5 Best Solutions to the Top 5 Money Problems!

five best solutions to the biggest money problems you face it's brian preston the money guy brian i am super excited about this show because one of the things that you and i love getting to do is we love getting to solve problems all the times we meet with clients or have listeners write in or just out in the community socializing with friends someone will present a problem and one of the things we love being able to do is lean into the problem say hey you know you've got this problem here are some ways you ought to think about attacking that here are some ways you should think about improving your circumstance and that's really what we're going to talk about today the five biggest money problems that we see and that you guys have told us you have and what are some solutions how do you address those how do you attack those yeah we we kind of tasked daniel we said daniel go do some some research out there on what people historically have said are their biggest issues financially and then um reeby while we were in the middle of a content meeting i was kind of shocked at how fast she was able to do it she took daniel's research put a poll out there to you guys to let our financial mutants kind of have some input and we got 14 000 answers uh on these top five items kind of putting them in order of how you you know priority of where you guys are on on facing these issues and so what this is what we've found in our poll and by the way if you're not someone had a chance to take part in the poll but you're here in the live stream go ahead and throw out uh what you would say is your top money problem that you face and here were the categories we gave you is it overspending having a hard time keeping the budget in the lines is it a high cost of living maybe you live on one of the coasts and it's expensive to do the things that you want to do on a day to day basis not having enough save for retirement not making enough money don't have a high enough income or buying into limited beliefs about money these are sort of the five biggest money problems that we see out there we want to kind of go through each one and how a financial mutant should think about it and how a financial mutant can go about attacking each of these problems to make them not a problem so well i know we have a lot of podcast listeners too you know i was if you take these in biggest to smallest and then we'll we'll attack these in reverse order when we go deeper do a deeper dive i was kind of surprised that the number one concern and i get this because i think they're all kind of interconnected in some way as not making enough money was the number one concern yep according to our to our financial mutants and then right after that was the overspending um and then we followed that with high cost of living and then we dropped down to not having enough save for retirement then the last one which you know this one is probably under reported because i think it's more of a blind spot that people don't even realize is just buying into those limiting beliefs i've shared my own stories of growing up in a household where i didn't think people you know wealthy people pay taxes that you know had to be you know your parents had to have money for you to have opportunity i i bought into a lot of that stuff so we want to kind of help you work through some of those limiting beliefs and so that's that's the first one we're going to go through let's dive right into that and i think as we're trying to come up you know because limiting beliefs is not a uh an idea that folks are common it's not language that a lot of folks know so we try to think about what would be something more all-enveloping that would capture what the problem is and we said it's really the public thinking the average person thinking hey i can't be rich it's not for me it's not in the cards for me and we would argue that that in itself is a limiting belief well so much of getting started you know whether you're talking about the concepts of deferred gratification you know all the wealth creation steps of putting money to work outside so you don't have to work with your back your hands your brain there needs to be behavioral component on that we've heard that so many times that a lot of this is driven by behavior so if you personally don't believe that you have this opportunity you're not even making it out of the gates and that's something that we we want to make sure that you can kind of understand what is the voice in your head because if you ever go to any type of counseling that's the first thing they're going to say whether you're talking to a significant other or your financial output is what are you telling yourself while you're taking a shower when you're having that voice come on in your head what is that voice actually telling you that will drive a lot of where you actually fall in choices you know opportunities and then how you feel about life in general yeah you know brian we've been doing the show for long enough now we've been working with clients for long enough and we've just been in the industry long enough that we wanted to talk about some of the limiting beliefs that we often hear be thrown out specifically as it relates to wealth building and here just a few that we came up with this first one the stock market is like gambling oh yeah we hear that i hear that all the time it's people thinking that oh well it's not something it's just luck it's luck of the draw you know maybe i'll make some money maybe i'll lose some money i would argue that's a limiting belief because people don't aren't truly educated on how the financial markets truly work i mean we'll talk about a little later i grew up in a house where our only investment was cds yep because my dad had this horrible experience share of somebody cold calling him and selling him a stock that was inappropriate for him and that one decision to take that one you know day trading or cold call changed his whole outlook on how investing works and he did equate it to gambling so that was a limiting belief for my household and had huge financial ramifications how about this one this is one that i grew up with uh investing is rigged for the wealthy yeah you can make a lot of money uh investing but you gotta have the right last name you gotta already be in the game uh it's a mechanism for wealthy folks to become wealthier that is the thing probably the biggest limited belief i grew up with that as i got a begin began to get a financial education they kind of flipped everything on its head for me yeah i mean i want you to to use if you come from humble beginnings use that as the energy that drives you because i can tell you most wealthy families are worried their kids are ruined by the exact opposite side of this so so pay attention to um harnessing that energy of what that you can do better because we're going to show you in a minute the solutions that show you that this there's not a better time to be alive to take advantage of investing now i love because you know in the chat right obviously if you're listening to this live there's this chat going on and some of the things that some of our folks are saying is hey uh yeah but you we're financial mutants a lot of the limiting beliefs you're talking about we don't struggle with we have that under control what about this next one uh it can't go any higher market can't go any higher it's just it's too frothy it's done too well it's made too much oh we're in for a problem yeah it's just a matter of time before it just crashes down and i always think do people think it's going to zero i mean what do they think that is going to happen and so that's that is definitely a limiting belief and you and you kind of said it not only can it not go any higher but it's going to crash any time now that's the next one we're going to see a significant downturn so we said okay let's do a little exercise as it relates to this idea of market seems kind of frothy right so uh i want to show you a picture now if you're out on uh if you're out listening to this an audio if you're listening on itunes or stitch or iheart radio you can't see the screen right now but we have a stock screen and it starts on the left and it shows a market this is the market uh going from left to right and it's going from the bottom left to top right it's kind of walking up a mountain well and here's a good visual i always tell people when you're talking up and you just said it mountain i look at investing for the long term and you can visualize the the prices right and the yodeler that they had where you are walking up this mountain with yoyo meaning that markets every day are going up and down up and down but as you walk higher and higher your elevation is increasing your total portfolio over the long term is going to do better so when you look at the visual of this all my listeners who can't see this out there on youtube is this looks like a mountain even with a few cliffs when we had market downturns because this was a full decade bo what's the rest of the story on this here's the rest of the story you might say well i certainly wouldn't invest at the end of that i wouldn't invest at the top of the mountain well this is just a chart of the s p 500 from 1980 to 1990. so can you imagine if you made the decision in 1990 you know what the market can't go any higher i'm done i'm out it's done all that it can do i'm gonna sit this one out uh that would have been a pretty substantial mistake okay let's look at another one what about this chart now this one is even steeper right this one it doesn't even have the same undulations at least you know in that last decade we saw that there was i think you called it a cliff this one is much more of a steady walk up the mountain without a lot of downturns uh if you're out there would you start investing at the top of this mountain yeah right here this is one that probably would really give you a lot of stress because as both said volatility wasn't as bad here you didn't see some of those those cliffs in between where you go holy cow how are we gonna get over this this is more of a straight up walk up the mountain so i imagine somebody at the tippity top here would be like yeah this thing's due for a crash any point in time i i don't think i want to be an investor and here's the thing this is what it was from 1990 to 2000. so this is the period immediately following the last decade we just looked at so if you were that person who said oh man market's too high market's too frothy it can't go any higher this is the decade that you would have missed out on if you just said i'm done with investing i'm out of this so this is the challenge if you are listening this i'd love for you to come you know document where we are time stamp wise and come back and watch this on youtube because where we're going to go from here is is that we've just taken a a a snapshot from 1980 and we're going to go ahead and blow this out to where you can see it from 1980 all the way to 20 20 did we go all the way out to 2020 and you can see guys those other previous times that we thought all-time highs you would be insane if you invested now looks so tiny that's right in comparison to where we are in 2020 and yet we face the exact same question how do we invest right now when markets are at all time highs you'd have to be crazy so i think if you want to be a successful investor over the long term you have to have an understanding of what this limiting belief is you have to recognize that over the long term more often than not the market is going up and what you hope is that the market does hit new all-time highs and you hope that it continues to hit new all-time highs and you hope that if your timeline is long enough it doesn't matter if the market is at a whole time high right now because if you think it's high right now wait till you see it 10 20 30 40 years from now yeah i mean let's get some basic understanding here markets go up 80 of the time if you'll get it year over year so eight out of ten years markets are going to be making money that's pretty good odds to your favor that you're going to be okay but yet there's a disconnect because if you ask and actually poll the american public and say hey do you think markets will be higher next year the is consistently comes in at 38 to 44 of people are optimistic that means the lion's share the majority like nope you can't go any higher can't go any higher that is completely separated from the reality we live in but that is the world of investing that we have and only 36 percent of americans report being very optimistic about their family's financial future that makes me so sad yeah and that's actually a perfect segue because what's the solution to limiting beliefs how do you begin to attack limiting beliefs our opinion is that you ought to have a positive outlook instead of being in that 38 to 44 percent of americans say you know what i think that next year the market's going to be lower than it is this year b that person says you know what overall the market's up about 80 of the time so i'm going to be in the market and whether it goes up or down in the next year i don't care because again i'm walking up the mountain with my yo-yo getting to higher and higher ground every day i don't want people to think we're tone deaf because it look there's always and we just came out of the well we're still working through this pandemic and there's a lot of just a strange time to it feels like to be alive because you know division there's a lot of divisiveness we have the pandemic we have all these weird things that people are going to see is about are these guys crazy do they not realize that in 2020 2021 the world's different i just want you to know there's constantly and there there are charts we could have thrown in here there's always going to be something negative that could derail you and keep you on the sidelines but my feeling is look there's always going to be negative stuff out there but long term there's a lot to be looking forward to and we'll we'll get to what the the driving factor of that is but i think that part of this whole glass half full is me being an optimist absolutely and what we found is don't just take our no we think it's our opinion hey you should have a positive outlook but you know one of the things that we do every year is we poll our clients that have come from the money guy show and they are the true financial mutants and we just asked millionaire clients hey do you consider yourself to be an optimist and what we found is that 83 percent of millionaires in our study said yeah i think by and large things are better than our worst by and large you know next week will be better than this week things are going to move into a positive direction they are glass half full not glass half empty yeah and this is this kind of gets me to the aha moment for you guys on why it's great to be an optimist is that these are weird times right now but if you think longer term remember whenever we're talking about money decisions investment decisions we are talking about five to seven years in the future at least so if you start thinking about what does the world look like 10 years from now 20 years from now 30 years from now guys we're not done i mean i have so much confidence in the human condition to want to continue to expand to continue to grow think about civilizations and how much innovation occurred you know when we go back if you've ever been over to europe and i i can remember the times i've been to venice or i've been to venice once by the way but the one that one the one time i was in venice and and you're on these boats going through the canals and so forth and you see a building that people are living in you know and they're living their best life these buildings were built in like the 1400s and you're like wait a minute this building was built before this our country was even discovered and but that's only one type of development human's condition was to we want to conquer the and grow and be you know and be around the whole world the next part is what has happened with technology and what's interesting if you look at by the centuries every century there was something going on that was pretty exciting but then we have amped that up and that's what you know if you look at what's happened in the the 1900s and now even the first 20 years of the the dec the 2000 the 21st century you can see that we're part of the law of accelerating returns guys this is not slowing down if you think about innovation we picked up in the last 20 years it is so much more than what was accomplished even in the previous 40 years and i got to tell you i think if you look 10 years in the future you're going to see i can't believe the breakneck speed that things are innovating they're changing and you get to buy into a little piece of every part of all that innovation the growing companies people figuring things out making life a little easier you can invest you can actually create wealth off of that and it's not slowing down and so i think you want to be on the right side of that so rather than thinking that the market is like gambling or investing is only for the wealthy have a more realistic view say no i can be part of this i can be part of exactly what has you just described i can take advantage of the fact that things are moving quicker they are building bigger they are moving faster yeah so don't don't buy limiting beliefs also take advantage of some of the great innovations that have occurred in the financial space meaning that index funds are now so easy to get access to and then you can even take index funds to the next level of if you don't know what to do or how to invest or what index funds to buy just go look at index target retirement funds some of the biggest providers are fidelity investments vanguard charles schwab all you have to do is answer two questions how much can i save when do i need the money they'll do the rest and you can focus on that wealth building behavior that you're just going to your future self is going to get sloppy excited happy and you want to give you a big bear hug if you'll just make those steps right now while you're younger all right so now let's talk about the next biggest money problem that people say that they have and this is one unfortunately i feel like we see all the time and it's not having enough saved for retirement people getting advanced in age getting into their 50s 60s and 70s and saying oh wow i am at a point where i need to have something saved up for retirement and i'm i am not where i need to be i think you know it's part of just living in america and maybe this is a worldwide event but you have midlife crisis you know and i think that sometimes a middle life crisis a lot of times is people get to an age their mortality is becomes very relevant and they start realizing what could have been if they just made decisions a little differently well i think that there is also a lot of financial middle life crisis meaning that people will get to and you see go look at our comments section everybody where was this channel when i was in my 20s and even 30s because this would have put me in a completely different situation i think it's very common for people to get in their 40s and go you know what i think i want you know i've i've been working for a few decades now but i've got to figure out where i can get off yeah you know where i can change and quit working so much or i can start enjoying this so like is that the 50s is that the 60s i probably need to start creating a plan and then i think there is this realization that oh my goodness i missed out on some of those key years and that's what that's where i think this risk or this fear or insecurity comes from of not having enough money saved for retirement yeah i think these statistics are interesting 48 of americans 55 and above have nothing saved in a tax advantage retirement account so that's like a 401k or an ira or a roth or something like that but here's what's interesting only 19 of america's americans age 55 and over report having no retirement savings so what they say is hey you know oh yeah i've not been doing the 401k and i've not been doing the raw fire but no no i've got i've got something safer i got my savings account i've got this account built up and so the question that we have is where's this disconnect people say they've got something saved but they know that they don't have what they need to be saved where is the disconnect what's not connecting and this is what we think it is people don't have a good understanding of how much they need for retirement and they don't figure it out early enough yeah i think there's two early components of this first of all it's this whole deferred gratification we'll go much deeper in that but it's why save for tomorrow when you can when you're younger you have a lot of time hey yolo you only live once i want to i want to make sure that i don't miss out on these decades and so i'm going to need to spend every bit of half because this is not my peak earning years so i'm going to go out there and make sure that i'm living my best life in these decades i think that's the first part of it but then this is so a lot of people will just go through a decade or two because time moves i'm just telling you it will happen to you like how have i been working for two plus decades you know i'm getting close to three plus decades and it's just you know you like i don't feel i still feel like a 17 year old that's you know about to go to college but no that's not the truth your your age your experience reveals something completely different don't let that happen to you a lot of people don't even start the behavior but then worse i think what happens is is that it's like you said bo people might have started something meaning they became eligible for a 401k and they said well the employer does 50 cents on the dollar for the first six percent they do a hundred percent for the first three percent so they do three percent if they have to do that i'm gonna do that they set it they forget it and they're like oh check that box i think it's we're all done with the retirement savings because you know i'm maxing out what the employer told me to and then they get in their 40s and they look at their 401k and they're like wait a minute this is this is good i mean i'm happy that it's six figures but am i gonna be able to live off of this and i think that is the aha moment that you probably need to begin with the end in mind as soon as possible and beau has some details on this yeah i think just understanding some very simple numbers is helpful so let's assume that we're going to go to the 5 withdrawal rate for someone retiring at age 65 so a full retirement 5 withdrawal rate well if you have a 100 000 portfolio built up that can really generate if we're going to have a portfolio that's gonna last in perpetuity about five thousand dollars a year in annual income that's five thousand a month right no no no five thousand a year in annual income if your goal is to not get into the corpus getting the principal i mean we've done episodes where i've talked about like hulu youtube tv i mean this barely covers your your streaming service that's right and now now don't just be so disheartening because obviously our goal is not to never bite into the principle but depending on how long you want to live it's a great idea to have a withdrawal rate that can allow you to weather the storm so then a two hundred and fifty thousand dollar portfolio would generate for you twelve thousand five hundred dollars in annual income a year a year a five 500 000 portfolio could generate for you about 25 000 in annual income and then if you have a million dollar portfolio that will generate for you about 50 000 of annual income what i worry about is that a lot of folks they get in that situation where they say you know what i'm gonna save the three percent or six percent in my 401k and it's just going to build and build a build and maybe that account gets to six figures and you're like that's awesome i've never made six figures in my entire life but i've got that money sitting there i think that most people don't realize what that money has to do for you for the rest of your life because if you start early it's not difficult to build to these large sums even to seven figure sums and then that coupled with other sources of income like social security you can have a very decent standard of living in retirement but you got to figure that out early if you're just now that age 55 plus person recognizing that man it's some hard work from now until retirement so let's talk about how we hedge this or how do we how do we absorb this and and really it's time you know we've told you guys the three main ingredients to wealth creation is the discipline meaning the deferred gratification to live on less than what you make putting that margin that is saved to work through money invested that's the second component and then the third is time and truthfully time is the most valuable you can't buy time you know it's just time is the secret ingredient to creating wealth building and this is an illustration that will show you just how powerful that is so what we said is what happens if we invest 500 a month over different lengths of time and we just came up 500 a month because that's just max maxing out a roth ira for someone under 50. well if you do that for five years at the end of that five years about 18 of your portfolio value is growth so what's that 82 percent of money you put in 18 of that is growth that it's done so that's exciting but it's not life-changing it's not my well it's not affirming from a behavioral standpoint i think that's the biggest part that people get frustrated because it doesn't matter when you start if you start in your 20s you start in your 30s or even your 40s after you say you just discovered the money guy show and you heard us talk about investing in target index you know funds you get to work five years in the future you'll look at your portfolio and be like yeah this was exciting but guys most of this money in this account is what i put in there where's all this you know army of dollar bills because right now i'm seeing me putting a lot of money to work you know less than 20 of that money is actually growth that is the look i'm telling you this is why you need to prepare yourself sharpen up your blood get your shield of protection and understanding no you do need to love knowledge because this is knowledge to know you've just begun the journey this is not that first five years is just laying some foundational work because it doesn't even get exciting i don't want this to sound negative but look at what happens at 10 years now 34 of the total account value is growth but it's still less than half you're like i've been at this for a decade now and those turkeys on the money guy show told me my army of dollar bills were going to start doing something incredible you're still planning the foundation the magic of compounding growth is time and this is where we're about to start seeing the big dividends look at 20 years 59 and i think this is exciting because you you said brian in your 40s there's a financial i think you talk about a financial midlife crisis right well imagine how much more exciting you say okay for the last 20 years i've been doing this hard work and i've been putting this money to work for me and wow now almost 60 percent of what i have is not the money that i had to put in not the money that i had to walk away from 60 of that is my army of dollar bills growing upon itself i think that starts to get really really well yeah i mean because this is now 60 close to 60 of your total account value is the growth side of it and you're going this is the part where this is the aha moment if you go look at our comments section and i'm telling you as a person who's been investing now close to three decades you're like yeah this is what i'm talking about is because now i can actually start to see that i've created wealth and 30 years into this you're going to see 70 76 of your account value is actual the growth not what you put in that's only 24 of what the account's worth then you take that out to a full 40-year investment 86 of your investment is going to be the time that it was worked and the growth that was created in that time you're only going to be 14 of that that actual investment this is but that's hard to see when you're that 20-something of that 30-something who starts the first investment because five years into it you're gonna be like where is it this is not the the critical mass this is not that where this money's replacing my wages where is what those that magical thing these guys are talking about consistency and time are going to be your friends stay the course i don't care what's going on out there in the world around you keep buying stay consistent you will be rewarded and it's back to that sloppy excitement that your future self will just come to you running up with tears and hug you and be like thank you thank you thank you for not you know spending crazy on those vacations or doing weird things in your 20s and 30s that we didn't invest for the future because now i'm living my best life ever just because you took a little bit just a little bit of today for that great big beautiful tomorrow now here here's the thing that you have to do right so in order to have after a 40-year working career in order to have 86 of your portfolio be growth it has to be invested it has to be put out there to be working for you i think that's another common disconnect that we see with americans and this is one that's really really sad because all the time we will come across folks who've done the absolute hardest part you said the hardest part is the discipline to put aside that little bit of money and maybe they even had enough time to do it and they did it for a long time they'd save x percent of their paycheck but they never understood you know what i can actually put my army of dollar bills to work for me instead of having them just sit dormant in my savings account yeah i've shared this before this is an experience share of my own life and the fact that my parents money wasn't wasted i grew up with with parents that didn't make a lot of money but man they did not waste that money sure the problem is is that that previous slide that showed how powerful your money was over the long term my parents idea of an investment was cds you know really the savings accounts cds if they had a little extra that they were thinking long term with and and the problem with that is it just doesn't ever allow your money to get the true benefit of compounding growth meanwhile my father-in-law also very good my both my father and my mother-in-law were good with saving money but they put it into the fidelity magellan fund back when the fidelity magellan fund was rocking and rolling i mean peter lynch was just defying gravity and the fact that his at the accounts kept going up and up and up so we wanted to show and that's why i tell you the experience here because you guys when we show you the chart we're going to show you from 1985 all the way to 2000. if you if you think about that 15-year period the reason we chose that window is because that is my parents and that is my father-in-law and my mother-in-law but i want you to see how the exact same dollar amount invested has a completely different answer at the end i mean a huge difference and all it is is that incremental decision of one chose to stay in cash and cds and play it safe the other decide to let their army of dollar bills work and i'm telling you the rest of the story will blow your mind yeah if you took those two individuals and they both started in 1985 with 50 thousand dollars the person investing just in one-year cds getting the interest rate rolling it through getting this rate rolling it through uh at the end of this 15-year period would have about a hundred and eighteen thousand dollars so yes their money did double that fifty thousand dollars turned into a hundred eighteen thousand however that person that understood the power of investing the power of putting your army of dollar bills to work for you that person's fifty thousand dollars after fifteen years turned into eight 836 000 dollars it is a stark contrast of the person that just put it in the savings account i mean think about it beau used a very i mean he did you guys a favor by using a 5 withdrawal rate instead of the traditional um trendy study four percent safe withdrawal rate but but here's think about a hundred and eighteen thousand five percent i mean that's barely over five thousand dollars a year that you can count on from your portfolio versus that eight hundred and forty thousand dollar portfolio that my father-in-law could create it's a very different i mean that's now we're talking about 40 over plus 40 000 a year you had social security that's a real retirement from a little bit of investment but you man did you really hit the jackpot on letting your army of dollar bills work so make sure you understand the difference between saving money versus investing money because and saving is the most important behavior but you gotta actually put it to work so it can turn into your army of dollars so what's the solution to not having enough save for retirement it's figure it out as early as you can if you start saving early a little goes a long way so maybe you are someone who's up in years but you have influence on children or grandchildren or colleagues at work get this in their minds that if they can start early the path is so much easier we even have another illustration showing if you want to be a millionaire when you turn 65 starting at dead zero how much do you have to save every month well here what's amazing is a 20 year old only has to save 95 a month to be a millionaire by the time that they get to 65 but if they wait until they're 30 it goes up to 270 dollars a month if you wait until you're 40 well then you have to save almost 800 dollars a month and if you don't figure this out if this doesn't start clicking for you until you get to 50 to end up in the same place that your 20 year old self could have ended up in instead of only saving 95 a month you have to do the hard work of saving almost 25 hundred dollars a month to end at the exact same spot this is why if you have that that green eye jealousy thought that man you look at somebody you're in your 20s and you look at your boss who's in their late 30s or 40s amen i wish i had what they had realize you more than likely could have more than they have if you just will start saving and investing because um i have people in the comments section and we've seen it with clients where people who turn a little into a lot just by recognizing time invested is a super powerful component in this whole process all right so let's talk about the next uh big money solution or big money problem that we see over and over uh and this one is a high cost of living this is one um i just had this conversation yesterday got my annual physical and i was talking to somebody at my doctor's office kristin shout out to you because she came up and she was like man i just want to buy my first house and we've seen this with nate and daniel too and i do feel for young people right now who are trying to get their own piece of the the planet essentially by buying their first house because this is a weird time i mean just here in the community i live in people who bought houses in 2019 are now selling houses in my neighborhood for 50 more than they paid two years ago and somehow they're getting multiple offers so a lot of you are like high cost of living is a true risk that i have how do i get into housing you we have used cars which i tell you guys cars are napalm financial napalm to your life because they depreciate and all of you guys are like what are you talking about cars are awesome right now you know this in this crazy world we actually make money off of used vehicles i i want to i do want to give you one thing and and is this too shall pass we're in a very unique time right now i know that that's worth about a nickel and a cup of coffee but i still we're going to give you the actual solutions how to deal with this but i i feel for you and that's why we wanted to kind of address this give you some thoughts but some of this is just going to have to be hang in there and your opportunity will come because just like when we have inflation and other things there does come wage increases or there are behavioral things you can do even if the wage increases don't happen because of inflation there's things you can do to put yourself in a better financial situation i think right now it's easy we all focus on housing because that's what we're all seeing so much it is a white hot market right now but what's interesting is i don't want you to feel like this is isolated to you or your part of our country where you are because the study found that 44 of americans cite the cost of basic living expenses as their biggest financial concern and this is how they broke it down 17 of respondents said that health care costs either now or in the future are their biggest concern 10 percent said that college expenses so i'm curious to know if this is young people saying college expenses or maybe parents talking about college for their kid nine percent of respondents at the cost of owning or renting a home was the thing that gave them a lot of pause and made them lose sleep at night and then eight percent said just overall high cost of living and or inflation the cost of living increasing through time is their biggest concern so this is not isolated this is not something that in one part of the country people are feeling this a lot of folks especially i'm going to say young folks life gets expensive especially when you come you know you're 16 17 18 and all of a sudden you start in your first job and you start in the real real world and you're like man this is this is different than it used to be this is sort of eye-opening i always i think about my 20s the shock and awe moment when you realize how much more expensive adulting is than you you thought and then fast forward and you get into the next decade or next season of your life where you know you're trying to figure out bigger you know housing arrangements because you have a growing family have kids that are expensive that's why we call it the messy middle so i mean it feels like life is a little unbalanced in the fact that while you're you're struggling to make you're not in your peak earning years it seems like you have the most life things pulling at your back pocket between just getting started getting foundational and then you've got the messy middle meanwhile we know every one of those dollars is the most valuable dollars because whatever you invest in your 20s and 30s has got a an exponential multiplier on that you'll never get that opportunity again so we think how do you navigate this is you just need to kind of understand guidelines or have a plan create a plan don't just float through life we have created and we're going to give you some of the steps but we've created the nine steps of the financial order of operations if you go to moneyguy.com resources this is going to be foundational but we've gone ahead and we're going to go a step further on this show and give you some of the guidelines of what are the basics you just need to kind of pay attention to as you're trying to figure out how you turn your little into a lot for the future i think for all of us we don't get to choose whether life gets expensive i just think that it does you said it as life happens it naturally becomes more expensive so hopefully these guidelines will allow you to keep you on the right path towards building financial independence and here are some of the money guide guidelines we're just going to throw out to you number one make sure when you start you have your deductibles cover that is why it is step number one in the financial order of operations this is your i think you call it the don't go in the ditch or keep keeping your life out of the financial ditch because what you don't want to do is have something in the grand scheme of it that's smaller but just because you're in a tight pinch where you need capital you end up making desperate decisions um to cover the basic things like whether it's a health insurance deductible whether it's your homeowner's deductible or just you know a car repair causes you to go getting credit card debts and all kind of other things you make desperate decisions and you never get to focus on actually building wealth that's what we're trying to protect you from so go ahead and build up some some savings to cover the worst of things that could come your way financially and look if healthcare expenses are something that you are concerned about i mean we said the number there's a lot of americans that list that as their biggest concern make sure you understand what resources are available to you if you have a highly subsidized cadillac health insurance plan available through your employer take advantage of it if you have a high deductible plan but maybe you're young in health and you don't have a lot of health care costs think about utilizing a health savings account think about building up tax-free dollars so that you can offset some of those costs in the future make sure if that's something you're concerned about there are ways that you can attack those concerns another guideline that we see after you just having the basic cash for the emergencies is just being careful with debt in general and primarily we talked about here i know for younger people or even parents who are planning for college expenses try to be realistic with student loan debt because that is a new thing i hate that it is kind of creating a sense of hopelessness with a lot of families because student loan debt has become a true tragedy in in something so positive which is education so try to the guideline we give here is make sure that your total student loan debt doesn't exceed what you think you'll make in the first year and the best way to do that is go go ahead and look at what your major or what your child's major or your grandchild's major will pay in their first year out of college because you can research that the bureau of labor statistics and other things post all kind of great guidelines we've covered it in shows if you'll just try to keep your first year uh you know salary and then keep the student loan debt below that i think you'll be in a good place now look i know there's exceptions between attorneys and doctors but that's a little different this is just basic stuff and then one other debt that i think people get in trouble with is car loans i know they're yeah i know they're going up right now but we give the guidelines of 23 8 meaning 20 down 3 i mean 3 years amortization no more and then 8 of your gross income and don't go by the luxury brands until you can essentially pay cash 12 months same as cash and then also make sure your investments are bigger your monthly investments have to be bigger than your monthly car payment all those things will keep you you know on the right track even with your basic debt management you know a number of americans also said not only is it health care costs that they're concerned with not only is it college expenses they said you know one of the big things that keeps us up at night is the cost of housing or the cost of rent how do i do that well here's our money guy guideline on that if you are purchasing your first home give yourself a break take a deep breath it's okay the 20 rule is a great rule and it's wonderful if you have the means to do that however don't let that be something that prevents you from making this huge life choice we give you some flexibility on your first home we think it's okay to not put down 20 which only get that pass on your first home for any subsequent homes if you want to upgrade in the future or move to a different area or do something after that first home you do have to put 20 down and then the last thing we had on here was more of a just an umbrella item that sits on top of all this is just this unique inflationary period we're in you know and and this is we this is not the first inflationary period we've we you know they've been experienced by our country and it won't be the last but when these things do pop up because we know general inflation is you know two three percent but now we're in a period where it definitely feels like when you look at automobiles when you look at housing things are moving much faster into double-digit territory and that gets kind of scary guys remember if you inflation your best friend is to actually own stuff and then invest in yourself meaning and what's your your future earning potential because that's going to help you battle inflation is is as being a person that's not renting your life but owning your life is because think about all the inflation hedges you the ones you stereotypical you hear about real estate and things like that um and now bitcoin new on the scene that remains to be seen i'm not gonna go into that deep dive but i still say what people always forget is that that diversified portfolio or that portfolio that owns good companies is also a great inflation hedge because companies always have the ability to raise the prices they charge for their goods yes in the short term they might bear some of that while they're trying to figure out where the market is and that's going to create volatility but in the long term you're going to see companies raise prices that will flow down about you know the income statement to revenue and then eventually net income you can get a portion of that through your investments and that's a great inflation hedge i i think this next one brian is one um that i think there's a reason this is the second largest response uh this is the second biggest problem that people face is that most folks say you know what if i had a financial thing that's really bothering me that i'm struggling with it's overspending yeah it is spending more than i should it is living not at my means but living even beyond my means and getting myself into a dire situation and this isn't just anecdotal there's actually statistics to back this up we know that right now in this country 47 of credit card users carry a balance for month to month that does not 47 of americans use credit cards it's 47 of americans rather than paying off their credit card balance every single month are paying punitive interest rates and and basically throwing money away this is the part that separates ordinary or average from financial mutant is that i think that people who are good with money and know the value of money will work hard to ensure that they're not just overspending and spending every time they make because one of the biggest crutches and it's out there in society is is go spend every dime you make so you know that's where credit cards they're right there to be your bridge to to answer all of your desires you don't have to have the income you don't have to be able to pay it all off in a year because there's these tools out there put forth with credit cards with personal loans and guys i'm just telling you be very careful of that mirage because it is false thinking that you can bridge your way to success by just using these debt instruments and you'll catch it up later that is going to be a disaster and that's something don't let those the easy accessibility to debt drive you to overspend because the first component the very first component to wealth creation is that discipline to use deferred gratification this is the one when i go talk to high schools when i talk to college students i talk about you've got to understand that you've got to use just a little bit of today for that great big beautiful tomorrow you're going to give up just a little sliver of your happiness right now for the awesomeness of the future and i know that goes against everything that society and the media tells you but i can tell you you can live your best life by just giving up a small fraction of right now so i can already hear uh our young audience members out there saying yeah but brian you just mentioned i'm i'm starting out and life is expensive things are hard there's not a ton of money laying around so i hear you say yeah yeah don't go over spend but man it costs a lot to be able to get myself from a to b and be able to put food on the table and to be able to do all these things well here's the good news this is what i think is so beautiful about wealth building the earlier you figure this out the easier it is because your dollars can be so much more powerful all a 20 year old has to do is say you know what i'm going to take one dollar i'm going to take one dollar and rather than consuming it rather than spending it rather than putting it on the credit card i'm going to put it in my army of dollar bills to work for them and that one dollar if given enough time by the age that they turn 65 can turn into 88 but again if you wait if you don't figure this out in your 20s you went to your 30 well now your 1 can only turn into 23 which by the way is still amazing let's let's not let's not make any bones about that that's still fantastic but the earlier you can figure this out the easier it becomes so if you can master deferred gratification when you're the 20 year old that's making minimum wage or the 18 year old making minimum wage or whatever it is the easier it's going to be to continue to master deferred gratification when you get that first pay raise when you change jobs and get that increase in standard of living when you get into your 40s and you hit your peak earning years you won't find yourself falling into that trap of overspending and over consumption if you can constantly reaffirm hey this is why i'm deferring gratification because i am building that big beautiful tomorrow well that's what you you've got to understand that while money's so tight in your 20s and 30s let's create some coping tools that will actually help you through this and that's what a budgeting you know so that you can figure out how am i going to craft a little bit of this money that's so i mean it's so valuable but i know it's also so tight but what bo just shared one dollar has the opportunity to become 88. think about somebody like myself where one dollar only has the opportunity between to become three to four dollars sure there's a huge difference between that 20 year old versus somebody in their late 40s so yes i'm in my higher earning years but every dollar you have when you're in your 20s and 30s is just so tremendously powerful make sure you're taking advantage of that yeah and again you already said this one of the components of wealth building the first component is discipline if you're starting out or maybe you're not starting out maybe you've been doing this for a decade now and you find yourself in the position where you know what i uh i just keep it up with a credit card balance you know i i got it paid off but then i wanted that trip or i want maybe you're the person that needs to drink the drink the tough medicine and just get rid of it if you're not someone who can handle a credit card maybe you don't have a credit card if you're someone who doesn't have money left over at the end of the month maybe you need to sit down and actually ride out your budget this is what i'm going to spend on this there's nothing wrong with going back to the basics and that's not something that only 20 year olds can do a 50 year old can go back to the basics to reaffirm what they know will work to get them to where they want to be well this is why it's it's a false promise when you use credit card as a bridge for a better futures because you're not only just losing out on just the interest that you're paying for the credit card um you're losing on the opportunity cost of what that money could become if you had just lived a little bit more discipline instead of just paying the interest on that credit card what if that money was invested because that that's the true cost of this is because you'll never get that opportunity for that one dollar to become eighty-eight dollars again so and then it gets amplified in the fact that not only did you miss the one dollar becoming 88 but you paid just outrageous interest typically on you know that credit card interest where you turn compounding upside down and it now is an adversary versus one of the driving factors of your success don't fall into that trap it happens way too often we live in a society that that makes that feel like that is what you should be doing i can tell you from working with wealthy people creating wealth from humble beginnings is that you do it this way you're gonna live your best life not falling prey to all the voices that are out there in society telling you consume consume consume run-up debt it's a false promise and i don't want you to fall in that trap all right so the number one when we polled you guys said hey what's the biggest money problem that you face the number one highest responded to issue was not making enough money and i think this is something that even financial mutants can end up falling prey to hey i just don't feel like i'm making enough money to be able to do the things i want to do and be in the place that i want to be in this falls back into that the kind of that mental trap that i earlier i was talking about when you start investing you know after you do it five years after you do it 10 years you're like where's all this rate of return the compounding growth these guys are talking about well the same thing happens with your wages i think sometimes when you come out especially some of the better opportunity areas you have to go build an expertise first you have to give it time to essentially develop the skills that are so valuable to society that an employer or business that you started pays you extra it doesn't happen overnight this is another one of those false promises that i feel like society puts forth is they they show all these people in their 20s and 30s on instagram that are living luxurious life and then i know better i know that the typical millionaire is not minute until around age 49. no not then you're like the person you're like wow that's not that's not what i see on social media and i'm telling you the reason is is that you've got to know that there will be a period that it takes to put in the time to develop into that great awesome life that you have in the future and that's why i you know when we see the stat that 19 americans are comfortable with their salary that means 81 percent are not comfortable well that makes sense i can remember all stages of my life really until my 40s i was like man i just don't make a lot of money for all the time i put in school all the time think about you know i think about even our associates you know the first few years we pay a great salary but you are developing so much in skill here it's not until you've developed that expertise that you can be rewarded and i worry about how many people because of the the the false promises of society they leave careers they leave ventures three or four years into it when maybe they just needed to gut it out for an extra year or two before they started actually pulling the fruit off the tree so i guess my word of caution is don't give up too early yeah you know i think i i am not uh i would not classify myself as the old category right i'm not necessarily old yet i think that but you're thinking looking over here because i don't consider myself old either i'm just saying i'm not exactly young either so i'm kind of in this in this middle ground one thing that i always encourage young folks for coming out of college and i talked with our intern this year about this there's nothing wrong with putting in the word if you are not happy with where you are first you do a self-assessment if you're not happy and you are 21 years old and you're just starting out a brand new job perhaps this is not supposed to be the happiest part of your work career because this is kind of the part where you're doing the legwork you're putting in the licks you're putting in the hours it's okay to do that but even as you progress in your career even as you move along you can still put in work at your current employer to look for other opportunities what are ways that you can deliver value that perhaps your superiors perhaps your boss is not asking you for but you recognize there's a need that's one of the things a lot of our clients who we've seen that have been able to work their way through either public business or privately owned businesses is they're able to see needs that the company has and they're able to speak and lean into those needs and it's amazing the more effectively you can do that the more control you have over your financial future than you actually might recognize yeah i mean and it might not be something that's glamorous because one of the things we you know we'll talk about it we have an upcoming show um with somebody when we talk about the american dream opportunities and we had somebody come by last week that just floored me i got the tingles on my hair arms hair stood up yeah she was it was just so incredible and one of the key things he said i was going to do the work that others weren't willing to do and guys if it was easy everybody would do it and i think that's the first thing so so look around and see is is there things you could be doing at your current place that makes you stand out and set you up for a better long-term opportunity is there fruit in the future and if there's not i mean that's another part of it look around and say man i'm kind of trapped this is not where i need to be maybe i need to take a step sideways to get to the step forward and then what's the long-term view and that leads to we did a show very recently on because this is something unique out of what came out of the pandemic is 40 of americans are considering quitting their job there's going to be a lot more turnover post pandemic then i think that is historically normal because i think a lot of people did use the pandemic and the time at home the time to reflect to figure out where how do i feel about this does this align to where i want to be in the long term so we want to kind of give a solution of how do you position yourself to actually do this transition well so if you are someone out there and you are thinking about other opportunities go listen to this show because you want to make sure you assess where you are presently figure out if a change is necessary and then there is a change necessary figure out the things that you need to do that will make you stand out that will allow you to get yourself in a better opportunity we walk through some things like learning how to be a peacock how to be enthusiastic and excited doing your research to make sure that you connect with your potential employer on a level that other candidates aren't able to connect on and we walk you through all these different ways you can approach doing that and doing that as a financial mutant not just as someone who's just another name another resume on the stack i do think this is such an interesting time is that i think that there are a lot of businesses that are looking for new folks right now so you have the potential to use these tips on how to get a job that we shared in that that that episode to really make yourself stand out and maximize the opportunity and this is going to accelerate your path to becoming a financial mutant creating financial independence and then reaching that level of success that you are you know kind of really relishing in your your best financial life and that's a great feeling because it takes you past happiness and really gets you to fulfillment and ultimately that's what you're hoping you can use money for is a tool to get you to that place that not only makes you happy but makes you feel like when you wake up in the morning you're doing exactly what you were put on this earth to do and maybe you're doing that and you're still saying you know what i am doing what i put on this earth to do but that thing is not the highest paying thing in the world or i wish i had more income i wish i had a way to be able to build more we live in one of the most interesting times in history because right now i think it is easier than ever to create a side income to do a side hustle we actually just show on this last year called top six side hustles in 2021 is this year i guess as i said 2021. we did a show earlier this year uh where we actually walked through how to go about doing a side hustle some things to think about so maybe you don't have to change jobs or maybe you have to climb the corporate ladder but there are ways that if one of the money problems that you're uh that you're struggling right now is not making enough money we live in a fantastic time to be able to impact and influence that and take control of your financial life so guys we covered the five biggest financial problems people face and then we tried to you know scratch the surface of those items to give you solutions to figure this out the biggest part of this is is be an optimist and look at your situation realistically and say what can i do differently or where am i right now and take an inventory of the situation we i think we've given you enough to create discussions i encourage you come to our you know come to our youtube channel go to our website moneyguy.com leave us comments write us questions tell us how we can help you figure out how to navigate this well because that is the entire purpose of the money guy show is to help you guys find solutions to accelerate your success because that is the abundance cycle i want you to come here learn apply grow these concepts and it's going to take years we are patient as we're planting these welt seeds that we know there will come if you've been doing this over 15 years you apply these concepts we know that you'll reach the level of success you'll be like i need a co-pilot i need somebody to sit right next to me and help me make the right decisions because this thing is too big to screw up or i just don't know what i don't know and that's where the abundance cycle comes to the graduation point that you consider hiring us to be your financial advisors for for the future we have a whole firm behind us abound wealth and i love the fact that i get to connect with you guys so with giving away advice essentially running a huge virtual classroom to show you how to be the best version of your financial self if you haven't checked out all the resources i have available go to moneyguide.com resource they are there for you to take and use we love getting to do this thank you for letting us be a part of your financial journey i'm your host brian preston mr bo hansen money guy team out you

Channel: The Money Guy Show

Views: 34,113

Keywords: money guy show, debt, budget, cash, real estate, insurance, how to make money, save, credit card, compound interest, buying house, buy stock, success, personal finance, 5 Best Solutions to the Top 5 Money Problems!

Id: Z23KmAozwRI

Length: 60min 43sec (3643 seconds)

Published: Fri Aug 06 2021