The Guns and Butter Theory
Summary
TLDRIn this episode of 'Driving with John', John discusses the actionable difference between the rich and the poor, emphasizing that the wealthy have money work for them while the poor work for money. He introduces the 'guns and butter' theory, suggesting that to get rich, one should invest in appreciating assets ('guns') rather than depreciating luxury items ('butter'). John shares his personal financial strategy of investing in assets that now outearn his blogging income, providing financial security.
Takeaways
- 🌞 The host, John, is driving to lunch on a beautiful sunny day in Southern California, enjoying the top-down lifestyle.
- 🍜 He's visiting Chef Hung's Taiwan Beef Noodle, one of his favorite places, which originated from Vancouver but now has a location in Irvine, California.
- 💼 John addresses a question from an email, challenging him to explain the difference between the rich and the poor without resorting to 'mindset' explanations.
- 💡 The key difference identified is that 'the poor work for their money, while the rich have their money work for them'.
- 💼 Examples are given, such as Bill Gates, who makes more from investments than from his work at Microsoft.
- 🔑 An actionable plan is suggested: to go from poor to rich, one should make their money work for them by investing in appreciating assets.
- 🔫 The 'guns and butter' theory is introduced as a metaphor for choosing to invest (buy guns) versus spending on depreciating assets (buy butter).
- 🚗 The host uses his sports car as an example of 'butter', a depreciating asset that loses value over time.
- 💰 The importance of financial planning is emphasized, suggesting setting aside a percentage of income to invest in appreciating assets.
- 💹 John shares his personal financial strategy, where his biggest income source is not from his blog but from his investments, providing him financial security.
Q & A
What is the main theme of the video transcript?
-The main theme of the video transcript is the difference between the rich and the poor, focusing on the concept that the rich have their money work for them, while the poor work for their money.
What does the term '.com lifestyle' refer to in the transcript?
-The term '.com lifestyle' refers to a lifestyle that is often associated with the tech and internet industry, characterized by a relaxed, possibly work-from-home environment, and the ability to enjoy leisure activities like having lunch with the top down on a sunny day.
Which restaurant is John going to for lunch in the video?
-John is going to Chef Hung's Taiwan Beef Noodle for lunch, a place that originally came from Vancouver and now has a location in Irvine, California.
What is the actionable advice John gives to move from being poor to rich?
-John advises setting aside a certain percentage of money earned and investing it in assets that appreciate, referred to as 'guns', rather than spending it on depreciating items like luxury cars, which he calls 'butter'.
What is the 'gun and butter' theory mentioned in the transcript?
-The 'gun and butter' theory is an analogy where 'guns' represent investments that appreciate over time and 'butter' represents items that depreciate, like luxury goods. The theory suggests investing in 'guns' to build wealth.
Why does John mention Bill Gates in the transcript?
-John mentions Bill Gates to illustrate the concept that the rich have their money work for them through investments, as opposed to working for money, which is a common situation for the poor.
What does John suggest is a common mistake people make with their money?
-John suggests that a common mistake is spending all their money on depreciating items like luxury cars ('butter') instead of investing in appreciating assets ('guns').
How does John describe his own financial situation in relation to his investments?
-John describes his financial situation as secure because his investments now generate more income than his blog, providing him with financial security and the option to quit his current work if he wishes.
What is the significance of the number '80 billion dollars' mentioned in the transcript?
-The number '80 billion dollars' refers to the size of Bill Gates' investment portfolio, which is used to demonstrate how the rich have their money work for them through significant investment returns.
What is the role of financial planning in achieving wealth according to the transcript?
-According to the transcript, financial planning plays a crucial role in achieving wealth by investing a percentage of income into appreciating assets, which eventually can replace one's active income and provide financial security.
Outlines
🚗 Driving to Lunch and Discussing Wealth
John is driving to Chef Hung's Taiwan Beef Noodle in Irvine, California, a favorite spot that originated in Vancouver. He discusses the difference between the rich and the poor, emphasizing that the wealthy have their money work for them, unlike the poor who work for money. He explains that the rich invest, like Bill Gates, whose income from investments far exceeds his salary. John encourages viewers to shift their mindset from spending ('buying butter') to investing ('buying guns'), which will appreciate over time and can generate income.
💰 The Gun and Butter Theory for Financial Growth
John introduces the 'Gun and Butter Theory' to explain how to transition from working for money to having money work for you. He advises viewers to invest a portion of their earnings into appreciating assets ('guns') rather than spending on depreciating items ('butter'). He uses the example of a sports car as 'butter' that loses value over time, contrasting it with investments like stocks and real estate that can grow in value. John shares his personal strategy of automatic monthly investments into 'guns,' which has become his primary source of income, providing him financial security.
Mindmap
Keywords
💡Southern California
💡Top down
💡Lifestyle
💡Chef Hung's Taiwan Beef Noodle
💡Vancouver
💡Irvine California
💡Rich and Poor
💡Money working for you
💡Guns and Butter Theory
💡Financial Security
Highlights
John is driving to Chef Hung's Taiwan Beef Noodle, one of his favorite places for lunch.
The restaurant originated in Vancouver but has expanded to Irvine, California.
John invites listeners to email him with questions or topics for future episodes.
The main topic of the episode is answering a question about the difference between the rich and the poor.
John emphasizes the importance of actionable advice over generic mindset discussions.
The key difference between the rich and the poor is how they make money: the poor work for money, while the rich have money work for them.
Bill Gates is used as an example of someone whose wealth is primarily from investments rather than a salary.
John introduces the 'guns and butter' theory to explain how to transition from working for money to having money work for you.
The theory suggests investing in appreciating assets ('guns') rather than depreciating assets ('butter') to build wealth.
John warns against the societal pressure of conspicuous consumption, which often leads to buying 'butter'.
An actionable plan is presented: set aside a percentage of income to invest in 'guns' and reduce spending on 'butter'.
John shares his personal experience of having investments that outearn his blogging income, providing financial security.
The episode concludes with a call to action to focus on accumulating 'guns' for long-term wealth instead of short-term 'butter' pleasures.
John encourages listeners to subscribe and like the video for more financial advice and lifestyle content.
Transcripts
foreign
.com and welcome to another episode of
driving with John ciao
I'm on my way to uh lunch right now
it's uh well you know beautiful sunny
day Southern California
75 degrees right now
top down
.com lifestyle and that means.com lunch
today we're trying uh Chef hung's Taiwan
beef noodle one of my go-to places
originally they came from Vancouver
and now they have a location down here
in Irvine California so I don't have to
fly back to Vancouver to get my Taiwan
noodle fix so that's great
and they also like me and they let me
stick around for two hour plus or
whatever however long lunch costs
anyway
my topic today
I wanna answer a question I got from uh
the email and that's where I get most of
my ideas for driving a giant shout
feedback from you guys so you know if
you guys wanna
me to talk about something any questions
feel free to email me uh either put in
the comments or email me at John
john.com and ask away so today's
question
it's a little unique because it was kind
of almost being mean to me basically the
the question was uh what is the
difference between the rich and the poor
and don't tell me this mindset crap
because I want something that's
actionable and doable so give me
something that is real not you know
we think differently or that kind of
stuff so because you know he said no
more Anthony Robbins okay so or any of
those other motivational speakers so
I remember this for a while and then
do something which I'm poor other than
mindset all right so
and I can nail it down to a very very
key and specific point
the difference between the rich and the
poor
comes down to this
the pool
work for their money
the rich have money work for them
and that is something that's almost
universally true between
the rich and the poor
see
when if you look at all
but he just examine people who are rich
the billionaire the multi-millionaires
and you're going to find some of them in
common
when they when they working they're not
really working to make money like uh
take for example Bill Gates like he
still works once that one day a week at
Microsoft and he works at his foundation
but
pretty much and I believe Microsoft pays
them I don't know says some 200 000 or
whatever they say payment but it's
insignificant the Internet isn't what he
actually makes because Bill Gates makes
his money for misinvestment and his
investment is like 80 billion dollars so
you work out this way 80 billion dollars
at 10 is 8 billion dollars a year five
percent is four billion dollars a year
so that's way more than he would ever
make working right but the poor
they have to work to make money because
they don't have any money to invest so
actionable plan how do you go from poor
to rich so you're right now you're
working for money
and but you want your money to work for
you how do you do that and it's really
really simple uh it's something called a
gun and butter Theory right and the gun
and butter Theory came I'm not I'm not
sure where the original analogy came
from but I think it goes way back to the
pilgrims when they first discover
America see I believe the uh the Native
American they turning butter and the
pilgrims they had guns yeah guns all
right
and we know who won all right so
basically how the analogy of work is
that when you make money from your job
or from wherever it is like let's say
you're poor and you work for money so
when you make money
your choice what to do that money very
simple you can either buy guns or you
can buy butter now
a butter melts a butter is thing that
they appreciate like this car this is a
big piece of butter
I mean it's a hundred and seventeen
thousand dollars but right now there's
no work it's 717 000 it's probably worth
well once you drop it a lot it's
probably worth less than a hundred
thousand bucks so huge piece of butter
okay or
you could buy guns guns are stuff that I
appreciate
stocks real estate you know things that
I mean things that are rare and very
good weapon value right and here's the
key
you want to get rich you buy guns
you spend your money on buying guns
if I stop date I appreciate don't buy
stuff that we appreciate unfortunately
in the society that we live in of you
know conspicuous consumption keeping
with the Joneses most people who make
money
you know
they buy butter and they just buy lots
and lots of butter not only do they
spend all their money on butter they
borrow money to buy butter
so that
not smart and this is why you know you
can't get rich because let's face it it
doesn't matter how much money you make
you could be making millions of dollars
every year but if you spend every dollar
you make on butter
you're not rich not even close to Rich
but for someone who is making a modest
income and even if we invest and
depending on your age even if you invest
a percentage every single month into
guns eventually
that those guns will make enough to
replace his income
and basically this is just financial
planning I suppose right so
actionable plan
where you make money set aside a certain
percentage and buy guns
and try to reduce the butter okay I mean
having a fancy sports car is really nice
but let's just face it uh
this thing melts and after a while at
the appeal well goes away I'm already
starting to think about my next car I
don't know what I'm gonna start thinking
about my next piece of butter right so
when really I should be thinking about
getting guns like in my case when I
invest in guns or if you do investment
it's it's automatic I don't even think
about it I mean every month x amount of
money just comes out of my account and
just buys investment and I've been doing
that for a long long time and currently
remember when I say that my biggest
income source is not my blog my biggest
income source is not online
it's because my biggest income source is
investment
that's right uh I have a I have a pool
of investment that's big enough now it
makes me more
than what I make on my blog
so and that's it's that gives me total
Financial Security because if I want I
can just quit
and I can continue right so that's what
you want to go to achieve but you will
never achieve that if you spend all your
money on butter all right so that that's
your lesson for the day buy guns don't
buy butter
John shop at johnstown.com thank you for
listening uh if you like what I just
said uh give me a thumbs up subscribe to
my channel and I'll see you guys for the
next episode
thank you
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