What is MJ DeMarco’s Unscripted about? What is the key message to take away from the book?
In his book Unscripted, MJ DeMarco claims that most people can’t achieve financial success because they have unproductive beliefs about money that dissuade them from pursuing an entrepreneurial path. However, he argues that though these beliefs are pervasive, they’re surmountable.
Below is a brief overview of the key takeaways from Unscripted: Life, Liberty, and the Pursuit of Entrepreneurship by MJ DeMarco.
Unscripted: Life, Liberty, and the Pursuit of Entrepreneurship
In his book Unscripted, MJ DeMarco—entrepreneur, investor, and best-selling author of The Millionaire Fastlane—insists that there’s only one way to achieve financial success: Adopt an entrepreneurial mindset.
This guide discusses DeMarco’s advice for cultivating an entrepreneurial mindset and achieving financial success in two parts. In the first part, we’ll explain his argument that all beliefs about money fall into one of three financial mindsets—each influencing how you manage your finances and the amount of wealth you accumulate. We’ll also clarify why people with an entrepreneurial mindset are more likely to achieve their financial goals than those who practice one of the other two mindsets. In the second part, we’ll explore eight specific beliefs that don’t support an entrepreneurial mindset and DeMarco’s actionable solutions for removing their influence and moving toward financial success.
Additionally, we’ll supplement DeMarco’s ideas with psychological research and practical advice from financial advisors and successful entrepreneurs.
Part 1: Beliefs About Money Fall Into One of Three Mindsets
DeMarco argues that the beliefs you hold about money determine how much wealth you can accumulate. This is because they influence the way you relate to and manage your finances. According to him, beliefs about money tend to fall into one of three mindsets—consumer, employee, and entrepreneurial.
Let’s explore each of DeMarco’s three mindsets in detail.
Mindset #1: Consumer
According to DeMarco, having a consumer mindset means believing that it’s more important to present the appearance of wealth than it is to actually acquire wealth. As a result, you mismanage your money, spend more than you earn, and create debts that prevent you from accumulating wealth. DeMarco argues that buying things you can’t afford without considering the impact it has on your financial security always leads to poverty.
Mindset #2: Employee
DeMarco claims that having an employee mindset means believing that you should sacrifice pleasures now so that you can acquire wealth in the future. As a result, you work for others for restricted income, budget every cent, and funnel all surplus money toward pensions, investments, and savings accounts. But, according to DeMarco, working for others and living frugally doesn’t help you acquire wealth now nor guarantee that you’ll be wealthy in the future.
Mindset #3: Entrepreneurial
DeMarco argues that having an entrepreneurial mindset means believing that you’re both accountable for and capable of creating massive wealth. As a result, you work for yourself and create unrestricted income—by developing recurrent passive income streams that maximize your income and net worth. DeMarco insists that generating recurrent streams of income guarantees that you’ll achieve financial success in the short term and enjoy wealth in the long term.
Part 2: Identify and Overcome Unproductive Beliefs About Money
Since the state of your finances simply reflects your financial mindset, it follows that to achieve wealth, you just need to adopt beliefs that support an entrepreneurial mindset. However, DeMarco argues that before you can cultivate this mindset, you first need to become aware of the unproductive beliefs you hold about money so that you can free yourself from their influence.
He explains that, if you’re not as wealthy as you want to be, it’s because you’ve adopted beliefs that don’t support an entrepreneurial mindset. DeMarco identifies eight such beliefs:
- Only lucky people get rich
- Your innate capabilities determine your level of wealth
- Frugality creates wealth
- It’s okay to spend more than you earn
- You can make money without creating value
- The rich prevent you from acquiring wealth
- There’s a shortcut to wealth
- Relying solely on compound interest makes you rich
According to DeMarco, though these beliefs are pervasive, they’re surmountable: You can remove their influence, cultivate an entrepreneurial mindset, and achieve financial success.
We’ll explore his practical advice for overcoming each of these eight beliefs throughout the rest of the guide.
Unproductive Belief #1: Only Lucky People Get Rich
The first belief, “Only lucky people get rich,” implies that wealth is entirely dependent on random and uncontrollable forces. DeMarco argues that this belief convinces you that you’re not accountable for your finances by disregarding two important factors:
1) The many failures entrepreneurs face before they acquire wealth: For example, DeMarco failed several times before building a company that made him millions.
2) The role your thoughts, behaviors, and choices play in creating your financial circumstances: For example, the reason DeMarco overcame his failures was that he chose to learn from them and take persistent actions to achieve his financial goal.
According to DeMarco, because you don’t feel accountable for your finances, you fail to see what you can do to improve them. This creates a feeling of powerlessness that prevents you from moving toward your financial goal.
Cultivate an Entrepreneurial Mindset: Create Your Own Opportunities
Overcome this belief and cultivate an entrepreneurial mindset by creating your own opportunities for wealth. DeMarco argues that each choice you make initiates a limited set of potential outcomes—and that you can only experience outcomes that line up with your choices. Therefore, financial “luck” comes from making choices that set off potentially successful outcomes.
For example, you choose to rely on an hourly wage as your sole source of income and spend all your free time playing video games. Your choices limit your probability of achieving financial success because they don’t create opportunities to acquire wealth from other sources. On the other hand, choosing to spend your free time constructively—for example, by improving yourself or developing business ideas—increases your probability of achieving financial success because it creates multiple opportunities for you to improve your finances.
Unproductive Belief #2: Your Innate Capabilities Determine Your Level of Wealth
The second belief, “Your innate capabilities determine your level of wealth,” implies that you have intrinsic, fixed skills that influence how much money you can earn. DeMarco argues that this belief discourages people from improving their chances of achieving financial success in two ways:
1) Convincing those who’ve easily achieved success before that they’re talented and that acquiring wealth will be equally easy: For example, as a child, you got perfect grades without applying effort. You grew up assuming that you’d acquire wealth just as easily and you don’t see the need to improve your skill set.
2) Convincing those who’ve struggled to achieve success that they aren’t talented enough to acquire wealth and never will be: For example, you lost money due to a poor investment decision. Instead of educating yourself on making more profitable decisions, you assume that you’ll always make unprofitable decisions and give up on your plan to invest.
Cultivate an Entrepreneurial Mindset: Make Incremental Improvements
Overcome this belief and cultivate an entrepreneurial mindset by making daily incremental improvements to your skill set. DeMarco argues that even the tiniest amount of progress will dispel the myth that your capabilities are fixed and cannot be improved. As a result, you’ll feel more empowered to hone the necessary skills to achieve your financial goals. For example, if you think you’re incapable of coming up with profitable business ideas, look to business books for inspiration and set a goal of coming up with at least one profitable idea each week, eventually progressing to one new idea each day.
Unproductive Belief #3: Frugality Creates Wealth
The third belief, “Frugality creates wealth,” implies that you can build wealth by working a low-paying job and saving every cent. DeMarco argues this belief cripples your chances of acquiring wealth because it prevents you from focusing on the myriad ways you can proactively increase your income. Instead, it restricts your focus to your outgoing expenses in the hope that sacrificing pleasures and budgeting every cent now will magically grow your savings into sizable wealth in the future. However, DeMarco insists that if your income is small, you won’t be able to save enough to create wealth. Further, inflation will reduce the value of any money you do manage to accumulate.
Cultivate an Entrepreneurial Mindset: Leverage Time to Create Passive Income
Overcome this belief and cultivate an entrepreneurial mindset by leveraging time to create passive income. According to DeMarco, the fastest way to acquire wealth isn’t by saving every cent, but by developing a business that generates recurrent income without your direct involvement.
He explains that relying on a wage or salary limits how much you can earn and subsequently save because you only receive money based on how many hours you work or how much you produce. For example, you work for an online publisher and either get paid $20 an hour or $20 for each article you submit. So you must work five hours or submit five articles to generate $100—both methods restrict your income to how much time you contribute and limit the amount of money you can save.
On the other hand, investing time in work that generates passive income—by creating a product or system that earns an income long after your original time investment—expands your income potential and your ability to accumulate large sums of money. For example, you invest your time into creating a $20 book that sells in global markets. The ongoing sales of this product generate an income far beyond the hourly wage you would’ve received for your original time investment.
Consequently, DeMarco insists that investing your time and money in assets that appreciate over time—such as physical or intellectual property that you can lease, sell, or distribute—is the only way to grow your net worth and earn millions.
Unproductive Belief #4: It’s Okay to Spend More Than You Earn
The fourth belief, “It’s okay to spend more than you earn,” implies that you can rely on credit to buy things you can’t afford without suffering any consequences. DeMarco claims that this belief underpins a consumer mindset—because it disregards the persistence required to create wealth in favor of the quick fix of using credit to impersonate wealth. However, relying on credit results in debts that destroy your chances of creating actual wealth—because instead of funneling money toward your financial security (a business, investments, and savings), you must commit all future income toward paying off your loans.
Cultivate an Entrepreneurial Mindset: Think Like a Producer
Overcome this belief and cultivate an entrepreneurial mindset by thinking like a producer. This involves examining everything you purchase from a producer’s perspective rather than a consumer’s perspective. Ask yourself, “What value does this company provide and how does it market the product? What processes are involved in offering this product or service? How does this company make a profit?” DeMarco claims that these questions will help you make the switch from thinking about what you want to buy to thinking about what you can produce to generate profits.
Unproductive Belief #5: You Can Make Money Without Creating Value
The fifth belief, “You can make money without creating value,” implies that all money-making opportunities are equal, regardless of how much value they create. DeMarco argues that this belief disregards one important fact: The amount of money you make is directly tied to the amount of value you create. Because you don’t understand that massive wealth depends on creating massive value, you waste your time pursuing activities that create little to no value and offer no chance of generating wealth—for example, by switching to jobs that pay more or jumping from one get-rich-quick business to another.
Cultivate an Entrepreneurial Mindset: Provide Value to Others
Overcome this belief and cultivate an entrepreneurial mindset by switching your focus from chasing money to providing value. DeMarco explains that people only see value in things that solve their problems and fulfill their needs. Therefore, the wealth you generate can only reflect the amount of value that you provide to others.
To create value, he suggests that you examine your skills, knowledge, or assets and think about how they can benefit others. Ask yourself questions such as, “What problems or inconveniences can I resolve?” or, “How can I improve upon products or services that I already use?” Answering these questions will help you align your skills and abilities with valuable money-making opportunities.
Unproductive Belief #6: The Rich Prevent You From Acquiring Wealth
The sixth belief, “The rich prevent you from acquiring wealth,” implies that wealthy people block your access to money-making opportunities because they’re inherently corrupt and selfish. According to DeMarco, because it convinces you that wealthy people are to blame for your lack of wealth, this belief makes you feel like a victim. Because you feel like a victim, you waste time complaining about your finances and feel powerless to improve them.
Cultivate an Entrepreneurial Mindset: Appreciate the Value Rich People Create
Overcome this belief and cultivate an entrepreneurial mindset by shifting from blame to appreciation. DeMarco argues that rich people aren’t to blame for your lack of wealth, you are—because you haven’t created sufficient value to acquire the income you want. However, each time you blame others for the state of your finances, you get caught up in a negative mindset that prevents you from coming up with constructive money-making ideas.
On the other hand, if you focus on all of the different ways rich people have made your life easier or more enjoyable, you’ll realize that they deserve to be rich because they’ve contributed something valuable to society. For example, Jeff Bezos deserves to be rich because he makes online shopping more convenient for millions of people. DeMarco claims that this realization will make it easy for you to shift your thoughts from blame to appreciation—creating a more positive mindset. As a result, you’ll feel more empowered to come up with your own ideas to make a valuable and profitable contribution to society.
Unproductive Belief #7: There’s a Shortcut to Wealth
The seventh belief, “There’s a shortcut to wealth” implies that wealthy people are born rich or have access to a secret weapon that quickly and easily creates riches for them. According to DeMarco, because it disregards the time and effort required to create wealth, this belief convinces you that you shouldn’t have to work hard and make sacrifices to achieve the wealth you want. As a result, instead of taking constructive actions to improve your finances, you waste time and energy pursuing get-rich-quick schemes that fail to generate the income they promise.
Cultivate an Entrepreneurial Mindset: Do the Work to Achieve Wealth
Overcome this belief and cultivate an entrepreneurial mindset by accepting that there are no shortcuts to creating money. According to DeMarco, you’re more likely to acquire wealth if you define the financial goal you want to achieve and commit to doing the work to make it happen.
He outlines three practical methods to focus on the work and make progress toward your financial goal:
- Set a measurable goal
- Create a daily routine
- Identify and remove distractions
Let’s explore each of these three methods in detail.
Method #1: Set a Measurable Goal
DeMarco argues that a clearly-defined, measurable goal gives you a clear target to move toward and provides opportunities to measure your progress. For example, “I want to be rich” isn’t measurable, whereas, “I want to earn $500,000 a year” is.
Method #2: Create a Daily Routine
DeMarco suggests that you break your goal down into a series of daily tasks that will help you make progress toward achieving it. For example, your initial daily tasks toward achieving your goal of earning $500,000 a year may involve researching business ideas and developing a detailed strategy to increase your income.
Method #3: Identify and Remove Distractions
DeMarco recommends that you consider what might prevent you from working on your daily tasks and find ways to remove their influence over you. For example, if you have a habit of binge-watching Netflix when you should be working, canceling your subscription will make it easier to focus on what you need to do.
Unproductive Belief #8: Relying Solely on Compound Interest Makes You Rich
The eighth belief, “Relying solely on compound interest makes you rich,” implies that you can create massive wealth by funneling small amounts of money toward pension and investment accounts. DeMarco argues that, because it encourages you to depend on unpredictable market forces to generate wealth for you, this belief convinces you to risk the money you do have.
He explains that in theory, investments create wealth by providing a predictable and healthy rate of return over the course of decades. In reality, however, the markets are unpredictable and the rates are too low to make a significant impact on the small, capped sums of money the government allows you to contribute to your investment accounts. You also can’t guarantee that financial managers won’t make poor decisions that lose you money or that the rate of inflation won’t reduce the value of your investments.
Cultivate an Entrepreneurial Mindset: Use Compound Interest to Supplement Your Profits
Overcome this belief and cultivate an entrepreneurial mindset by using compound interest to supplement your profits. According to DeMarco, instead of relying on compound interest as your only plan to build wealth, you should rely on it as part of a plan to preserve and build wealth. His recommended plan involves developing a profitable business first, then investing your profits to generate additional passive income. He argues that the more profits you invest, the more income you’ll generate—because compound interest dramatically increases the value of large investments over a shorter period of time, even when the rates of return are low.