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Why Being Good at Making Money Can Make You Poorer

by Scott D. ClaryDecember 1st, 2024

Too Long; Didn't Read

Wealth is created in three distinct states: work (solid), skill (liquid), and systems (gas). By moving from direct time-for-money exchanges to building scalable systems, you can unlock true financial freedom. Learn why improving your hourly rate can trap you in a cycle and how embracing systems thinking can multiply your wealth.

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Work, Skill, and Systems

Remember this thought. It’s important

Your first $1,000 is from work.

Your first $100,000 is from skill.

Your first $1,000,000 is from systems.

So I was sitting in this overpriced Manhattan coffee shop yesterday, watching two entrepreneurs have completely different conversations about money.

The first guy is proud. He's telling his friend how he finally hit $300 an hour consulting. He's beaming. And look, he should be — that's not small money.

The second guy, three tables over, is worried. He's telling his partner that their automated course platform "only" made $300,000 last month while they were both on vacation in Greece.

Same coffee shop. Same time. Two completely different universes.

And that's when it hit me: We're not just talking about different income levels here. We're talking about different physics of wealth entirely.

This is the thing about wealth that nobody tells you: It exists in three distinct states.

Like matter can be solid, liquid, or gas, money comes from work, skill, or systems (yes, we’re going back to grade 7 science class).

The tragedy? Most people spend their entire lives trying to optimize the wrong state.

Think about it: The first guy will need to trade more time to make more money. He's stuck in the solid state — the direct exchange of time for money. Better hourly rate? Sure. But still chained to the clock.

The second guy? His system works whether he's sipping espresso in Manhattan or tzatziki in Mykonos. He's operating in a completely different phase of wealth.

But this is the part that keeps me up at night: Getting better at making money from work actually makes it harder to build wealth from systems.

It's like quicksand. The better you get at trading time for money, the deeper you sink into that paradigm. The golden handcuffs get tighter. The escape velocity required gets higher.

Let me throw a question at you: When was the last time you made money while your phone was off?

Because that's the difference between being good at making money and being good at building wealth. One requires your presence. The other requires your absence.

In the next few minutes, I'm going to break down:

Why the traditional advice about "charging what you're worth" is actually keeping you poor
The hidden trap of skill-based income that nobody talks about
The counter-intuitive reason why generalists often build better wealth systems than experts

But first, you need to understand something crucial: The path to your first $1,000 will kill your path to your first million if you let it.

Let's start by understanding why making more money might be your biggest obstacle to building real wealth...

The Three Energy States of Money

Let me share something that's been bothering me about every wealth-building book I've read.

They all treat money like it's one thing. Like water is just water.

But that's not how physics works. And it's definitely not how wealth works.

Water changes completely when it transitions from ice to liquid to vapor. Same molecule, entirely different properties.

Money works the same way. And understanding these state changes? That's the key to escaping the gravity of trading time for dollars.

Let's break it down:

State One: The Solid State (Work)

This is where most people live. It's the direct conversion of time into money.

You show up, you get paid. You don't show up, you don't get paid. Double the hours, double the money.

Simple physics. Clear rules. Limited potential.

Think hourly consulting, salary jobs, freelance work. The math is straightforward but brutal: Your wealth is capped by the number of hours in a day.

State Two: The Liquid State (Skill)

This is where it gets interesting. In the liquid state, you're not just trading time — you're trading expertise.

The rules change:

Value isn't tied directly to time
Results matter more than hours
Income becomes more fluid and flexible

These are your high-end consultants, specialized lawyers, and expert surgeons. They're making more in an hour than most make in a week.

But here's the trap nobody talks about: Being liquid isn't the same as being free.

You're still the bottleneck. You're still the product. You've just increased your hourly rate.

State Three: The Gaseous State (Systems)

This is where wealth takes on entirely new properties. Like gas fills any container, system-based wealth can expand infinitely.

The physics here are completely different:

Income disconnects from time
Growth happens while you sleep
Value scales without your direct input

Think software companies, content platforms, automated businesses. The wealth keeps expanding long after you've stopped working.

But here's what fascinates me about these states:

The skills that make you successful in one state often cripple you in the next.

Being an amazing worker can make you a terrible system builder. Being a brilliant specialist can blind you to leverage opportunities. Being too good at making money can prevent you from building wealth.

I see this all the time with the founders I work with. The ones making $50k/month from their expertise often struggle more with building systems than the ones making $5k/month.

Why?

Because they're too invested in their current state. The energy required to change states feels too risky.

Think about it:

When water turns from solid to liquid, it has to first become less stable. When liquid turns to gas, it has to first become more chaotic.

Your wealth follows the same rules.

Before you can transform from work to skill, you have to let go of stability. Before you can transform from skill to systems, you have to embrace chaos.

This brings us to the real question that nobody's asking:

What state is your wealth in right now? And more importantly — what's stopping you from changing states?

Because the uncomfortable truth is that the path to significant wealth isn't about working harder in your current state.

It's about having the courage to change states entirely.

The Paradox of Progress

Let me share something that messes with most people's heads when they first hear it: Getting better at making money is often what prevents you from building wealth.

I know. Sounds crazy. But stick with me, because understanding this paradox might be the most important financial insight you'll ever have.

Picture a successful lawyer I know. Let's call her Sarah.

Sarah's brilliant. Started at $200 an hour. Worked her way up to $1,000 an hour. Now bills $2,000 an hour for specialized corporate work.

Impressive, right?

But here's the trap she's in: Every hour she spends building a system is now costing her $2,000 in lost income.

The better she gets at practicing law, the more expensive it becomes to do anything else.

This is what I call the Success Trap, and it works in three devastating stages:

Stage 1: The Skill Acceleration

Your hourly value keeps increasing
Your expertise becomes more specialized
Your income grows consistently

Sounds great, doesn't it? But watch what happens next.

Stage 2: The Golden Handcuffs

High income becomes addictive
Lifestyle expenses expand to match
The opportunity cost of change becomes painful

Stage 3: The System Paralysis

Building systems feels "too expensive"
Time becomes your scarcest resource
The gap between income and wealth widens

This is why you see so many high-income professionals who are secretly broke.

They're making too much to quit, but not enough to be truly free.

Think about the math:

If you make $500/hour, spending 100 hours building a system that might fail feels like risking $50,000.

If you make $50/hour, those same 100 hours only risk $5,000.

The people most capable of building wealth-generating systems are often the least likely to try.

But here's where it gets really interesting:

The real toll isn't financial — it's psychological.

Every year you spend getting better at trading time for money, you're actually:

Strengthening your dependency on active income
Weakening your system-thinking muscles
Making the leap to true wealth creation more terrifying

I see this with founders all the time.

The ones making $30k/month from consulting struggle way more with building scalable businesses than the ones making $5k/month from a day job.

Why?

Because the successful consultant has more to lose. Their identity is more wrapped up in their expertise. Their golden handcuffs are tighter.

So what's the solution?

It's counter-intuitive, but here it is:

IF POSSIBLE… You need to start building systems while your opportunity cost is still low.

Before you get too good at making money. Before your lifestyle inflates. Before the golden handcuffs click shut.

Because the path to wealth isn't about climbing the income ladder. It's about building the elevator while you're still on the ground floor.

Ask yourself, are you building systems that will make you wealthy? Or are you just getting better at being expensive?

Because one leads to freedom. The other leads to a very expensive trap.

The Hidden Cost of Skill

So I'm at this dinner party last week, sitting between two tech founders.

One's a brilliant engineer who spent 15 years mastering cloud architecture. The other dropped out of college and barely knows how to code.

Guess which one built a $40 million company?

The dropout did.

Not because he was smarter. Not because he worked harder. But because his lack of expertise was actually his greatest asset.

I call this the expert’s curse.

The Expert's Curse

Think about experts you know. What do they all have in common?

They see complexity others don't
They spot potential problems instantly
They know all the ways things can go wrong

Sounds good, right?

Wrong.

Because while the expert is meticulously planning the perfect solution, the amateur is already building, launching, and learning from real feedback.

I call this the Expert's Curse, and it works like this:

The more you know about your field:

The harder it becomes to simplify
The more you overthink decisions
The less willing you are to experiment
The more you fear "doing it wrong"

Think I'm exaggerating?

Watch what happens when you put an expert developer and an amateur in the same room:

Expert: "We need to consider scalability, security protocols, database optimization, and build a robust infrastructure..."

Amateur: "Let's launch a basic version next week and see if anyone even wants this."

Three months later:

The expert is still architecting the perfect system
The amateur is already getting real customer feedback

Expertise doesn't just slow you down — it actively blinds you to bigger opportunities.

The Specialist's Blindspot

When you're a hammer, everything looks like a nail. When you're an expert, every problem looks like it needs your specific expertise.

I see this happen constantly:

The brilliant coder tries to solve everything with code
The marketing expert thinks every problem is a marketing problem
The finance whiz reduces everything to numbers

Meanwhile, the generalist is free to:

See patterns across industries
Borrow solutions from other fields
Focus on what actually moves the needle

The Wealth-Building Paradox

Now how does this tie into our main idea?

Building wealth isn't about being the best at what you do. It's about building systems that work even when you're not at your best.

Example:

Expert writer: Crafts perfect articles that take weeks
System builder: Creates a content framework others can use

The expert is playing a game of diminishing returns. The system builder is playing a game of multiplication.

So what's the solution?

It's not about becoming less skilled. It's about becoming less attached to your skills.

The New Expertise Model:

Learn enough to be dangerous
Build systems while you're still flexible
Use expertise to optimize, not to create

Because here's what nobody tells you about getting really good at something:

The better you get, the harder it becomes to build something bigger than yourself.

Ask yourself: Is your expertise making you wealthy? Or is it just making you expensive?

Because there's a world of difference between being valued for what you know and building value that works without you.

Now that you understand the three states of wealth and why expertise can become a trap, let's talk about something that ties this all together:

The hidden force that determines whether you're building wealth or just earning income.

Leverage

Two screens, two very different wealth strategies.

On the left: A consultant's calendar. Back-to-back $1,000/hour calls. Fully booked for months.

On the right: The backend of a Chrome extension. Simple tool, built once, making $2,000 a day on autopilot (more or less).

We're seeing the same pattern again:

One is trapped in the skill state (liquid)
One has evolved to the system state (gas)

But here's what really separates them:

It's not the money. It's not the time invested. It's not even the expertise required.

It's the type of decisions they're leveraging.

Value per Hour vs Value per Decision:

The consultant? High value per hour. But every dollar requires a new hour.

The Chrome extension? Low value per hour if you count the build time. But here's the interesting part: Every decision made while building

it continues creating value months later.

This is what I call Decision Leverage, and it's probably the most undervalued form of leverage in business.

Think about it:

A consultant makes new decisions every hour
A system makes the same decision millions of times

Which would you rather build?

The Three Types of Decisions:

Linear Decisions

Need to be made repeatedly
Value dies after each use
Require your presence Example: Handling customer support tickets one by one

Compound Decisions

Get better with each use
Value grows over time
Learn from their own results Example: AI that gets smarter the more data it processes

Infinite Decisions

Run forever once made
Value multiplies with scale
Create new opportunities Example: The Airbnb matching algorithm

Most people focus on getting better at Linear Decisions - handling more tickets, closing more sales, seeing more clients.

But real wealth? That comes from building systems around Infinite Decisions.

Here's what this means for you:

Every time you're about to make a decision in your business, ask: "Am I making this decision once, or am I building a system that will make this decision forever?"

Because that's really what separates the consultant from the Chrome extension:

One trades time for money, making fresh decisions every hour.
The other built a system that multiplies a single decision forever.

This is why system builders often seem lazy to everyone else.

They're not making fewer decisions - they're making decisions that compound.

The Four (Main) Kinds of Leverage

Now let’s recap what we've learned so far: The path from work to wealth isn't about making better decisions - it's about building systems that make decisions forever.

But most people get stuck here.

They know they need systems. They know they need leverage. But they're missing the playbook.

I was in the same place until I came across Naval Ravikant's thread on wealth creation. Most people shared it, quoted it, put it in their Twitter bios.

But they missed its real power.

This wasn't just a clever set of tweets about making money.

It was a blueprint for how wealth (leverage) actually works in the digital age.

It was a playbook for systems thinking.

He wrote about the four kinds of leverage.

Capital Leverage
Labor Leverage
Technology Leverage
Media Leverage

Let me show you the four forces that are actually reshaping wealth creation and will ultimately help you build the systems we’re aiming for (this is what he wrote about).

Capital Leverage:

The old way: Save money, buy assets, wait 30 years

The new way: Use other people's assets to build empires

Think about this: Airbnb is worth more than Marriott and Hilton combined. Yet they don't own a single hotel room.

This isn't just clever business. This is a fundamental shift in how wealth works: In the digital age, controlling assets is more valuable than owning them.

Labor Leverage:

The old way: Hire more people to do more work

The new way: Build systems that multiply human effort

Look at Instagram when it sold for $1 billion: 13 employees serving 30 million users.

Compare that to Kodak in its prime: 145,000 employees serving a smaller market.

The difference? Instagram built systems that scaled. Kodak just kept hiring.

Technology Leverage:

The old way: Software that helps humans work

The new way: Software that replaces decisions

Uber isn't just an app that connects drivers and riders. It's millions of micro-decisions happening automatically:

Pricing adjusts in real-time
Routes optimize automatically
Performance metrics evolve by themselves

But here's what makes code different from every other form of leverage: It costs nearly nothing to replicate, never gets tired, and works while you sleep.

Media Leverage

The old way: Trade your expertise for money

The new way: Build systems that scale your insights

Most experts try to sell their time. The best experts build systems that replicate their judgment.

Think about Joe Rogan's podcast: It's not just content creation. It's a system that converts conversations into an empire, reaching more people in a day than most radio hosts reach in a year.

But for what we're trying to accomplish, we don't use one, or two or even three of these kinds of leverage. We use all four.

These forces aren't meant to be used alone. They're meant to be stacked.

The real magic happens at the intersections:

Code + Labor = Automation platforms
Media + Code = Content engines
Capital + Media = Media empires

(The list could go on and on)

All four combined? That's how you build empires.

I see founders all the time trying to use just one type of leverage. They're either:

All-in on raising capital
Obsessed with coding everything
Focused only on hiring
Stuck selling their expertise

But the ones who break through? They're playing a different game entirely. They're combining these forces in ways that multiply each other.

It comes back to our original framework:

Work is using one force at a time.

Skill is mastering a single force.

Systems? They're about combining forces to create something that grows by itself.

Think about the progression: A freelancer uses labor leverage. A consultant adds media leverage. But a true system builder? They stack all four:

Uses other people's capital
Coordinates other people's labor
Deploys code that scales
Embeds media that compounds

This is why most people stay stuck in the first two wealth states: They try to get really good at using one type of leverage. But they never build the systems that combine them all.

And this brings us to what I saw last week that changed how I think about all of this...

The Future is Coming…Fast

So I'm at this tech conference in Vegas last week, and something keeps bothering me.

It's not the fancy AI demos or the slick presentations. It's this 22-year-old kid I meet between sessions.

He's built an AI system that's already making more money than most doctors. But here's what's fascinating:

He's never had a "real job" in his life. Never traded time for money. Never even learned the rules most of us are trying to break.

He went straight from thinking in systems to building systems that think.

And that's when it hits me: We're watching the greatest wealth gap in history unfold.

But it's not the gap between rich and poor. It's not even the gap between skilled and unskilled. It's the gap between system builders and everyone else.

Let me show you what I mean...

The Great Divide

Here's what's really happening:

While most people are trying to:

Get better jobs
Raise their rates
Climb corporate ladders

System builders are:

Creating autonomous businesses
Building scalable platforms
Designing wealth machines

Think about the math for a second:

The worker's equation is linear:

More hours = More money

Better skills = Better pay

Higher position = Higher salary

The system builder's equation is exponential:

More systems = Multiplied output

Better leverage = Compound returns

Higher automation = Infinite scaling

The gap isn't just growing. It's accelerating.

And here's the part that keeps me up at night:

Most people don't even realize which game they're playing.

The Leverage Revolution

I was talking to a VC friend last week who said something fascinating: "The cost of building wealth machines is approaching zero, but the returns are approaching infinity."

Think about what's happening right now:

AI is making system building easier than ever
Digital leverage is becoming more accessible
The cost of launching systems is dropping to zero

The real opportunity isn't in building better systems. It's in positioning yourself for what comes next.

Because while everyone else is trying to master today's tools, the real players are designing tomorrow's playing field.

Let me share three ideas that will matter more in the next few years than all the growth hacks and business strategies you're currently obsessing over...

1. The Three Future Forces

The AI Acceleration

Systems will get smarter faster
Automation will become more autonomous
The gap between builders and workers will widen

The Trust Shift

Buisiness brands will matter less
System & leverage will matter more
Results will speak louder than resumes

The Wealth Velocity Change

Speed to market will beat perfection
System thinking will beat expertise
Adaptation will beat optimization

2. The New Rules of the Game

Build for change, not stability

Systems should be flexible
Solutions should be modular
Growth should be sustainable

Optimize for learning, not earning

Speed of iteration beats speed of execution
Quality of feedback beats quality of output
Rate of adaptation beats rate of production

Design for multiplication, not addition

Think in networks, not lines
Build platforms, not products
Create ecosystems, not entities

3. The Questions That Matter Now

Ask yourself:

"Am I building systems that can evolve?"
"Is my wealth strategy future-proof?"
"Am I positioned for exponential opportunities?"

The future doesn't just belong to the smartest people.

It belongs to the most adaptable ones that understand leverage and systems.

Because here's the truth about the future of wealth, the gap between workers and system builders will become unbridgeable. The difference between linear and exponential growth will become unsurvivable. The choice between building systems and being part of someone else's system will become unavoidable.