The Money Expert: "Do Not Buy A House!" 10 Ways To Make REAL Money: Ramit Sethi

ah this is driving me insane to make a lot of money you don't need to be a genius you just need to remember a few key things RIT sa Financial expert the moneyman New York Times bestseller has more than 20,000 documented success stories this is your chance to never worry about money again you can live a rich life regardless of where you came from regardless of your income how many people are clear on what their rich life looks like less than 1% when I talk to people who have a spending problem 100% of the time

they always always say the same thing I just need to earn more if you doubled your income today do you think your problems would disappear no some of the stats I pulled out from your book about 25% of people who make $100,000 a year plus are still living paycheck to paycheck makes us realize that maybe the things we think we need are things that we have been socially taught are important for example owning a house is the best investment it means you are successful but it can be a very bad financial decision there are far

better far simpler Investments so I've got 100 PS that I want to invest where do I start I love that we're getting into the nuts and bolts let's do this exercise together and everyone can do it with us first off and then got it now there's just one more thing you have to do do you know the math I would have 736 th000 in my account yeah remets 10 Money Rules this is where the real wealth is created number one this episode changed my perspective on money I'm an investor I've been investing for the last

six seven years at different levels big companies small companies the S&P 500 funds you name it but ramit changed my mind he changed my mind on money spending investing and he changed my mind on something that I think 95% of you that are listening to this podcast and that are about to listen to this need to have your mind changed on too that if you have the right philosophy towards money the right perspective and mindset towards money then there is a path to living our rich life to becoming rich that enough people are not talking

about he debunks the myths of money the limiting beliefs about money and he confronts all of the unhelpful advice about money that stands in the way of you becoming rich there's an app on my phone that I now have installed because of this conversation and there are three big Investments that I've now made in my life because of this conversation and there is one key idea that I now believe will make me 10 times more wealthy over the next three decades because of this conversation you're going to love it enjoy [Music] REM someone's just clicked

on this podcast on YouTube on Spotify on Apple and they saw the title they saw the thumbnail they thought that sounds interesting tell me why you think they should stay and listen to what we're going to talk about today what they stand to gain if they give us their time whenever someone hears someone talking about money they get rigid they instantly think that someone's going to come in and tell them you can't spend money on lattes you can't go on vacation you can't buy any new clothes save all your money until you're 90 years old

and maybe just maybe then you can spend it and I don't believe in any of that I think you should spend extravagantly on the things you love as long as you cut cost mercilessly on the things you don't I think you should live a rich life today and in even richer life tomorrow and so when you combine money and psychology you start to understand that there is more to a rich life than just some number in a spreadsheet people already know they should be saving more they know about compound interest they may not know the

intricacies but they understand if they invest some now they're going to have more later so what's stopping them that's been the central question that I'm fascinated with for the last 20 years that's why when I studied human behavior and persuasion and psychology I was obsessed with this question of what are the things we know we should do but we still don't you can live a rich life regardless of where you came from you can live a rich life regardless of your income now of course having a higher income dramatically helps but just like Fitness we

can all improve where we are and that's what we get to talk about today when you talk about the language language of money what do you mean I mean understanding the nuts and bolts of money so just the same way that we all learn how to drive we learn the rules of the road when to use our turn signals most of us do not have even the equivalent knowledge of money for example the basic language of money would be what percentage of your income are you saving and why what percentage are you investing and why

when will you have $100,000 or 500,000 or a million dollars and what will that money get you cuz just having a million dollars in the bank is pointless what does it get you specifically this is the basic language of money you've got to know your key four six numbers in your life not many just a few but once you understand those numbers it's like understanding the speed limit understanding the speed limit means you understand a lot there's a rule of the road if you go too fast what's going to happen why do these rules exist

and these rules are similar in money you can break them that's okay but you got to understand the rules first what are those numbers that I need to know there's four numbers that I really like to track I track these myself and these are the numbers I encourage the first is your fixed costs okay those would be your rent or your mortgage your in uh your uh any debt payments groceries the money that you are spending every single month that is essentially fixed and the number I recommend for that is 50 to 60% of your

take-home pay so that would be if you're spending 50 to 60% of what you make what you take home on your rent your groceries any debt payments your car you're in good shape okay the next one is your savings that would be roughly 5 to 10% savings would be things like an emergency fund savings for a down payment for a car things like that third is Investments uh this is where the real wealth is created and for this 5 to 10% of takehome is fine of course the more you put in the more you're going

to have and then the fourth category the one I love the most is called guilt-free spending this is going out for cocktails in New York it's buying a beautiful shirt it's treating your friends whatever you love yoga 20 to 35% of your take-home pay so if you're watching or you're listening to this just take 15 minutes back of the napkin jot down your approximate numbers you don't even have to get them perfect and you will be able to Benchmark how you are spending compared to those numbers I'll tell you that those numbers tell me a

lot it's almost if you just show me those four numbers of your spending I can tell so much I can tell what you love spending on I can tell what you don't I can tell what your priorities are and I can also tell where you are out of alignment so I'll give you an example when I ask people what is your rich life when of the common answers they say is I want to do what I want when I want I go oh God not this answer again I hear it every day I go wow

that's so interesting so what do you want they go uh most people have never thought Beyond a trite answer so then the next answer I often get is freedom I want freedom I go great that sounds good what is freedom I want to do what I want when I want I look at their numbers and I see a huge payment that they're making to a 30-year mortgage I see debt payments I see car payments and I go now this is interesting you want freedom but you have essentially anchored yourself down to not be able to

travel or to Pivot or to move how can those two be how can you reconcile those two and that dissonance is actually a fascinating moment I love when we experience dissonance we all do I say that I want to work out more but I don't work out more why and what you'll discover is people often they simply have never thought about it what what our rich life is these gener these generic phrases Freedom flexibility it's just words what I really want somebody to say I want them to go a lot deeper is to say I

want to be able to travel for six weeks a year I want to go to London I want to go to New Delhi I want to go to Thailand because I want to visit my family that's a good start if we get even more specific they tell me what seat on the airline they're sitting on they tell me where they're eating they tell me who they're bringing with them but to Simply say I want freedom is so vague that when I look at your numbers there's often a huge in congruity with how you're spending versus

what you claim your rich life is how many people from your experience of interviewing people and doing this research are clear on what their rich life looks like down to you know what you just that I want to travel for a couple of months a year and then even further down to which seat I'm going to be in which class I'm going to be on as I travel less than 1% less than 1% of people know that no most people literally say I want to do what I want when I want that is their the

extent to which they've thought about a rich life why does it matter to be what did that one that less than one% of people that have that planned out have as an advantage or a benefit from that meticulous thought that the other 99% don't have because they can craft their rich life that is uniquely theirs almost like getting a handmade glove and in fact the more you craft your rich life the more bewildering it looks to the outside world so I'll give you an example from my own life I love to travel I spend a

lot of money when my wife and I we go will travel for months at a time I love hotels I love the hospitality I love the details I love it all I don't really care about cars not at this phase of my life it's just not that important to me so when I talk about my money dials or the things that I love to spend money on I might spend a crazy amount on a hotel per night just because I love it but I drive a car that's almost 20 years old it's just not important

to me and I want that I want to hear in your life what you spend extravagantly on but then you cut cost mercilessly on because I want that Duality which indicates you are intentional about your rich life what if we're buying things to impress other people and we don't because it's hard to looking in from the outside especially it's hard to know if someone actually likes Lamborghinis yeah or if they're buying Lamborghinis because they were beat up when they were 9 years old on the playground and they're trying to overcompensate and make the world and

does it matter why they're buying it does it matter I don't know H first of all how would we even know how would they know is there a is there a difference do you think just on your in your opinion on the impact that that purchase has on us whether we're doing it intrinsically or we're doing it extrinsically because I reflect on some of the things that I spent money on and I go that was for someone else whereas there's other things I spend money on which are maybe health related or travel related like convenience

flying in a nice class on a plane which I go know that's actually adding a lot of benefit to my life whereas that Mansion I bought out in the countryside when I was 23 or whatever was a terrible decision it took me away from my friends because it was hour and a half outside of the city yeah and none of my friends ever came to it so I was just arriving at midnight after work in this mansion with this Tennis Court by myself sleeping for 3 hours and then driving another hour and a half back

to the city where all my friends in work were I go that was a stupid decision based on extrinsic external you know motivations it's a great question and you know particularly in America we love this idea of ownership we are taught you've got to own owning a house is the best investment it means you are successful and if you're renting no one really says this but what they deep down say is you're a loser yeah okay this individualistic strain really runs deep and it has led a lot of people to make poor financial decisions uh

first of all you might be surprised to hear my view is that owning can be a good financial decision but it also can be a very bad financial decision in fact I rent by choice and and living in New York for example I lived here for a long time I knew that if I were to buy I would be losing thousands of dollars every single month because it actually costs more than twice as much to own than to rent but can you imagine the type of pressures even I got from people who would come over

and say oh so do you own this place the place that I was renting I said no I rent and there was this visible moment of confusion they're shaking my hand they know that I'm the I will teach you to be rich guy but I rent how can you be teaching money but you rent isn't renting for losers and I have to say because I was Rock Solid confident in my decision that pressure did not affect me but I want to also say that a lot of us buy things based on status like the idea

that we don't buy things based on what people around us think is is nonsense we buy things based on status to deny it is absurd but I do think that for the big purchases in your life like a house a car the big things you've got to run the numbers and if you decide hey you know what I want to buy a house even though it's going to cost me an extra $600,000 in opportunity cost and Phantom cost but I'm going to do it because I like it or it makes me feel good I say

God bless but if you simply make decisions based on what other people around you do then you will discover like you did I thought I was going to feel a certain way and I don't really feel that way and that for me is an opportunity for you to interrogate your own beliefs and money is a like a personal zero some game right like so I can't just spend indefinitely so buying that ridiculous house out in the countryside takes away from something which might have genuinely brought me closer to happiness like I don't know going away

with my family or whatever it might have exactly you you talk there about buying property I find that really curious because the the the popular narrative is for most people the minute they get any decent amount of money is to buy your first house that's what people do they get they take a 10% deposit or 20% deposit whatever it might be and they buy a house um why is that a poor investment why is that a bad thing to do because that does kind of sit counter to the popular narrative well we have to remember

first of all where the popular narrative came from in America if you ask people what is the American dream yeah the answer is inextricably tied up with a single family home with a white picket fence that's not an accident that is the result of Decades of messaging some might call it propaganda first of all most people in the world do not live in single family homes like we do in America that has caused a lot of issues but to leave that part aside this is how most people think about buying a house they think Grandma

bought a house in Austin Texas in 1970 for $100,000 grandma just sold it 50 years later for $1 million grandma made $900,000 they go it's the most profitable thing you could do buy a house I go okay uh that sounds really nice did granny factor in how much she spent on maintenance for the past 50 years uh no uh did granny factor in inflation and how that affected her return uh no what's inflation uh did granny factor in the opportunity costs of what that down payment could have been used if invested in the S&P 500

uh no and did granny look at all these Phantom costs such as interest on the loan uh no it's not simply the bigger number minus the smaller number that's wrong that is simplistic for the biggest purchase of your life you've got to go deeper again when I was living here I kept a very close eye on real estate and the place right right next to me same square footage same number of bedroom same everything it would have cost 2.2 times what I was paying in rent so just to give you an example if I was

paying $3,000 a month it would have cost about $6,400 a month to own okay I said you know what I like renting if I have a problem I just text my landlord I took the $3,400 I would have spent owning when factoring in Phantom cost maintenance interest taxes all that and I simply invested it and I made more money doing that than I would have owning what about if you buying somewhere to for the rental income that can work that can work so owning real estate as an investment can be part of a well- diversified

portfolio if you run the numbers right now there's a lot of hype people go I'm going to buy a house and if I don't like it or whatever I'm just going to rent it out okay fine but you've got to remember that if your mortgage is $1,000 that's not just the amount you're paying there's a lot more in fact in my estimations I add 50% to that price so $1,500 a month which would include a roof repair happening 19 years from now we've got to amortise that out uh labor costs interest all that if you

can rent it out and make a profit fantastic it cash flows that's awesome what you discover is that most people who buy a primary residence the place they want to live in they buy it because they want it and then they tell themselves it's an investment buying a house can be an investment but oftentimes it's not and there are far better far simpler Investments here's my key message I want to make sure nobody misunderstands me I've been accused of saying buying a house is bad no I never said that in fact I will buy a

house myself one day and when I do it's going to be a terrible financial decision and I'm going to do it anyway my key message is for the biggest purchase of your life you've got to run the numbers sometimes buying can be a good financial decision often renting can be a good financial decision run the numbers and never feel guilty for renting as it relates to buying a house I've always been hesitant because I'm scared really of the point you mentioned about being anchored to a location so I the way that I've kind of Justified

that away is by saying well I'll just Airbnb it when I'm not there or I'll rent it out when if I decide to move to New York or whatever is there a a cost in the opportunity of being less flexible about where you can be um that people don't think about especially when they're younger yes and they're probably a little bit unencumbered by you know life at that point yes buying a house is one of the most profound financial decisions that will affect your lifestyle ever you can sell a car even at a minor loss

but selling a house involves massive transaction costs and labor that most people don't anticipate one of the reasons that I rent is for lifestyle reasons Financial yes I make more money renting and investing the difference than I would owning but also lifestyle I don't know that I'm going to be in the same place for 10 years which is one of the key things that I would encourage people to decide before they buy you want to know that you're going to be there for at least 10 years because then you can spread all those transaction costs

spread them out over 10 years they become much more affordable it's kind of like buying an expensive jacket if you buy it and you wear it once that's really expensive if you buy it and wear it over 10 years becomes a lot more affordable now take that multiply by a thousand and that's a house particularly for young people I don't give a lot of unsolicited advice I used to do it when I was young when I just learned about money and I realized nobody really wants to hear it they really don't if somebody comes to

me they come to my blog my social media great otherwise I'm not going around telling people you should do this once in a while though I get a young person asking me I'm just about to graduate from college what advice do you have for me and at that moment the the best piece of advice that I have is move where the action is and typically that's a big city so that would be where there's more jobs where there's simply more people if you're looking for relationships and there's a lot of tacit knowledge that happens in

big cities like oh have you tried this oh what have you seen that musical uh have you tried this thing this idea that's going around so often surrounding yourself geographically can be hugely rewarding to you as you grow you can't do that if you bought a house because everybody told you that it was going to be the best investment and if I were to say show me where you calculated the numbers that it was going to be a great investment 75 plus percent of people have never created a simple spreadsheet how does buying a house

compare in terms of returns to something like investing in the S&P 500 it's quite poor actually really yeah over about a hundred years there's great research showing that it has essentially matched inflation it's been slightly above inflation people find this mindboggling again because they think somebody bought a house for 100k and they sold it for a million so it's 900k but they don't properly factor in inflation opportunity cost Phantom cost all that it's really hard to factor these numbers in but it's critical because it's the biggest purchase of your life I'll give you another example

of where people don't properly Factor it in uh some people pay a financial advisor 1% they go 1% it's not a big deal I'll pay 1% what they don't realiz is that that 1% over the course of their lifetime will take 28% of their returns and hand them over in fees think about it if you make a million dollars in investing over the course of your life $280,000 are going right out of your pocket into that advisor's pocket now that's super counterintuitive one % turns into 28% how does it work you can simply go online

and search for uh investment cost calculator and plug in the numbers add a 1% fee and you will see the point of this is that sometimes money is highly counterintuitive really counterintuitive it's unlike anything else if you and I go to sushi right now and we get sushi for 20 bucks it'll be fine if we get it for 100 bucks what do you think probably be a little better right and if we get it for $11,000 the fish will have been flown in from Tokyo this morning and it will be served in an absolutely stunning

setting so in other words you pay more you get better results we're used to that if I spend more on a sweater it's probably going to have a different type of fabric more on a car it's going to look cooler have cooler features money's not like that if you spend more you don't get better returns you don't get better anything in fact if if anything you get worse returns people find this mind-boggling because it is it's counterintuitive but in investing costs matter in buying a house you've got to run the numbers because they are totally

counterintuitive quick one before we get back to this episode just give me 30 seconds of your time two things I wanted to say the first thing is a huge thank you for listening and tuning into the show week after week means the well to all of us and this really is a dream that we absolutely never had and couldn't have imagined getting to this place but secondly it's a dream where we feel like we're only just getting started and if you enjoy what we do here please join the 24% of people who watch this channel

regularly and have hit the Subscribe button means more than I can say and if you hit that subscribe button here's a promise I'm going to make to you I'm going to do everything in my power to make this show as good as I can now and into the future we're going to deliver the guest that you want me to speak to and we're going to continue to keep doing all of the things you love about the show thank you thank you thank you so much back to the episode so what is the S&P 500 for

anybody that doesn't know yeah and what are the returns that I'm likely to get from investing in the S&P 500 I really want to simplify this for people that are at the very start of their investing Journey you know because I mean this is what you spend so much of your time doing that I just think about my my team here say at the dire of a CEO there's about 30 people and we started talking about money one day and it was mindblowing how nobody in my team's lives had ever had the conversation with them

about investing we all think of investing as something that rich people after the age of 40 do once you have a million dollars um Al if you don't have a million dollars then the only other way to invest we're taught is to buy a house ah this is driving me insane it's true though isn't it yes and that's that's the central part of my work is that you can live a rich life and that rich life can be richer and more vibrant and more personal than you ever imagine if you want to travel you can

travel for longer than you ever thought you can travel for me at nicer hotels you can uh spend more time with your children with your loved ones whatever your rich life is you can do that but you've got to learn a few key basic things about investing and money so let me tell you what I would tell my family when they come to me they go how should I start investing the simplest simplest way that I advise my family is I say get a Target date fund so let me explain what that is a target

date fund is One Fund just one and you pick it based on the year that you're going to retire so if you're going to retire in 2050 if you're going to be 65 in 2050 you go and you find that one fund it's called a Vanguard 2065 fund or Fidelity 2065 or Schwab 2006 there's lots of Brokers these funds it's One Fund all you do is put put money into it that's it the fund like a pie chart is automatically Diversified so as you get older it gets more conservative because somebody who's 75 years old

should be investing differently than someone who's 25 One Fund all you have to do is set your money up to go into it every single month what is a fund a fund is uh a a set or a basket of stocks and maybe bonds so we''ve all heard heard of you know companies like Microsoft Google whatever a fund owns lots of these right and that's important because we've heard diversification like you should have Diversified your Investments okay well how do I do that you don't need to go and buy 20 stocks and then figure out

how much of each to do that's too much work and honestly most people are not good at that even professionals you buy a fund which automatically owns lots of stocks like hundreds of them and over time all you the individual investor like me have to focus on is putting money into it automatically so a fund essentially I've got1 pounds that I want to invest um I find a fund where do I find these funds you can go to Vanguard Schwab or Fidelity all those are great companies uh what you're looking for regardless of what country

you're in is you're looking for a lowcost brokerage firm so but there's also apps and stuff that I can I can you can use apps I don't like a lot of the apps because they gamify you to try to invest they want you clicking and trading I hate Traders Trad you do not want to be a Trader Traders lose money investors treat investing like watching paint dry that's how sexy it is trust me I'm not getting my entertainment from investing I'm going out go watch a movie go watch Netflix but investing is boring and automatic

that's how it should be I used a a a company called harri lands down in the UK who have an app when I first started investing um when I first started investing in funds they they had a very ugly app so I wasn't very compelled to use I think it's better now but I would use just do it on desktop which I do get your point because you don't want to you don't want to be game you don't want to screen all of that notific ug it should be ugly and you don't want it to

be too accessible as in I don't want to be able to check it every day no look on my phone you will see no investing apps there should not be why do you need to log in and check it every day what's the point in fact I L you know most people should check it every 3 to months and here's how you check it you log in on your desktop wow it's up wow it's down okay bye you're not tweaking anything it's like making Thanksgiving dinner once you've put the turkey in the oven just let

it sit do not fiddle with it cuz you're only going to mess it up and in this case you're letting the turkey cook for decades and that fun so got1 I go on a website Vanguard Fidelity Schwab whatever they are I have no Alliance to any of them neither do I um there's various ones in the UK I actually do recommend hard land down just because it's simple and I think investing in funds there's no fees there's no fee associated with the investment itself obviously they take a you know they might take a percentage depending

on which fund you're investing in I take my 100 and investing in harri lands down you don't need there's no um minimum great from what I understand and there's no if you invest in a stock they charge1 per per investment but if you invest in a fund it's free um I put my1 into a fund the fund is essentially taking one pounds one of those pounds and investing one pound into Facebook it's investing one pound into Google one pound into Shopify one pound into Spotify one pound into Nvidia or whatever it's doing that for me

it's managing it for me it's making the decisions for me I just put the money in every month whatever I can and I leave it yeah and let's go even deeper I love that we're getting into the nuts and bolts here because you know honestly most most people they do not know how to invest literally what website do I go to and then what do I do the fund owns these different stocks and some will go up and some will go down and it's inconsequential to you all you need to know is you own this

fund now that you've opened up an account and you've sent a hundred bucks or a thousand bucks great you've made one of the most important decisions of your life now there's just one more thing you have to do set up an automatic transfer so that every single month you have a certain amount of money going in now if you don't know how much money use my conscious spending plan guideline what did I say 5 to 10% of takehome is a good guideline all right you should be able to do 5% trust me anyone who comes

to me they go REM there's no way must be nice I can't afford I go show me where you're spending your money I guarantee you I can find 5% to send in every month now you're not trying to send it in I don't try to brush my teeth in the morning it's a habit investing is even easier than brushing your teeth because you set it up automatically the investment fund will automatically draw from your checking account and it will pull in a hundred bucks 500 bucks a th000 bucks whatever your number is and so you're

not going to log in for three four five months you're going to log in a few months later you're going to be like oh my god I didn't even realize that all this money is in here when you add that plus compounding over many years that is how real wealth is created so I don't want anyone to think that you have to be rich in order to start investing one of the ways you get rich is by investing I've got a friend that's currently actually in this building at the moment and I had this conversation

with them about a year ago gave the advice that you've just given there and about two months later this individual who I Shan name came to me and I said How's your uh you know your your your Investments going in that in that fund and they said oh yeah I had bills I had a credit card bill so I I took took it out oh yeah she she treated it like a checking account Investments for me are places to accumulate wealth I don't draw from it that's what a checking account is for so if what

that is is there's two parts to what your friend is saying one is um mentally she's thinking that this investment account is just money I can draw from if I need it so I would sort of gently change the way she thinks about it the second is I guarantee her account structure is a little um subpar so here's how I would set it up this is in chapter five uh it's all automation because trust me I don't want to spend time transferring money back and forth that's I don't spend any time on that you get

paid your money goes into your checking account from your checking account it is automatically transferred to a savings account in fact I have sub savings accounts for vacation car down payment all that stuff so you have money set up for specific goals money is transferred to your investment account it's transferred there I'm not going to touch that money I'm G to let it cook and then I have my guilt-free spending which is going out with friends whatever I love and my credit card bill is automatically paid off every single month that's how you want to

set it up it takes a couple of weeks to set everything up and then you never have to think about it again C how can you prove to me that this is the way to make wealth what case studies have you got that investing in funds over a long period of time is the path to financial wealth because you know it's you said earlier about the paint drying thing the narrative that we see about how why people and how people get rich is you know they sell a company or they have a lottery win or

maybe they buy some cryptocurrency and it goes up yeah that's what we hear so that's what we're trying and emulate totally we prove to me that that's that this fund strategy is better well there's there's a couple things first off the research over more than a hundred about a hundred years shows the returns of the stock market and the returns tend to be at least in America they tend to be around 11% 10 to 11% and if you take out inflation you get about 7 to 8% per year now for anyone listening they go okay

well what does that mean that number means nothing to me 7% whatever if you go right now and you Google investment calculator and you just plug in your age you plug in let's say 200 300 bucks a month and you plug in 7% return and you just watch how that money grows you will be shocked Jack give me my phone I'm going to do it now okay so let's search for compound interest calculator and there's a really simple one this it's called money chimp okay okay I've got it all right all right so there's four

numbers we need to fill out here let's take a look the first is current principle that means how much you've got in the bank I'm going to say $5,000 and I'm going to start when I was 16 because if IID saved my money when I was 16 and not spent irr recklessly I think I could have had that $5,000 when I was 16 um and Edition what does that mean how much can you invest per year so for most people they think about on a monthly basis they might say 200 bucks a month which would

be $2400 annual Edition okay so what do you want to say I'm gonna say can I say $5,000 yeah that's you know about 400 bucks a month I think that's reasonable I often find that with people making uh median or slightly above median salary that there are hundreds of dollars a month of money that is unaccounted for that if properly made intentional could be invested so great 5,000 a year all right obviously I could have once I got past a certain age I could have increased that though so we're going to talk about that hold

on to that idea okay how many years this was you at 20 this was me at 16 oh okay and how old are you today 30 okay so 14 years let's just do it until today and we'll see what happens okay all right 14 years and then it says interest rate so what should we assume for that is that 8% yeah 7 to eight I I do seven just to be super conservative because I never want to be surprised on the downside right if anything I'm going to make more so 7% all right let's calculate

it okay what do you see damn what do you see $133,000 537 yeah that's what you would have had right now now let's add some context so this is really important you see a number that says $133,000 at age 30 yeah okay is that a lot is that not hm I don't know let's break it down at that point you started with $5,000 and you invested $5,000 per year we assumed no raises even though you obviously made more than you made at age 16 MH we assumed you stopped investing at age 30 which is obviously

ridiculous and you end up with six figures let's play it out let's take it until 40 so instead of 14 years you invested for 24 years what do you see I would have $336,000 it's getting better from just $5,000 a year it's not much it's fantastic again 400 bucks or so a month is very modest remember people's income goes up typically in their 30s and 40s and if you already are investing a little bit automatically all you have to do is just tweak a number and it will take an extra couple hundred three four 500

bucks let's do one more let's go to 34 years just cuz I want to see what happens and then we're going to play with the other numbers okay so investing from the age of 16 until I'm 50 mhm I would have $736,000 in my account yeah now I want to do the full the full thing I want to do a more realistic number here so instead of 50 we're going to go 49 years that takes you to age 65 yeah okay and instead of $5,000 per year your income obviously went up from being 16 years

old so I'm going to pick a number out of thin air and and I'm going to tell you how I picked it I'm going to say instead of $5,000 a year it's actually going to be $330,000 per year let me tell you why I picked that in your early years you don't have as much money but you were still investing a little bit which shows that you're dedicated as your income goes up you're going to start proportionally continuing to invest so at a certain point your income will be really high and that will bring that

average up that's why I switch it to 30,000 per year I actually think this is quite modest but I'm going to go ahead and do it so here we have someone starting investing at $5,000 they invest $30,000 per year okay they grow it for 49 years at 7% do you know the math no tell me 12 Milli $33,000 so that's me starting with 5K gradually ratcheting it up until I'm investing well investing 30k on year a year per average across those 49 years yes which is a flaw in this because it's so simple that money

invested you're not actually going to invest that much early on you'll invest more later so you won't you'll maybe have a marginal amount less but we're talking 10s 12 million that's a lot of money and then if I got 8% instead of the 7% I'd have 17.4 million yeah but don't mess with that CU this this is what people do they go well if I got 133% I'm going to invest in this PE fund I go don't do that you're going to lose all your money just stop yeah 7% is safe it's conservative that's why

I am here that's why I want to encourage people you don't need to juice your returns I hope you do get 8% but I don't want you to count on that I want you to count on safe stable returns and what matters for you is the time you started early and the amount you have a considerable amount to invest what about the richest people in the world MH you know we think of the Warren buffets of the world or the Charlie mongers of the world who ended up becoming the richest investors on planet Earth yeah

what was their strategy I'll tell you let's talk about Warren Buffett uh there's a friend of mine Morgan howel he wrote this amazing article I love that book yeah the psychology of money he wrote this amazing article about Warren Buffett if you look at Warren Buffett's returns he started investing at a very young age and the money compounded again it's like putting the turkey in the oven and letting it sit there not just for an hour but many hours in his case 60 plus years he has made over 90 I think over 99% of his

wealth happened over the age of 60 okay think about that it's all because he started investing so far ago and what is mindboggling is that you don't need a fancy strategy you don't need to be picking individual stocks you don't even need to be a genius to make a lot of money you do not have to be the smartest person in the room you just need to remember a few key things start as early as possible okay and if you're not 16 years old if you're 30 40 even 45 okay start now second invest aggressively

every single month that's critical third keep your costs low 1% in fees is going to take 28% of your returns 2% is going to take over 55% of your returns keep your cost low if you do those things you will have more money than you ever imagine what are the attributes of someone that's probably going to be poor in 30 years in terms of their relationship their behavior with that money easy they don't invest they feel overwhelmed and anxious about money and they talk about it all the time but they've never read a single book

about money and there's these deeper attributes they have uh only rich people invest they think that yeah and that's why I'm here I want Everyday People to know just like me I started off my parents immigrated from India I had no special uh uh investment knowledge but I had two parents who were educated and encouraged me and said learn this stuff here we'll do it together and that was a gift um everyday people can build tremendous wealth which in and of itself is impressive but it's even more impressive when that wealth is used to live

a rich life a rich life of adventure and spontaneity and generosity some of the stats I pulled out from your book about 25% of people who make $100,000 a year plus a still living paycheck to paycheck according to a recent survey of millionaires done by the US trust 83% of the wealthy wealthy say their largest investment gains have come from small wins over time rather than taking big risk yes this is counter to everything we see on TV because on TV it's really boring what are you going to look at my Vanguard account oh wow

compounding 7% per year it went down 8% last year and it went up 9% this year so boring so we see these cool stories of business owners and we're both business owners it is cool but a tremendous amount of my own wealth will come from lowcost long-term methodical investing that's like a rule of life isn't it that the the real returns you know in reality the great Returns come from patience yeah and consistency and things that really aren't sexy like they're not instagrammable if I post on my Instagram today hey I've got some advice for

you guys to become wealthy and I go need to invest in this fund and just leave it there but if I go listen I've got this new NF this new nft collection or cryptocurrency coin that's going to make you a million percent this year people are going to go all in that's just like a something within the human condition where we want we want big returns with little effort and today we want to get rich quick same with the six-pack we want the six-pack abs in 10 minutes we don't want sixpack abs with diet restrictions

and nine months of work that's not and that is why I have a lot of compassion for helping people unlearn some of the messages about money because we all have them uh we all H have the equivalent of I want six-pack abs but we also have something in life that we've spent time to get really good at and we know that the secret is basically consistency if I go ask someone who's an amazing cook hey I want to cook like you how do I do it what are they going to give me some used cinnamon

no they're going to say get in the kitchen and cook every single day for 5 years and you're going to learn about when to use salt and when to cook it for longer Fitness you want to ask someone who looks really good or or feels really good about their body they're going to give you some secret workout no they're going to say I show up when I feel good I show up when I don't I show up when you let's think about the people that might be listening now so there's going to be someone that

is a they're a they're a bus driver or they are a social media manager they are a I don't know cleaner they're a teacher they are a personal trainer mhm if you were if your job was to make that person a millionaire in 20 years from now whatever your age they are right now what is and you were their financial advisor in fact you were controlling all of their personal professional decisions uhhuh talk me through what you would do with that individual at a very detailed level I would do a few things number one that

the most important things I would do would be set up automatic investing be aggressive about it two they have to increase their income okay I'm going to be that person I'm going to embody that person I just described so increase my income I'm a personal trainer perfect okay so so what what should I do all right you're a personal trainer so first off I would say how much are you charging how are you finding your clients we talk about that and let's say you're charging 100 bucks an hour and you have clients they say how

long do they stay on average uh that's exactly what I'm Charing month perfect great they stay longer than two months I'm very good how long do they say three months three months wow okay you're very good all right so your average client is worth 4 uh ,000 bucks yeah great so you're making let's say 60 70,000 a year all right uh the first thing after I understand all this information I would say all right we're going to double your income how we going to do that the first answer everyone gives is I got to find

more clients okay you should you should ask your clients hey I've got a few slots available who would you recommend so you should get more clients second you're going to listen to your clients and you're going to say um what else are you looking for I know you've got your fitness journey you're going on they're going to tell you I've got a 10-year reunion I want to plan for that uh another person is going to say gosh I I know I should be eating healthier but it's really hard for me so you're thinking about it

here's what you do you create uh you package up uh meal planning Services you can either uh um do their macros for them and charge them a little bit extra let's say an extra 200 bucks a week or 200 bucks a month you can also partner with a food delivery service and you coordinate with that company to feed over their macros and it gets delivered to them and you take a small cut right there you've added thousands and thousands of dollars per year per client as long as they stick with you in addition to that

um you can do group sessions so you go hey um I'm going to do a weekend session I'd like for you to invite your friends invite them for free and of course of the people who come let's say you get 15 20 people to come you do a free little session on Saturday you go I'm a trainer I work in SoHo I have three open slots that's how you're finding new clients now so you're doing two things you are finding new clients you're increasing your average lifetime value per client okay that's the that's two things

now let's do one last thing let's increase the duration that they stick with you they're stick sticking with you for 3 months give them a special offer to stay with you for 6 months so when they sign up they work out with you for a month you say look it's 100 bucks right now if you stick with me for a six-month plan I will give you my sessions at $95 per plan you'll save x 5% one two three you've increased and if we did the math you may have doubled your Revenue you certainly boosted your

profit in a huge way all of a lot of that's about making sure you're getting a better return per hour you spend at work but also Mak sure all of those hours are full but then doubling down and making sure each hour cuz that's your your currency when you're a personal trainer you're trading in your time I need to make the most from every hour I spend um I've thought about something recently as I've been writing my new book The Diary of a CO um which I've written these 33 laws for building and becoming great

essentially it goes across marketing and business and whatever and one of the chapters that I investigate is this idea of making sure your skills are on the right market so my company went public and one one of the things that I I came to learn from sitting with investment bankers for many many years was that if you put a company the exact same company let's just say it's you know the company that make these silver mugs in front of me if I take this company public on the London Stock Exchange I might get for example

four times Revenue if I take the exact same company and I list it on the New York Stock Exchange it will be valued at eight times Revenue it's the exact same company exact same people exact same business just moving it to a different market and what upon leaving the social media marketing world when I was 27 years old one of the first calls I got was from a biotech company ran by a billionaire friend of mine that was going public and they brought me in and on the first week when we discussing what they might

pay me I'm thinking there's they can't really pay me in cash because I've got enough cash I don't really need that they can maybe give me some stock their offer to me for my skill set was $8 million roughly $8 million in options m that I would earn in 9 months from taking the company from where it was building out the marketing team handling their storytelling and taking the company public which we did at about 3.2 billion valuation their offer was $8 million in options I reflect on that and go I'd spent the previous 10

years using the same skill set to sell consumer goods like dresses and iPhones for apple and Logitech and big fashion brands I took the same skill set and applied it to a marketing industry where it was rare biotech people know nothing about Reddit and Twitter and Facebook and social media so my skill set was rare scarce in that market so it was incredibly valuable and I think about this a lot with with especially as this AI thing rolls in I think people should be looking at their skill sets and going where is my skill set

as a writer going to yield the greatest returns I could be a social media manager I could be a uh um a Blog writer or I could add a little bow string to my bow and become a a scientific writer at or like work a writer in biotech and you'll get paid if you can add that little bit of knowledge to your to your writing skills you'll get paid I'm going to say five times potentially five times more yeah and people don't think about the fact that they're they need to use Place their skill sets

in the most lucrative Market where it's scarce yeah and I so yeah I'm just throwing that out there because it's really front of mind for me at the moment like personal training you know like you could be at a gym and you'll you lose 75% of your income to the gy or you can do it virtually you can specialize on um just preparing people in the beginning of the year it's like your best year and every January that is your focus it can be celebrity clients it can be uh Uptown um midcareer Executives that's a

very lucrative you choose but you choose carefully I I agree that's a bit of an advanced concept I think most people they start off they go just how do I make more money I'm a trainer I have free hours but once you kind of Master that and you go like for example there's a trainer I know here who charges 175 bucks an hour that's very good after you get that and you fill up your entire calendar you go okay I'm making $35,000 a year I want to make more how do I do it now you

need to get creative you move to different markets you add in package things that scale when you sleep you have video courses Etc there's so many different ways but I think everyone would do well to listen to what you're saying which is think about how to move up Market or potentially to a totally different Market where your skill set is really scarce yeah and that's the problem a lot of people have there you know their skill set might be too abundant in the industry that social media managers social media managers is one thing but that's

a slightly different skill set because there's there's there's a wealth of knowledge there that is unique to that knowing the algorithms knowing the platforms there's a real creative element to it but I think about my friend Anthony he was he was a graphic designer uhuh the greatest graphic designer I ever in Manchester but he was designing nightclub flyers and he's talked about this publicly before for every nightclub fly he designed he got $50 the equivalent $50 to $100 right I had a conversation with him a couple of years ago about this and I said you're

you you're really specifically good at like luxury design he's got that really like beautiful Chic simple but you know elegant design style I always go to him when whenever any design work like that so I said to him move to Dubai and and go there and help design um luxury Brands yeah and this guy did it so he went from Manchester where he was doing nightclub fers to moving to Dubai and without revealing his financial position what I can say is the same hour per piece of work is now yielding him tens and tens more

in returns you know instead of getting $500 he's getting $50,000 for for a project and it's just moving his skill set the same thing designing on the same software to a different industry which will appreciate and pay more for the same skill the lesson I take away from that Beyond his willingness to actually make a change which is amazing is that most of us do not think in terms of discontinuous jumps we think okay I'm making I have a hundred bucks a a month what if I had 120 bucks a month well 20% is like

quite good that's amazing but what if I had 500 bucks a month or 5,000 that's a discontinuous jump and to get those kind of numbers something big has to change in business moving markets developing a new skill partnering all those things but it's different in investing it's primarily time and that's where we're not attuned to it we go well you know I only have like a couple hundred bucks a month to invest that's nothing it's only going to turn into a few thousand you go no you're not thinking about time because the human mind is

not made for compounding so plug it into a calculator and you will be blown away same thing buying a house you're only thinking of how expensive your rent is which granted rents are very expensive but you're not actually factoring in how much time and money it costs to pay taxes and maintenance and interest on your loan you've got to get smart about running the numbers and when you start to sit back when you learn the basic language of money and you understand how you feel about money whether it be I like status or I like

luxury or I don't really care about XYZ when you understand your own feelings suddenly you can almost look at the chessboard dispassionately you sit back you go okay I see what's going on here I even see how I am a player on The Game of Life when it comes to money and then you start to say the most powerful question of all what is what if I earned more what if I spent less what if I decided I actually love traveling two months a year or buying a house because I can decorate it the way

I want what if what if what if and then you can start to make moves that line up with your rich life someone comes to you and they say what about crypto I get that question a lot oh God what about crypto should I be investing in my friends told me about this new coin and um I'm thinking of putting a couple of thousand Pounds into it I get this all the time God should I invest in that coin that my friend told me about so I get this question a lot I I got it

a lot a few years ago yeah let me tell you what happened you know people read the book they know that I'm a fan of lowcost long-term investing and then all these crypto nuts grow up and well they grew up to be you know 19 years old and they go oh RIT Sati such an old guy such a ly he doesn't understand investing this is the new future Fiat is dead I go um I have a a couple of questions for you number one what does the rest of your portfolio look like they go portfolio

I put it all in on crypto I go oh God okay um second do you think that it's normal to get uh 4,000% return per year when over about a hundred years the stock market has returned approximately 7% per they go yeah that's cuz Fiat is dead you idiot it's going to be we're going to the Moon I go you're going bankrupt and many of them did lose a tremendous amount of money my view on crypto is if you have a well Diversified portfolio well Diversified and you want to have a little bit of fun

with one two even 5% of your portfolio go ahead and that could be crypto it could be an individual stock it could be investing in your friend's bar in Brooklyn could be whatever you want but you got to limit your risk and what you find is that the type of people who tend ended to be attracted to crypto tended to be extremely risk-seeking and in fact they saw diversification and risk management as boring for old people this game is a marathon you want to live a rich life you want to be living it for 60

70 years I'm not trying to get 10,000% returns and then blow out and that's what happened to many of them I mean part of the problem here is that when we do get our 10,000 returns 10,000% return moment yeah we think it's going to be 10 million per if we just but we also go tell everybody of course you never hear anyone saying let me tell you something thank you for saying that I went on Twitter cuz uh you know I mess around with these crypto guys a lot on Twitter I have a great time

doing it I go hey where'd all the crypto Bros go everyone seems to have disappeared in 2023 where' you guys go and there's just like crickets where in 2020 they were really coming out you know guns blazing I said if you have lost a lot of money from crypto send me an email I want to share your story I'll keep you Anonymous I have a lot of people who follow me on social media I got less than three responses we love to share our successes we love it we do it with crypto we do it

with buying a house and selling it for a profit we do it with business we do with all that stuff but you almost never hear anyone saying oh my gosh I bought this uh I sold it for um 15if the price oh and by the way because of the transaction fees Associated I actually lost like 80% of my money you know or 85% of my money you never hear that it's deeply shameful for people to admit that they lost money it's the opposite of status isn't it yeah and we're not wired to seek the opposite

of status exactly we're not wired to voluntarily bring ourselves down in the tribe exactly we are safety seeking we are status seeking and so so this is what happens with money that's why I talk about prenups and why I talk about investing and mistakes and all of the above is that I want to shine a light and show people if you are only seeing the top of the iceberg all the successes of course you feel like you're behind of course you feel like everyone knows something you don't but it's complex some people make good decisions

some make poor decisions we got to look at them all and then we will understand what's right for us so my my position on crypto is um I believe in the underlying technology of the blockchain and I I'm I've been a big ethereum holder for a very very long time but it does represent less than 5% of my portfolio although I am a very big holder um in ethereum and I've held it for so long that although I'm at a I'm at a point of profit right now I'm well aware that I could go um

into a huge you know into the red yeah irrespective of that it a has is inconsequential to any decisions or my like my financial Financial portfolio at large and B because of that I have such a long-term time Horizon that I could hold it for 30 40 years and I've never flinched I don't check their price sometimes I just check my password works but I but but I'm not in I've never traded I have no interest in that remites 10 Money Rules I just want to go through these 10 Money Rules cuz you mentioned prenups

there and I was quite curious that number 10 in these rules is marrying the right person but let's start at number one always have one year of emergency funds yeah so for me one year of emergency fund is conservative it's more conservative than most lets me sleep at night and I just keep the cash in a savings account it's not under my pillow cash does not mean it's sitting under my bed please don't try to rob me it's cash in a savings account totally liquid and that's what it's for emergencies rule number two save 10%

invest 20% of gross annual income yeah this is all about the numbers that I shared and being more aggressive with them I know that paying myself first now turns into way more later so I invest aggressively rule three pay cash for large expenses like engagement rings or big holidays or weddings yeah this one is controversial because for the things that are important to me I don't want price to be the number one concern so I'd rather save up for it when I was in my 20s before I ever met my wife I knew one day

I would get married and because I'm Indian I knew we would have a big wedding and I wanted it to be amazing so I started putting money aside every single month automatically I do the same thing for trips house Etc rule four never question spending money on books appetizers health or donating to a friend's charity fundraiser yeah so the books and the appetizers are a little weird I have something called rem's book buying rule which means if you ever see a book that you're even remotely interested in just buy it don't ask a question don't

equivocate just get it because if you can learn one thing from that book it can transform your life appetizers when I was a kid we couldn't afford to eat appetizers so we would eat out every six to eight weeks if we had a coupon we'd usually go to a pizza place getting appetizers was inconceivable so now when I eat out to be able to see one or even two appetizers that look good I go yeah I'll take them both it feels incredibly rich and this is just example of how our childhood sticks with us it

feels awesome to be able to do that rule number five business class flights on flights over four hours long yes again my money rules not for anyone else when I used to when I was in my early 20s I would get on a flight and I would actually in my head scoff as I was walking from the front of the plane to the back be like why would anyone spend four times the money paying for a first class ticket makes no sense we're all getting to the same place hahaa I wish instead of disparaging that

I would have gotten curious and I wish I would have said wow if somebody can afford to get those seats why would they I wonder what they're spending money on aren't we all getting to the same place and if I had gone from disparagement to curiosity from D to C I would have understood that some people have their office paying for it some people do it for health because they want to get there they want their back to feel good they maybe need to go to a meeting and some some people just have enough money

that they can do what they want and when I started to become more curious about money that opened up my eyes to be able to spend on certain things and spend extravagantly but also to realize wow maybe I try this certain type of food once cool I don't need to do it again so for me my money rule so that I don't have to decide every time I take a flight boom this is my guideline it's done it's written never have to think about it again rule six buy the best and keep it as long

as possible yes I love this I think we all intuitively have this idea of quality over quantity but if you look in somebody's closet or you look at the things in their house there may be some in congruity so um for example my car is 17 years old it's a good car it's a I mean for me it was a fine car I don't care it rides fine it's a four-door Honda Accord I told you very sensible longterm great uh buy the best keep it for a long time it's the same with clothes um those

things matter to me I like that and so I'll buy something that might seem very expensive but I'll keep it for a long time good for the environment as well yeah rule seven no limit on spending on health or education yeah this this one is important um I learned when I was in my 20s and I started training and learning from personal trainers and nutritionists that I really loved it and I also realized that I needed help I needed great teachers and So eventually I just realized I'm going to give myself unlimited spending on this

same for education so I'm a teacher I teach different programs of course I'm a student as well I want to learn from great teachers from taking accounting classes here at Colombia to buying every conceivable book and digital program there is I've given myself the freedom to do that and all that came from uh I had a scholarship I had many scholarships that paid my way through college and one of the scholarships set up an account for me at the Stanford bookstore so when I walked in there I could get literally any book I wanted it

was like uh Willie Wonka in the Chocolate Factory for a guy like me to have unlimited books it was like unbelievable and when I graduated from college I realized that would be going away and then I remember having this conversation with myself and saying how much would it really cost to recapture that feeling that feeling of being able to get anything I wanted see a book on the bookshelf I'll get it the answer is really not that much so over time that then expanded to health and Education Health I find really compelling because it's clearly

clearly the most important foundation of all of this it's clearly the most lucrative investment any of us could make um because everything we've described the rich life doesn't exist without that Foundation yeah so it's all good investing in your Vanguard but it doesn't matter at all if you're going to die yeah if you ask people what's important to you they'll often give you the same answers they'll say relationships Health maybe travel Korea maybe yeah I go okay let's take a look at your spending show me where you spend on those things it gets really quiet

really fast now it's one thing to spend time on relationships and we should but we can also spend money to enrich those things it might be surprising your niece at a showing of uh Jackson or it might be surprising your family by going home and visiting them there are lots of ways you can use money to enrich those experiences same for Health it could be what you buy at the grocery store it could be training or a gym membership it could be whatever it is that's meaningful for you but if we claim something's important to

us it sure better show up in our time and our spending rule number eight earn enough to work only with people you respect and like I love this one I decided long ago that I only want to work with people that I like and respect and so I earn enough money so that I can do that and to me who you surround yourself with matters profoundly ideas seep into your Consciousness values seep in if I'm around people who when I look at the calendar when I have a meeting with them I dread it I already

know it's the beginning of the end most of us have to work with our souls though right like we no I say have to I shouldn't use that word I don't like saying have to but most of us spend most of our lives especially the early part of our Lives working with ourselves um we work with people that we may not particularly choose ourselves I think that's probably so yes I built a life where I could make that decision for myself I'm the CEO of my business but I think what is important there is the

intentionality behind it it's like even if I worked at a company I would be deciding on on which Division I want to work in which boss I want to transfer under based on do I like and do I respect him that's it the intention is there you again these are my rules not anybody else's but if this one strikes you then the way that I would interpret this is wow who in my life do I not like who do I not respect do I need to be around them maybe it's not work maybe it's the

friend that I hang out with socially on Saturdays again we have a choice not on everything but in the things we do have a choice what a shame if we don't use it rule number nine prioritize time outside the spreadsheets yeah too many Nerds love a spreadsheet and they they go I got to optimize sell b43 b43 never talk back to me I go all right look yes you need to know your numbers yes you should be automatically saving and investing all that yes do the conscious spending plan but at a certain point you won

the turkey is cooking you you w you know your numbers Turn the Page get out of the spreadsheet a rich life is lived outside of the spreadsheet so on a personal level that means I spend less than one hour per month on my finances it all runs it's a machine it's a system I speak to my wife we talk once every couple of weeks about money besides that do not spend time tweaking because the rich life is lived having conversations like this seeing friends seeing my family that's where I want to live not tweaking things

endlessly for no marginal gain number 10 you mentioned your wife there marry the right person yeah maybe the most important one of all um marriage is the most consequential financial and relational decision we ever make and people they're a little weirded out by this rule they go what does this have to do with money I go what do you mean the partner you choose will affect where you live what you spend on a day-to-day basis what type of house you buy if you do how often you travel the values if you have children that you

pass down to kids of course it's important and so these are conversations that if you are starting to date it's great time there's natural moments in the dating process or even the relationship process where you can bring up money so it's like the first time you take a vacation together take a trip you you go hey um just want to you know this is on my mind I'd love to just like put it out on the table love that you invited me on this trip I'm so excited to go I'm just curious how were you

thinking about paying for the trip who who in your mind pays for it how would you see us splitting this that's a great way to bring it up and you learn a lot about your partner um there there are questions you can naturally ask you know how were you raised with money what do you remember your parents telling you here's what I remember about my parents genuine curiosity it also tells you a lot about your partner and then there's a few other natural moments in a relationship where it just makes perfect sense to talk about

money uh when you get engaged when you get married uh if and when you move in together pre or post marriage uh if and when you have children there are these natural moments where you get the gift of being able to talk about money do people talk about money couples they talk about it uh when something goes wrong outside of that what sort of percentage of people couples do you do you think talk about money rarely it's very low I know I speak to them all the time I ask them when do you talk about

money they go when we're fighting or when they talk about it it's like it's these grooves that have been created for 40 years oh every time she goes to Target she spends too much hahaa and I'm like that's not that funny like the running joke between you is that she spends too much at Target sounds like resentment yeah why not it be something different so so that when you talk about money once a month proactively you always start off complimenting your partner you go you know what I really appreciate that when we travel you always

pick the best flights I I have total trust because you always get us there on time and you pick the flights that are so comfortable and I just love you for that that's a great way to reframe how we talk about money but instead we often simply do not talk about it proactively we only talk about it when something is a problem do you think our partner should know how much money we have when you're married probably a little before that as well like I'll tell you what happened with my wife and me so in

my book in chapter nine I talk about how to talk about money and when to talk about money and first of all there's a lot of personal finance experts they're like you should talk about money on date one I'm like have you guys ever been on a first date can you imine who's talking about their asset allocation on the first date I'm like get a life so uh she had had um asked me like years into our relationship some 401K question and I was like read this book learn it it's in there so I knew

all about her money we had talked about her finances and then as we started getting more serious one day she came to me and she said I don't feel comfortable because you know everything about my finances and I don't know anything about yours and that was a a sobering moment because I realized I had violated my own rules in chapter n of talking about money early and proactively why didn't she feel comfortable she didn't feel comfortable because she felt like I knew everything and she didn't know anything about me being in the dark about your

partner and their finances is very uncomfortable you're plan we were planning to get married so what does that mean does he have debt does he not does he have this much money or not does he expect me to pay the exact same amount for this apartment because I don't know if I can afford that there are M what does it mean for children what does it mean for our elderly parents all that stuff this is what money means money is not just a amount in a spreadsheet it's where do we live security security who do

we get to be and you know security is a really good that word haunts me because uh we we I realized to my horror that I had not shared about my finances so we had a series of conversations and as we got engaged uh um we had more we started talking about money a lot and uh I mentioned to my now wife I said it's really important for me that by virtue of me running a business for so long I've accumulated this business these assets and I love you but it's important for me that we

talk about a prenup and I was very very scared I had talked to a lot of friends and I'm sharing this because prenups are another thing that always happen in the dark and I don't want that I want people to shine a light and to understand how these conversations happen cuz nobody talks about this I'm going to talk about it so I was nervous and all the advice online is awful it's like um have the conversation I'm like what conversation what do I say or some people they tell you to blame your lawyer my lawyer

insists that I have a prenup I'm like if I can't be honest to my soon Tobe wife what kind of relationship do we have so that's what I said to her and she responded like awesome she was like wow I didn't expect that I don't know much about prenups but I'd be willing to learn more I said fantastic so we start talking more about it we both get lawyers as you're both required to and it was going pretty well until it didn't and we started really disagreeing about money and we were we're were just like

fighting and she finally said we should go see somebody because this conversation is not going the right direction and and I totally agreed with her so we literally went on Yelp and we searched like therapist near us and we found one right there we went and we sit down and this therapist was great she asked us what does money mean to you and she asked me first so obvious money means growth like I could literally see the compound interest charts in front of my eyes I know about the rule of 72 and expense ratios growth

of course she asked the same question my wife my wife says safety like what that's like somebody saying metal money means metal to me I go huh and it was that that we realized we saw money completely differently completely it explained to me why my wife wanted more money in just sitting in a checking account when I go but that checking account is losing potential interest why would we lower our yield blah blah blah we were looking at it through two totally different lenses so that single question was very helpful in us reframing our conversations

it didn't change everything overnight we still had a lot of conversations we had to have and even once we got married we still have conversations now they're different they're about spending and investing and prioritizing but it was a new way for us to look at the way we related to money where did hels come from childhood like most of ours same for me in fact every time I talk to couples who are now in the seat that I was in I ask them what do you remember about growing up with money and they always tell

me similar things uh my parents never talked about money that's very common or um they said certain phrases like we can't afford it money doesn't grow on trees we don't talk about money in this family etc etc etc imagine you here we can't afford it a 100 times a thousand 10,000 times growing up and you turn 25 35 you start to make decent money but every time you go to buy something you feel guilty and you feel anxious and you feel like I should be saving this money and you can't figure out why because on

paper you make more money if you can't to me on my podcast we would trace it back and you might realize it is something as simple and Vivid as sitting around the dinner table and hearing mom or dad saying we can't afford it our childhood sticks with us and we can change but is so important for us to acknowledge that it sticks with us if I approach my partner and I say I want to get a prenup and they say what you don't trust me yeah and they say no uh what do you do is

that the question well I I would say first of all I wouldn't start off like that I think there's that that is one of the most important conversations you're ever going to have in your life and the subsequent conversations so take it seriously you show up and you explain it I explain it perfectly and they turn around and say that and they say no they say you don't trust me uh no okay that's a contingency you might have to plan for so you might say okay can you tell me why tell me what's going through

your head I want to understand your perspective this is a conversation it's not a dictate trust you didn't trust me yeah would you marry that person I would have a lot more conversations I can't say yes or no because you can't judge someone based on their reaction in a situation they've never been in how am I going to react if I got in a car accident and I start crying can you judge me my entire life based on that no but let's say that we extend it and and you and I are in a relationship

and I ask you I it's important for me by virtue of this and that and you go I don't you don't trust me if you are unwilling to even discuss it if you're unwilling to talk to friends to talk to lawyers to talk to people you can find on your own or I can introduce you to then I think we have a bigger disagreement about values and you know the way that most of us think about a prenup is it's usually some rich uh telling someone who has way less money like sign this paper or

it's over and again that's Hollywood prenup which I learned is all about if the marriage ends what you had before or any agreed upon assets stay with that person so if you have a business and your partner and you get married there's no prenup and for whatever reason God forbid you separate suddenly that business business might be at risk the portfolio that you accumulated before you ever met your partner might go to them and that when you explain it that way most people go oh that doesn't really seem fair but the money that you accumulate

together as married Partners yeah there definitely should be an agreed upon that money needs to be split Etc and no person especially the partner who earns less should be left out in the cold ever do do you notice any differences when you speak to these couples or on your podcast um in gender differences as it relates to people's relationship with money CU I read a lot of stuff about men being more prone to gambling addiction and gambling generally yeah yeah I think there are a lot of differences I think gender is one of the axes

that people differentiate on um I see typically more aggressive investing from men I typically if I see a gender difference in investing differences it would be much more conservative with women I might see um words like Safety and Security used more commonly by women um but I think there are also other axes uh socioeconomic class is a huge one that we talk about and that's something that's very uh under the covers particularly in America but we talk about it Point Blank if somebody tells me I've been poor before and I can be poor again doesn't

bother me I can tell you how they were raised I can tell you probably to some geographic area in fact um if they tell me um my parents said be seen and not heard that tells me a lot about someone in their financial behavior so they're different axes that you see different behaviors on this is the best product that hu have released in recent times many of you will think of alternatives to this but I I've tried those Alternatives and none of them are as tasty as hu's Daily Greens it was out of stock because

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love I'd love I'd love to know when you look at really successful rich people that are living their rich life that might be billionaires millionaires or just living their rich life what are the unobvious things the the character traits the the philosophies towards life that you see whether it's I don't know confidence whatever that means whether it's patience what are those like character traits they're really good at multiple things like really good when I was at Stanford my first year there was a Nobel laurate professor and the professor next to him was making a joke

but it wasn't really a joke and he said you know you'll hear stories about a person being an amazing chemistry professor but they're just a disaster at home Etc but not him he's a Nobel laurate I think it was in chemistry he's at the topest field in chemistry and by the way he's published papers in music and he's an accomplished father that was the first time that I had been exposed to the idea that you can be absolutely amazing in multiple domains because it's a comforting story we tell us that oh this person's really good

at this but they're probably a disaster in everything else what I find is that the people who are really good at something they're actually good at a lot of things they take those skills and they transfer them they show up on time they prepare even though they didn't need to look at all the preparation you've done that's cool you didn't need to but you did it and they're probably good socially skilled there's a lot of things they're really good at so for me that is inspirational because it means that I have a lot I can

work on flip that Coen then on the other side people that you would bet on give me three character traits of people that you would bet on never living their rich life in terms of character traits uh number one they they're surrounded by people who uh keep them down versus build them up so that would be phrases like um why do you need to do that um that's weird don't get too big for your britches okay number two um impulsive they make decisions based on what's in front of them vers versus stepping back and looking

at the entire chessboard and having a longterm perspective and if I were to ask them tell me two things in your life that you do with a long-term perspective they would probably struggle to answer it whereas a long-term thinker would be like oh my God I could talk about this for four hours investing parenting travel uh what I wear on my feet and on on on health perfect um and three no personal vision of a rich life so if I ask them what is your rich life they go I want to do what I want

when I want I go yeah yeah what uh I want you know I want the house and I want the car and I go okay what type of car like a Ferrari okay like how come a Ferrari oh it's just cool like a red Ferrari like no personal connection to it if they were to say I want a Ferrari because uh you know my uncle once had a Ferrari and I saw the race in Italy and blah blah blah I go wow but if it's just things objects driving without a satav yeah yeah super interesting

I wish ID had this conversation when I was 18 I'd certainly be in a much different position now I think about if i' if I'd been even more Savvy with my money and I'd had it compounding sooner in my life my life would be would be a lot different I actually I Ponder and that's why there was such a pause there whether it would be happier cuz I I don't even I don't even know well your story brought you here what you did and look I wish I had started squatting when I was 14 years

old I didn't know what a squat was yeah and so we all deal we play the cards we're dealt with and then we make the best with what we've got and I never want anyone to feel like it's too late there's always something you can do honestly your life has turned out obviously very fantastic but I love that you grapple with these questions just like anybody we all wonder is it too late what if ID started five years ago of course we can't do anything about that we have a closing tradition on this podcast where

the last guest leaves a question for the next guest and the question that's been left for you you without knowing who they're leaving it for is oh okay what is other people's biggest misconception of you I think the biggest misconception is that I have a very specific way of telling you what your rich life is but that's not true uh that comes across because people often interpret what I say about buying a house that I'm telling you don't buy a house not true I'm going to buy a house one day myself what I what I

crave is encouraging someone to build their rich life with intentionality don't do it like me my rich life is mine your rich life is never going to look like mine nor should it the misconceptions that I'm telling you follow this exact formula and you will be rich no follow this formula and you will have a lot of money but building a rich life takes your unique creativity and only you can do that do you see that as a piece of work that we all need to do like the kind of the exercise that you ran

me through there do you think that everybody needs to um do that initial piece of work to sketch out what otherwise what are we working for you're saving money blindly that's what the whole Journal is about you've got to know down to the intimate detail what is my perfect Saturday what do I not want to do I I guarantee you when I ask people what their perfect week looks like 0% say I want to spend 3 hours doing laundry I go great can we use money to solve that problem easy Luggage in the airport can

we use money to solve that problem done we never have to think about it again so we've got to design our rich life it doesn't just happen to us nobody trips and falls and lives a rich life it is intentional and it is ongoing work and in my opinion is one of the most important pieces of work that we can ever do and that's you're right exactly what this journal does I will teach you to be rich journal and throughout this journal you kind of hold people's hand through those exercises but Solo or you do

it with a partner and you get to dream about money most of us feel so nervous and rigid and scarce about money we feel ashamed this has almost no numbers it's all about what does your rich life look like and if anything you finish this and you dreaming bigger not smaller when I look at this journal as I go through it there's there's a real emphasis here on just heightening people's turning the lights on in terms of what money is but really heightening their their self-awareness about their relationship with money as well mhm um which

seems to be the foundation of getting good at money and your other book I will teach you to be rich which is the second edition of this book the first one came out I believe in 2009 just after the financial crash which is perfect timing um this one came out in 2019 so this is an updated version of the book I mean millions and millions of people have bought this book the nuts and bolts of money if you don't know how to get started investing if you have debt and you're not sure what to do

if you even have questions about uh should I buy whole life insurance the answer is no uh should I um buy or lease a car it's all in there no guilt no excuses no BS just a six- week program that works you're referred to as the new Finance Guru and I think you know we do need new Finance gurus because there's not enough financial literacy from the very start of Our Lives as you saw from my story well I just just my relationship with money was catastrophic and I could be in a much I'm very

aware that I could be in a much different position because of those mistakes I made and mishaps and my early relationship with money so people do need to start getting educated with their money because as I said at the start of this conversation it is about living your rich life and that is a subjective thing for me it was having the freedom of choice broadly across every facet of my life about where I spend my time and and who I spend it with um but it is the foundation of that freedom of choice and that's

what your book and your work does so brilliantly and articulately it gives us the the path to freedom of choice and we get to choose what our rich life looks like so thank you so much for your time thank you for being an inspiration and being a loud voice in the conversation around money I know so many of the people listening to this podcast are completely in the dark about money and so having these kind of conversations and having the Practical road map to how we can improve our relationship so we can unlock the future

we want is um incredibly important now and I'm sure it will remain incredibly important in the future because there's going to be a lot of influencers like Instagram and Tik Tok that are trying to tell us a story about money and aspirations and what we should be aiming at that are unhelpful and counter privative to our happiness so thank you R thanks for having me [Music]