9 Surprising Lessons That Made Me a Multi-Millionaire

for the last 20 years I've been helping people take control of their money and if there's one thing I've learned it is that we love to lie to ourselves about money we tell ourselves I just need to keep a budget or I don't know how to invest that feels like gambling to me when ultimately if we got really honest with ourselves we would admit that like anybody else we are Guided by our emotions and by our money psychology there's nothing wrong with being emotional about money but what I want to teach you today are nine

counter intuitive lessons that I have learned which are going to help you take control of your money the first lesson is a big one being Frugal can actually cost you did you know that you can actually save too much money when I say this to people they look completely puzzled but it's actually true ask yourself this do you really want to end up 80 years old with a million 2 million $5 million in the bank yet no skills to actually know how to spend it well I'm going to let you in on a little secret

if you spend your entire life being restrictive about money worrying about money and thinking that ooh once I have xll in the bank then I'll finally be okay you will never be okay I've talked with millionaires on my podcast even multi-millionaires who cannot bring themselves to spend their money and this is something that is not really talked about because most of the media focuses on how bad things are even when an economy is extremely strong like it is right now let me tell you my philosophy on money I believe it's a tragedy to live a

smaller life than you have to if you have money you can use it on the things you truly love and that's what I want you to do use your money to live a rich life today and an even richer life tomorrow the key here is to figure out what enough is now a lot of people have a random number they pick they say a million I go where'd you get that from I don't know uh 3 million what does that mean I don't know it just feels good no first off if you're going to pick

a number pick a number and then add 15% okay that's cuz you're going to forget about a bunch of expenses you need but the truth is that enough is rarely a number sure you need to have enough so that you can take care of yourself and your family sure you need to make sure that you can live off a certain percentage of it maybe three to four% you need to factor in Social Security all that stuff but most people don't actually do this they camouflage anxiety by saying I need a number once they hit that

number they still worry they still feel anxious it doesn't change a thing so more important is to make sure that you are saving at least 10% a month investing 10% a month at least your fixed costs are below 50 to 60% and you're using the rest of your money for guilt-free spending if you're doing these things you can start to live that rich life today and know that you will be able to live a richer life tomorrow in other words make sure that you are exercising your spending muscle not just your saving muscle and that

brings me to the second lesson spending more sometimes can actually save you more now this sounds crazy but hear me out one of the best uses of money is to buy back your time now a lot of people conceptually agree with me yeah that sounds so good I want to use my money buy back my time and then I go Okay cool so how have you done it oh I I couldn't I couldn't pay somebody to go get my groceries for me they don't know the exact type of cash shoes that I like oh hiring

somebody to do my laundry no they don't know how to fold my underwear like I do I like threefolds not two what the hell are you talking about but when it comes down to actually spending money to buy back our time I've discovered that most of us like the idea of buying back our time more than actually buying back our time I'm going to share some ways from my own life that I actually use money to buy back time for example I get pre-made freshh food delivered right to our home when I travel I don't

sort by price I sort by direct and shortest time I make sure that there's a car waiting and this is just a little weird thing for me but I hate filling out paperwork when I go to the doctor or dentist so I have an assistant fill out the paperwork for me ahead of time I walk in get the treatment leave it gives me a ton of joy and there are lots of things that other people do they hire a personal trainer they hire a nanny they have a bookkeeper accountant they get a cleaner to come

to their house once a week or once every two weeks they have online grocery ordering they have a personal assistant go through their email or they hire a home organizer to calm their house down what's the point the point is that you can do these things yourself if you truly enjoy grocery shopping fantastic if you can't afford to have somebody come and clean your house once every month okay then that's not in your spending plan I totally respect that on the other hand if you ask yourself what is my rich life would doing laundry fit

in there if not then maybe it's time to take a look at where you are spending your money and redirect it to get rid of some of the things you don't like and what this can free you up to do is it can free you up first to just enjoy life you can literally sit on the couch read a book watch TV you don't always have to be productive you can also use that time to earn more if you choose to you can take one of the programs we have at I will teach you to

be rich to start a business you could negotiate a salary increase land a better job whatever the real question here is what is my rich life is it actually doing laundry four times a week or do I want to spend my time doing more productive more enjoyable things that are actually a part of my rich life now let's talk about a lesson that seems controversial sometimes lesson number three renting can actually be a better financial decision than buying sometimes now people get furious when I simply suggest that for the biggest purchase of your life you

should actually actually run a buy versus rent calculator it seems kind of obvious to me if I'm going to drop hundreds of thousands of dollars or more maybe I should type in a few numbers and calculate it I don't know is that crazy I guess it is because in America real estate is religion in fact we have all these fun little phrases don't throw money away on rent weird they don't say that about eating out at a restaurant don't pay your landlord's mortgage uh that's weird do you say that when you go out don't pay

the Sushi owner mortgage no and we even have people saying hey why would I rent there's a two-bedroom house for $600 to rent or next door I can buy it for $1,600 same two-bedroom type of unit I should build equity I go okay I like Equity but did you factor in a 30 to 50% increase in costs for owning you need to factor that in when you calculate the opportunity cost of your down payment the ongoing maintenance which you will pay as a homeowner but as a renter you simply pay what the market Bears also

transaction costs of buying and selling there's so many other factors personally I basically add 50% onto the price of a mortgage to account for these Phantom cost that's just a back of the napkin calculation you need to do your own because nobody does this instead they just write me angry comments and tell me that I'm an outof touch person even though I'm the one running the freaking numbers most people don't actually realize the true expense of owning until it's too late candidly most people don't really want to know they want to buy for 500,000 then

20 years later they want to sell for $800,000 and then they want to go I made $300,000 of profit it's like dude you actually lost money you just don't realize it remember this rent is the maximum you will pay a mortgage is the minimum you will pay now in some cities it can make Financial sense to rent and to invest the difference this is especially true in High Cost of Living cities although it's becoming increasingly true everywhere right now in my situation I lived in San Francisco New York and La it made no Financial sense

to buy I rented I rented an amazing place and instead of buying I invested the difference because it would have cost way more to own that in turn made me way more money than I would have made by owning now you can do the same thing you can invest the difference between buying and renting you can choose a lowcost index fund and actually make more money sometimes I'm not telling you to buy I'm not telling you to rent I'm simply saying please run the numbers to decide if buying or renting is a better financial decision

for you and while we're on the topic of housing the fourth lesson I want to share with you is paying your mortgage ahead of time isn't always the best decision now depending on interest rates you can actually make more money by paying the minimum on your mortgage and investing the rest but I got to tell you this is where money psychology really comes into play because some people just hate debt they see any type of debt they go I hate it I want to pay it off I go um have you actually calculated that if

you pay it off early you're actually going to lose like $280,000 and they just they physically do not hear me they go whatever I hate debt for people who truly hate debt even if you point out the math they don't care they just want to be rid of the debt and I used to argue with look at this spreadsheet have you ever looked at the amortization this is where math and psychology intersect in a fascinating and beautiful way it might seem irrational for somebody to want to pay off a lowest mortgage it might seem emotional

for them to say I don't care about the math I just want to be debt-free but the truth is we all make irrational decisions with our money we all are emotional with money being emotional is part of being human and money is deeply emotional so while it's true that if you have a lowest mortgage like say 2.5 or 3% mathematically speaking you should pay the minimum on it and invest the difference I'm okay if somebody calculates it they look at the numbers and they go you know what I can see that it's going to cost

me a lot of money but I just want to be debt free it's okay to make decisions that differ from the spreadsheet as long as you understand what the numbers are the fifth lesson I really want you to hear a financial adviser can actually cost you hundreds of thousands of dollars without you even knowing it if any of you out there are paying a percentage to a financial adviser please pay close attention a lot of times if you're paying a financial advisor you're not even really sure how much you're paying I recommend you text them

or email him right now and ask them hey what's our fee structure how much am I paying you if they give you anything other than an hourly or per project fee it's probably a percentage typically 1% now if you don't think 1% sounds like much let me show you some surprising math that 1% fee can cost you 28% of your lifetime returns for many people that's hundreds of thousands of dollars let's say you're 30 years old and you invest $50,000 and you contribute another $1,000 a month the numbers are sort of irrelevant just look at

the percentages in 35 years with a low 2% management fee assuming a 7% return you'd have just over $2 million those are conservative assumptions by the way but if you pay a financial advisor 1% instead of having 2 million in your pocket you'd only have 1.7 million that's almost $400,000 going into your advisor's pockets in fees by the way if you pay 2% that's over $750,000 in fees there's some very important things I want to emphasize here first off I have no problem if you choose to hire a financial adviser I've actually hired an adviser

myself to look over my asset allocation and give me some specific feedback but I paid an hourly fee just like when I hire a personal trainer a highly credentialed personal trainer who gives me specific personalized feedback and they charge me an hourly fee I don't even mind if it's a high hourly fee but they would never charge me a percentage of my portfolio so why should you pay the same thing for a financial adviser now there are a variety of other questions the people in the financial industry are obsessed discussing the differences between a flat

fee and commission-based and fiduciary there's a lot of stuff you want your financial adviser to be a fiduciary yes that means they're looking out for your best interest but also you do not want to be paying hundreds of thousands of dollars in fees particularly because a lot of people can do this on their own but if you choose to hire one go ahead and pay an hour hourly or per project fee now you can learn about the basics of personal finance in chapters 6 and seven of my book I will teach you to be rich

and as I discuss in there you'll also want to look out for the fees that you are paying for your Investments sometimes people have invested in fees that have a funds B funds they have front-end loads backend loads they have high expense ratios these are all terms that secretly charge you tons of money what I do with my money is invest in lowcost index funds at places like Vanguard Fidelity Schwab all those places are great now if you ever want an expert to look over your numbers fine go ahead hire a financial adviser just make

sure they charge a flat fee or an hourly fee never a percentage of your assets by the way if you're looking for someone who charges a flat fee I recommend you check out facet who I'm excited to partner with for this video with facet you can get your own cfp professional to work with and a team of financial experts across Investments taxes benefits and more and importantly it's all done through a flat fee membership not a percentage of your portfolio I'd recommend you check them out especially because facet is giving my subscribers an exclusive offer

they'll wave the $250 enrollment fee for new annual members and they'll give you $500 in your brokerage account when you invest $5,000 within your first 90 days head over to facet.gov follow your passion and you'll never have to work a day in your life well I freaking wish that was true because I love spicy food and I once considered teaching a class called RIT 60 days to habanero unfortunately there's just one problem not one person in America wants to pay to learn how to eat spicy food a lot of you think black pepper is spicy

and for those people all I want to say is please unsubscribe from my channel just unfollow if you think black pepper or a little jalapeno is spicy we don't have anything in common we can't be friends the point here besides the fact that your parents really did you wrong when you were a child never teaching you how to eat anything more than Pepper the what is the point what am I even doing on this video right now here's the point passion alone does not make you money I'll give you another example I love to iron

okay I really do I'm not joking I love ironing my shirts I could pay someone to do it but it's very leisurely calming for me so I iron my own clothes nobody wants to pay to learn how to iron half of America doesn't even own an iron it's revolting I see these wrinkles people going on TV I'm like look at that wrinkle what the hell is going on meanwhile I have my own list of rules for ironing iron so crisply that if your face touches the crease it will cut your face forever you think that's

weird I thought that's totally normal but just because I'm passionate about ironing doesn't mean that people want to pay me for it and on honestly what a relief if you have a passion whether it be decorating cakes ironing clothes mountain biking grooming your dog great if you want to turn that passion into a business you might be able to but you don't have to because when you start a business trying to earn more money passion is just one part of it in fact one of the ways to look at this is that if you start

getting good at something you will often become passionate about it I'm sharing this because so many of us are paralyzed for years sometimes decades trying to find our passion but I think a much better way to approach it is to take a look at the things you enjoy the things you're good at the things other people will pay for and then start to get really good at serving other people if you do that you will become passionate if you're interested in taking some of the skills you already have and turning that into a profitable business

click the link in the description I'll help you find your first profitable business idea for free now that I've shown you that passion alone does not equal wealth let's move on to the seventh lesson money can make you happier yes it's true and personally I don't want to have to skip 12,000 coffees so that 25,000 years from now I can finally start living my life ooh cool I finally have some money in the bank I'm 93 years old what should I do today it's like what is that really the kind of life you want to

live every single day you wake up and you you put on your glasses like this you go what am I going to say no to today what kind of life is that why not have a different approach why not say yes I need to hit four numbers my fixed cost my savings my investments and my guilt-free spending and once I'm hitting those I can go out and enjoy myself you can use my concept of money dials to decide where you want to spend your money on a money dial is just an area of your life

where you love to spend money on you can even turn that dial up here are 10 common money dial that I see eating out is the most common Travel Health and Wellness convenience that's my favorite experiences Freedom relationships generosity social status and self-improvement by the way no one ever admits to wanting social status they're like status that's so stupid so vapid who would ever do that they say that while they are using an iPhone driving an F450 and uh their partner has a uh beautiful Chanel bag they're like status so stupid here's the deal look

at your own spending what area of your life does your spending get you excited about and don't apologize for it it could be spending more time with your family it could be traveling it could be time working on your hobbies I'll give you an example from my life I like to wake up open the fridge and food is there it's healthy it's portioned it's all ready to go I love it I'm not going to apologize for it I love staying at absolutely beautiful hotels I love that it inspires me I love the attention to detail

and the hospitality once you've identified your money dials then you get to have a really fun set of conversations around what it would look like to turn those money dials up now maybe you can turn it up today or maybe you need to set a savings goal so you can turn it up later but what a fun way to look at money to dream and say what if we could turn up our spending on the things we love as long as we cut cost mercilessly on the things we don't all right I have two more

lessons left to share but before we get to those if you're not already subscribed go ahead and click subscribe for me real quick so I can keep sending you these videos on money psychology now on to lesson number eight never make an expensive purchase based on the monthly cost I have talked to so many couples on my podcast who decided they could afford a house or a car based simply on the monthly payments and the Frank truth is that that is how most people make their purchase decisions and companies love it when you do this

because you don't realize that the monthly payment can be be adjusted to be anything if something costs $50,000 I can make your monthly payment be $10 a month you'll just be paying it for decades and what's even worse is that low monthly payments can make it seem like you can afford something when in actuality you cannot this is why so many people feel that they are living modestly but they can't figure out where all their money's going typically they have made bad purchase decisions a long time ago because they only looked at the monthly cost

here's what you do instead when you are making an expensive purchase like a house or a car you need to stop looking at monthly costs and instead look at total cost of ownership or TCO for example what you pay for your housing is not just the monthly payment it's got to include taxes utilities maintenance including that roof repair 10 years from now and the transaction cost of when you buy and sell that house all of it needs to be factored in otherwise you will be hit by surprise surprise after surprise and you'll be playing defense

for the next 15 years when you're buying a car you need to factor in all the costs not just the monthly payment but the gas the parking the parking tickets insurance and registration all of it for example when I got my first car my monthly payment was $350 but when I factored everything in it actually cost me over ,000 a month that is why you never make an expensive purchase based simply on the monthly cost and that brings me to my last lesson lesson number nine managing money does not just mean tracking everything I talked

to so many people they genuinely believe that having a spreadsheet with 80 tabs and 500 rows is going to make them feel like they're in control but it's not what they're really doing is playing small they're focusing on all the wrong things trying to cut back $5 here and $10 there and deep down they believe believe that tracking expenses is the same as managing money it's not managing money is picking high value things to focus on that would be things like what is our savings rate is it 5% can we get it to 6.5% this

year Investments what's our investment rate oh it's 8% okay could we get it to 9% by the way what is our asset allocation that's high value in order to do this you've got to fight for Simplicity in your finances and what I mean by that is really try to keep your finances simple typically no more than two credit cards one checking account a few different savings accounts that are named like vacation down payment Etc and then move on with your day complexity is not your friend but Simplicity is all right I hope this video gets

you to start questioning the typical money advice you hear and helps you on your path to creating a rich life now check out this video to watch more