who are emotionally dragging you down, you’re not going to have good ideas," he says, which means choose your friends wisely because they really impact your success.
3. Mental: For Altucher, an improvement in mental health means writing 10 ideas down every day "to keep the idea muscle as sharp as possible." We know our brains are inherently lazy and will basically choose the same pathway over and over again if we let it. To keep your brain agile, you basically have to keep exercising it.
When writing his ideas, Altucher usually picks a theme or a topic to start.
"The first three are easy because I’m probably already thinking about them in the back of my mind, but then around number five or six, it starts getting physical and you feel like you’re exercising," says Altucher. "It feels like it hurts your brain a little bit. And you make sure you keep coming up with good ideas and by the 10th, you feel like your idea muscle has been exercised."
Afterward, he usually throws the ideas away. Sometimes, if he’s writing ideas for a company, he might send it to the company along with a note that says, "hey, I love your company so much, here are some ideas for you. I would actually spend more money from you if you implement any of these ideas." Sometimes they respond and you find yourself with more financial opportunities. But that’s not the point of the mental practice.
"The whole idea is, if you exercise the idea muscle for three to six months, you’ll really feel it in your brain," explains Altucher. "You’ll become an ideas machine. And the goal is to be in a constant idea machine state."
4. Spiritual: An improvement on spiritual health means simply being grateful every day.
"I feel you can’t have gratitude in your mind at the same time as regret and anxiety," explains Altucher. "Whenever I would feel regret and anxiety come on, I would switch it to gratitude." After all, your thoughts are the averages of five things you think about, according to Altucher.
Most of us have heard of the 10,000-hour rule made famous by Malcolm Gladwell’s Outliers, which basically says that if you practice a field for 10,000 hours—anywhere between five to 30 years of your life—you become a master at it.
When you’re a master, you’re basically the best in your field. According to Altucher, you don’t need to be the best in the world to succeed in life. And in fact, you might be wasting decades of time practicing when you could be learning new things.
"Often, 1,000 hours is enough to move you to the top 10 in the world," says Altucher. "Being the top 10 will still make you a lot of money," because not many people are able to recognize the subtleties that are often learned in the next 9,000 hours.
However, there are two shortcuts to putting yourself on par with master status:
1. Take two fields that you love and combine them. "Let’s say I love business and fashion," says Altucher. "I can study both at 500 hours each and I can be the best in the world at the intersection."
2. What most people learn between the 1,000 and 10,000 hours is getting back up if something unpredictable happens. For instance, if you’re a racecar driver, checking all your rearview mirrors constantly in case a car comes crashing into you. If you’re constantly analyzing the worst-case scenarios and mitigating all risks, says Altucher, then you’re basically a master in your field because nothing else will be able to ruin you.
But at the end of the day, Altucher admits that there are no rules and, in fact, you should break all the rules made by other people as often as you can. Just come up with the ones that work for you.
"I think studying successful people is good, it shows you the successful traits they have," he says. "But you still have to build your own successful traits, and that building comes from within."