5 Things Every American Should Know About Money!

five things that all Americans must know about money it's Brian Preston the Buddy Guy Brian I think some of the best content some of the best topics that we come up with just kind of come out of nowhere and there was something that was kind of going on in your life and you came and you told the team and it was like you really did kind of like it was Christmas morning because you were like guys guys guys guys you won't believe this listen to this conversation that I just got to have a few days ago so here's the cool thing we live in Franklin Tennessee which is right below Nashville and part of the curriculum for high school kids is personal finance so my daughter is doing it through virtual learning this summer it's like a summer class that she's taking to work towards graduation so when you hear personal finance this is like an answered prayer and the fact that if you I talk about this stuff all the time but I know now it's not just gonna come from mom and dad having discussions there's actually gonna be structure sure so my poor daughter she keeps bringing me concepts I'm gonna keep talking about things and I feel a little guilty because I feel like she's getting mini money guy episodes I mean because I'm probably going over the top because this is what we love guys we created a virtual online classroom not realizing this was the greatest business decision of all times but truthfully because I wanted you guys to understand the great news of making good decisions and knowing how money can work for you so now having a daughter who's of the age she's already saving by the way having a Roth IRA because we do a 50/50 match meaning it's actually a hundred percent match every dollar my daughter does to her Roth IRA her custodial Roth IRA I will match it dollar for dollar because I want her to get that fire in her belly about saving for the future but here's III thought it would be a wasted opportunity I grabbed module 1.0 which is titled financial responsibility and personal decision-making here's the first two things and we're gonna focus on one of these the first one is there are opportunity costs of decisions okay isn't that important for young people to know hey if you go by this sacrificing yourself something in the future or maybe there's a opportunity cost of looking at the definition there might be a better choice or made that decision and here's the second thing delayed gratification and here's the textbook definition that they provided on delayed gratification the act of resisting and impulse to take an immediate available reward in the hope of obtaining a more valued reward in the future in quote so as we were having some pre-show one of our one of our listeners sunny said hey how would you describe delayed gratification to an eight to ten-year-old we just did it what you just want to look you're eight to ten-year-old in the eye and say hey it's the act of resisting an impulse to take an immediately available reward in the hope of attaining a more valued reward in the future and they're gonna get it right they're gonna get and Bo's alluding to because we all know there's a famous research study where it's called the marshmallow test yep and it is you can take kids and you cannot say look I'll give you one marshmallow now or you can wait a few minutes and then you'll get two marshmallows and it kind of is a good indicator of your if your child has the behavioral understanding of waiting for the future well I think that when I see that my daughter is now learning delayed gratification deferred gratification this is she's on her path towards the adult marshmallow test meaning that are you saving for the future and we describe it this way are you willing to take just a little bit and we believe me that little bit is going to be displayed on today's show for a great big beautiful tomorrow that is the most powerful concept you need to learn about personal finance now did you ever do the marshmallow test with your kids where your relative I was at you know it's one of the things you take note of and then you you look back and go okay I probably should also mark their Heights but every month but we didn't do that either so you know we'll just move on and just be happy so I did it okay I did it I did it but here's what I didn't do it Marshall here's what I did my kid loves jelly beans right so I told her before to bury my oldest ok I'm not willing to it my youngest because I don't want to be just let down horribly disappointed because we all everyone who's met my youngest daughter knows how that's gonna get but we told her I am we give her jelly bean and said hey I'm gonna put this on your nightstand right here and if you until tomorrow morning we wake up from show to mommy and daddy and show us that you didn't need it then I'll give you two jelly beans well sure enough she woke me up in the morn and said daddy daddy daddy daddy show me the jellybeans I got two so I was like yes she might have a career in the wonderful world of finance in her future so look pay attention but we did we want it I want to take this a step further than deferred gratification I want to go through the five things that every American needs to know about money but we are going to start with the heavy one sure this is I would put this at the base this is the cornerstone of what you're going to build your financial empire on and that is deferred gratification trading just a little bit of today for a great big exciting happy tomorrow yeah so it's let's and this is this is guys this is my beginning because look I've always been on the financial mutant side I was if you ask any one of my high school friends they'll tell you Brian was the nut that had the George Costanza wallet before we even knew they were called George Costanza wallets because I had so many coupons poking out I was the guy that perfected the seven dollar date night in high school I mean that's kind of incredible we adjusted for inflation that's still incredible because seven dollar date night probably his equivalent of a sixteen dollar date night now pretty impressive but we made a whole night pass with that so that I was always a little different what I didn't realize then was I actually had a grasp understanding a deferred gratification and also I talked about it his I had a economics teacher in high school mr. Morrow who was Vietnam vet who was also you know wrestling coach wrestling because you know the school but they and I don't think that his passion was necessarily always economics but that's what he had to do to check the box to be the wrestling coach so he he but he shared with us one day he said guys I'm a little jealous of every one of you guys in this room because if you could save $100 a month you'll be rich you'll be a millionaire and I remember the time being like oh my gosh I can I worked at Hardee's I was like the crew leader I Drive through its like I mean I don't have money I don't come for money but I could save my box probably and and that one concept woke up a part of my brain that still continues to be the foundation then it really heat mr. Morrow was talking about deferred gratification yeah and so we started thinking about and this has even become a theme of the money guy show like what's a really easy visual way to think about deferred gratification just how powerful can your dollars be and why was it so interesting to you as a high school student that only a small amount only a hundred dollars could do something so big and the the reason was is because when you do start young it is a powerful powerful thing the earlier you figure out deferred gratification the more impactful it'll be in your financial life no doubt about it drop some bombs on them with these visuals that we put together so we have an illustration and we've done this before but we said okay if you want to be a millionaire and you're starting at different ages and your goal is to be a millionaire by the time you turn 65 and let's just assume that at 20 you can earn a 10% rate of return and then every year that you age your rate of return goes down we're just gonna assume that you can earn less as you age your risk tolerance changes your portfolio changes whatever so that the terminal return by the time you get to 65 is 5.5 percent so 10 percent down to five point five well if you're a 20-year old it actually takes less than a hundred dollars if you're 20 so for a high school kid it took much us ninety five dollars a month we'll get you to a million dollars by the time you turn 65 at 25 the number goes to 158 at thirty two hundred and seventy dollars a month at forty seven hundred and eighty dollars a month at forty five now it's almost doubling 1350 a month at fifty twenty-five hundred a month fifty five five thousand dollars a month and then if you wait till sixth you have to save thirteen thousand dollars a month to get to a million both the sixty year old in the twenty year old have the ability to get to a million dollars by the time that they turn 65 but look how easy it is for the one that figured out if I do this earlier I can change the game well and remember what we said take a little bit of to say for a great big beautiful tomorrow but it's even bigger you probably how is that even possible what enables this to happen we talk about this all the time eighty eight times over explained so it's the wealth multiplier when you have a deliverable if you go to money guy calm go out there and we have this you can actually because we we broke this out by you know every five-year increments lied that's up right now but we have this by each year if you'll go to our deliverable on money God calm yeah I think what's so interesting is we always hear young folks I just I have a lot of money I just I can't save a lot I'm broke I'm trying to do this and what we always try to remind them is that if even if you don't have a lot of money if you have a lot of time that money can be powerful just look at the illustration one dollar for a twenty year old can be worth eighty eight by the time they get to 65 that same one dollar for a 40 year old is only worth seven dollars and thirty four cents but if you're that forty year old that's been saving and been consistently building wealth all the way until age forty take all the money that you've built up until age 40 multiply at times seven dollars and 34 cents and that's what you're on track to have sixty-five it's super exciting well I think you just nailed the powerful component not only does this show what the potential is for your money but it also can get your mind right because it's not uncommon look becoming jealous being green with envy is a pretty normal human nature event and it's not uncommon that you know when you're 25 years old you look at your 35 year old pier and go man I got a lot more good things going for them but if you think about the fact that that 35 year old their money is going to have a multiplier effect of $12 12 to 13 dollars for every dollar they invest in you're at 44 I think it gives you a little more context to appreciate the season you're in right and just get your behavior right and you're going to set yourself up for a lot of success in your future so that leads to the next thing I want to talk about some limiting beliefs that we see because we just showed you creating wealth is surprisingly simple exactly right all you need is taking a little bit of discipline of saving just a little bit today for a great big beautiful tomorrow and then the behavior of actually doing it and putting your money to work I mean it is so simple but yet it doesn't happen if you look at the stats every year I talk about that 60% of Americans can't come up with $1,000 and I hear that stat and I think we just thought wealth building is so easy wealth building is such an easy thing to do but most folks can't come up to $1,000 why is there a disconnect what's gone wrong well I think that sometimes we speak these things upon ourselves I grew up in a household you know you come from very humble beginnings I come from humble beginnings and I grew up in a household where and my parents are awesome but there was this disconnect on wealth creation in the fact that first of all they never made their money work for them their army of dollar bills was always in CDs we'll talk about why that's a mistake later sure another money was actually long term invested but the other thing is I think they thought the system was completely wired against them they always told me that wealthy people cheated on their taxes and you know and they didn't pay anything by the way as soon as I you know 16 years of tax prep here wealthy people pay a lot of hate taxes I just I'm just gonna tell you now there might be some doing specific things that there's loopholes or you know and other things but lion's share I haven't seen these big vats of opportunity to skip out on taxes so a lot of it I've realized is that a lot of the things we're told about wealth creation are kind of limiting beliefs that if you buy into it you're gonna hurt yourself yep and I think that there's so much opportunity to take a step forward and bring the success for yourself that's why I love education I mean that's why one of the things is education knowledge is going to be the latter that if you put it before you you can crawl out of a lot of different scenarios and that's what let's kind of talk about this we did and this is I'm so excited as the first year we did it and this is going to become an annual tradition yep we did a money guy wealth survey because here's the thing I love millionaire next door I love Chris Hogan's everyday millionaire so now and I hear these guys you know cuz made our next-door everyday millionaires they do these huge surveys and I'm like this is awesome but the only problem is is these things only happen every 10 15 20 years that they get a book where they're doing these huge service every year everyday we're working with successful people why don't we do an annual survey of our clients because they all have a lot in common many of them save yummy requires saving behavior we also require you have assets at a certain level I mean you Foster defer gratification to some extent you've been able to build wealth up to this point because they're at the top of the abundance cycle we talk about you guys know you come here we give you free information so that you learn apply and grow but you will reach a level of success if this thing gets so big and complicated that you'll remember who planted the original seeds and you want to make the abundance cycle come full circle and you come back to us that's when you become a client now you get to even play a bigger part because you're gonna contribute to our annual wealth survey and this is what we find because remember what I told you I kind of thought that millionaires came for money me and probably mommy and daddy hooked them up or they took advantage of someone to get the advantage of something by the way that's the other thing it's not a zero-sum game this this pizza pie this pizza is expanding is getting bigger and bigger and I love that because you don't have to necessarily hurt somebody for you to benefit through the process so let's talk about this do millionaires inherit their wealth again coming from humble beginnings this is something that I would have assumed the answer is yeah like if I want to be wealthy I've got to be born a rockefeller or a Vanderbilt like I'd have the right last name in order to have wealth one day and the answer is surprising but what poet we did our own wealth survey I could not believe how close our data points tied to the millionaire next door Chris Hogan's everyday millionaires it Souma I mean I couldn't believe it I mean when the data came in it showed me that there is something to this no matter what we're facing what decades you're in these stats we probably can look at this a decade from now I mean is I'm going to be very similar so here's what I found out seventy-seven percent of our wealthy clients that responded to the the the money guy wealth survey didn't receive a dime didn't inherit anything no they so everything they've done has been bill on their own first-generation nouveau riche so that ties in nicely to a lot of the stats out there here's the other part if you just because expanded it and say okay how much of how many other clients actually got something over a hundred thousand dollars because that's the part where you say okay that money I can give him a jumpstart it's 11 percent 11 percent so that means the other 89 percent the majority of their success was kind of variation yeah that's a pretty powerful it so don't use that as a limiting belief use that as something opens up you're feeling that I can do this go empower yourself to make the best version of your potential so next thing are because this is something I talk to people about all time cuz I just mentioned the word limiting beliefs this tells you when I wait you know because I talked to my family members about this too as I was like you know why do you have to put it look I've been to some counseling I've been married for 20-something years one of the first things I'll tell you if you ever go through counseling on relationships or anything is what's that inner voice telling you what is your inner voice kind of whispering in your ear as to what's going on in your wife and if it's negative it's kind of a self-fulfilling prophecy but if you can flip the script and turn that voice in your head into an optimist at glass half full instead of glass half empty it's gonna open up a lot more opportunity so that leads itself to the question of are our clients that filled out the middle you know the money guy wealth survey are they optimist or were they considering themselves pessimist and what we found was 81% of the respondents said they were optimists now I think it's so beautiful because Dave talks about this all the time it says you know when it comes to personal finance 20 percent of it is the mathematics of figuring stuff out but 80 percent of personal finances behavior one of the things that drives our behavior most often is our mindset so if you can just like you said control that inner voice and instead of thinking about I don't have this or I didn't have this opportunity I don't make this much money I can't save this much money and you can flip it to know I do have this I can say this and I do have this much time and I do have this positive mindset it's amazing how much influence I can have over your personal financial life well we talked about invisible hand of success one of the first things you can do when you flip the script on are you an optimist or a negative is that invisible hand that's working in your brain while you're sleeping whatever I'm telling you it's moving it's making things happen so if you can change your subconscious and turn yourself into an optimistic guys it is just like education is the ladder out of whatever situation you're in that mindset instead of having limiting beliefs that optimistic mindset is also going to be the fuel the key Isis that keeps the momentum going through the process I thought this was um because a lot of us look we just showed you starting early is powerful but does that mean that's the only way forward and we were surprisingly found out no it's okay yes we want you to have a head start on saving but that doesn't mean that's the only way to create success so what do we find from our wealth survey buddy so we asked okay when did you get serious about personal finance when was it that you thought personal finance is something that I should prioritize and all we found was about thirty seven percent of the respondents said they figured it out between ages eighteen to twenty-four so they came out of college came out of school and got busy right away another 37 percent said that they figured it out between my reading is now forty thirty seven percent twenty four forty / twenty percent twenty five to thirty four and then twenty three percent so still even a decent chunk figured it out after age 35 what this shows us is that the ones who master defer gratification early yeah you set yourself up for success but even if you are someone and you just stumbled onto the money guy in your 35 40 45 years old that's okay yeah we always tell people again when they find out where financial advisors I say alright well when's the best time to start investing or what should I invest and we always say the same thing the best time to start investing was always yesterday which makes today the second best time to start investing because time is your most viable resource I love it just great cross section here get out there don't there's never a bad time to start and and I just because I want people just like you have diversification of your assets this diversification is on ways of creating success but that does lead to my next point and this is something I thought was very valuable now did this is one of those things because I've read everyday millionaires I told you I'm fans of the The Millionaire Next Door Chris Hogan in his book I thought this was so powerful because we all have this well where does it come from the media the press the you know lifestyles are rich and famous MTV Cribs I know some of these things are agents but there's even more when you watch videos on VEVO and other things like that we get this false sense because you find out somebody who invented YouTube or something that you came a billionaire within two years of starting their company we get this false sense that wealth creation can have shortcuts yeah I I think that I want you to be excited about that you can create opportunity but the reality is is that we're running marathons we're not running 5ks and what I don't want you as a young person or even a person your 30s or 40s who's starting out if you are running a marathon but you actually are thinking your mind that you're running a 5k you would get to 3.1 miles and you go start celebrating like you won the race when you you just out of the box I mean you bet you really started this thing be good but if you have a false narrative because the consumerism and the the people who are doing the advertisements are telling you this you are going to screw up things royally so it's important to know what does typical success look like and Chris Hogan details that this came from the Ramsey solutions did a huge I think it was the largest in history survey of millionaires and and they called it the national study of millionaires so I thought that was about what jinx you owe me a coke no because that was was that was very Intune there but it's um this this is powerful the typical millionaire it took him 28 years no shortcuts about that it just it's not having financial abundance and be successful it's not a get-rich-quick scheme it's not something that oh I need to go start day trading and figure out how to go buy the stock before it goes up 3000 foot that's not it takes time it's and the other part I thought look at the average age 49 mm-hmm that might not be as sexy as you know as a 28 year old that becomes you know like Kendall Jenner or whatever you know who you see on Instagram but that's that's kind of reality and you know where a lot of these people got their success their 401 K so I mean it's it's it's important for you to have the right visual of your head of what the goal is so that you don't get distracted by all the things that are gonna come your way because wealth creation is surprisingly simple but there's a gazillion it doesn't mean it's easy because there's so many distractions there's so many consumer isms there's so many limiting beliefs that if you're not careful it will mess you up so the thing you have to ask yourself is what do I believe about money what are those beliefs come from and then once you kind of figure that out go say okay is that founded it do I have to in order to be wealthy do I have to go become a real estate tycoon in order to be wealthy do I have to be the CEO of a major corporation in order to be wealthy do I have to do any of these things most likely the answer is no and once you figure that out and you figure out that it's really about just consistency over time it is absolutely liberating so we've kind of done the motivation that was kind of step one talking about the behavioral side of deferred gratification number two was all the limiting beliefs that's getting thrown us every day number three should be how and you guys are probably you're motivated you're ready to move forward how do I do this now and that's where we came up with number three on the five things I wish Americans knew is managing money isn't hard and we wanted to give you the three things and those three overviews is master the basics know where the landmines are and then number three recognize that there are unknowns that you can prepare for now let's actually get into these things you guys know the how so first mastering the basics the first thing the building block I've already talked about the cornerstone was that deferred gratification element but how do you get to that you've got to have that what that whole concept is is you have to create some margin you have to create some let's live on less than you make you need to take whatever your income is live unless that say you have the margin to actually create success yep love it and that leads to there's a warm Buffett slide now look we in pre-show if y'all could have seen the hot mess that we had all I was trying to do was I was trying to make the point is that when you look at great big the the grandeur of a live oak if you've ever seen a live oh that's thick it's got you know branches all it makes you want to climb a tree and build a fort in it or just enjoy the beauty of it and I think there's no quinces of the financial firms out there they have sort of situations or any what's it was so wild about it is that a tree comes from a tiny sapling I mean it is so tiny when it comes out of the ground and it takes time yeah and but over time if you if you watch a simple little sapling turn into this huge tree Warren Buffett has a great quote it kind of explains that someone is sitting in the shade today because someone planted a tree a long time ago that's exactly right yeah and I think what's so funny and we talked about this in in weight-lift I don't know how I ended up bringing a weight lifting into this yeah that's what wisdom is experience to go ahead you know they always tell you people whenever you start out doing something people always ask you why why why why so when you're not going out there and buying the fancy house or buying the fancy car or going on the fancy vacation fine hey why aren't you doing that stuff you're in your 20s you should go reward why why why well then you get into your 40s and your 50s and your 60s and you do have success you have abundance the question shifts from why why why duh how how how and this is it you recognize that all it took was a little bit of energy early on to create the oak that is your financial circumstance now and look I know it's hard we live in a consumer society enough I talked about it in the last three shows because I'm really when you showed me that clip it really had a profound impact on me it's cuz it's a perfect illustration Will Smith talks about building a wall with his brother as a kid and he was he was not focusing on what the wall would look like at the end he was just laying down each brick as well as he possibly could through the process and that's kind of what wealth creation is and I want you to know there is a process think about this we all know in human nature and in life you first have to crawl yep then you walk and then you can run no there's no skipping steps like I've never seen a baby go from lie rolling over to standing up and sprinting yeah I mean I don't maybe you can have a fast learner yeah but you still don't Skip's don't skip steps though and it's the same thing with money and think about this just like you have crawl you should have track yep do you know where every dollar of your what you make is actually going and here's what I love about this this is it's not a hard thing to do right so most of us go out and spend money and we have either debit cards that we use or we have credit cards that we use or we spin cash it's not hard to just say you know what for the next 30 days so next six days I'm just gonna track my spinning every time I go somewhere I'm either gonna use an app because there's tons of apps until I do that or I'm just gonna make note when I first got when I got my very first job I started spending money for the first time I saved every single receipt you know it sounds a little crazy now and I put in a spreadsheet cuz I just wanted to know hey where's my money going where's what that's how I had to figure it out I wasn't innately born with the ability to know where money goes I had to be tracking early on I mean it makes I think it's a common-sense thing if you think about it break it down to basics how can you know if you have margin how can you know if you have excess to create wealth if you're not actually doing the data gathering and to know what you have coming in and what you have going out so the first step just like you have crawling it's very deliberate when you're when you see a baby they're having to think about every little thing they're doing when they're trying to get that first crawl going you you have to let them out you know how that works reset it's the same thing with wealth creation you have to track so that's first then you move on once they start crawling the next thing is you start walking that's budgeting that's once you know all the data points you now have to create a deliberate plan that says ok I know what my income is I know what my fixed expenses are I know the variable things I can control how do I make all this work together to I get the structure that I want it's the same thing walking is the evolution of crawl so it's the same thing tracking turns into budgeting again I have friends all the time they screw this piece up because they will track everything they can tell you every dollar they've spent for the last 15 years and always ask this question okay that's awesome what did that change how did you use that oh I just been tracking it I didn't I didn't do it I didn't change anything I've just been tracking well then it's just kind of wasted effort if you're not actually using the tracking to figure out how you could better deploy your future dollars then you're missing that second iteration and it is I think it you have to bring in I want to take a step because I think one thing should income match your expenses no I think that they remember your building budget as being a deliberate process that's why it's better than quit the whole tracking or the crawling element is because when you get to budgeting you're also building in do you give money to charity do you pay yourself first with a saving component built into your budget all that is the behavioral stuff that is going to set you up for step 3 now look everybody who listens this show for any length of time well no I absolutely hate budgeting III can't I despise it you're like wait a minute you just told me I have to track you told me then I have to evolve from tracking to budgeting to get to this step 3 then how can you come back and tell me after all that you hate but budgeting stinks it's kind of like weight training it's all these things you're working on oh all stinks bicycle riding all the things that you take for granted later started with a process in the beginning so it's harder and I will do you know so but once you get to a point if you will do this long enough guys if you will be the responsible individual if you'll take control with your finances long enough it's going to turn into a habit once it turns into a habit because you paid yourself first you've created you know automated systems and we call it talked about all the time for scarcity every time I get a pay raise every time my income goes up I'm creating forced scarcity so that that abundance just doesn't flow in and flow out and no benefit comes from it I create automatic structures so I no longer have to do these simplistic things of the tracking the budgeting because it's already I have muscle financial muscle memory to do all the right steps that's where your that's where your running I mean you're running wide open cuz you know you're you know everything's working just like it's supposed to you don't have to think about all the different steps that went into because you've created a system and in our mind this is where the financial have order up financial order of operations the foo steps in once you start knowing okay where should I deploy every dollar I've done the tracking I've done the budgeting now I'm on the cash management you are full steam ahead moving towards financial in defense always got the we've got the master the basics that's the basic now let's talk about all the things that you'll be you think about once you get good at running it turns into American Ninja Warrior where you know they throw some now obstacle you know all the obstacles start rolling out it seems like they were going to derail your wealth creation so you have to know where the landmines are the first thing the dangers of debt though you know I would say that in the society in which we live I think this is the biggest one I think this is the biggest one that gets people off track because we live in this world we can afford anything in the world one month at a time doesn't matter how expensive it is so long as I can cover that $50 $100 $200 monthly payment that means that I can afford it hey in this society if you can't afford it you can finances right and that that is a failure guys because we realize yeah you can afford anything $100 or $200 a month if you just never owned it you're essentially renting your life forever and that is the biggest mistake because remember when we go back if you're watching how I click go back and watch some of the other steps we talked about because the biggest thing you're trying to do to create wealth is to make your money work as hard as you do with your back your brains and your hands you want your money doing that for you if your money is being used to pay interest it ain't working for you can hard so that's let's give an example here of how the typical American falls into this horrible trap so we start thinking about what's the consumer decision a lot of Americans make and it was pretty easy it didn't take us long to come up with this buying a car so when we think about affordability of an automobile there's sort of a disconnect here there's how much can the average American afford then how much does the American actually by so FTE Daniel did some work for us and he found out that if you look at the medium median household income of American families the median household can afford a car that costs eighteen thousand eight hundred eighty three dollars now remember that's built off of twenty three eight if you guys have never heard that concept this is the money guy ISM we want you to put 20% down finance no longer than three years and your total car payments for the entire household cannot be greater than eight percent of your household gross income a lot of you guys like why not cash only cuz I recognize you've got to get to work yep so I want you to have reliable car and I but that's also you can't use this for luxury vehicles anything that's luxury you better be paying it off like it's cash this'll only for functional vehicles eighteen thousand dollars in thinking about your spouse and the kids and other things that that's a reasonable before you know that you could get the kit get your get you get to work and you get the family safely to where they're going but what is the typical American yes so the median household can afford almost a nineteen thousand dollar car but the average car loan right now in America thirty two thousand one hundred and nineteen dollars almost double not quite but almost double so there's a big disconnect so you might be saying oh well okay it's just one car it's not that big of a difference it's not that big of a deal well let's see how the numbers actually play out well but here's a can I say something is this I just tickled myself that maybe did you get those transitions in there so the transitions did something professional because with the eighteen thousand hurry and this this is look my own biases because I'm just as susceptible to consumerism as the rest of you guys I had a visual is that eighteen thousand cuz Daniel put made it slow and almost I feel like is it parked it backfired you know is it meanwhile the car that we truthfully can't afford you know who's I imagine it has just a cool sound to it that is our own biases there is nothing wrong with that eighteen thousand dollar car but even in my mind I have biases that are showing but let's let's let's get your brain right by showing you what this actually costs your wallet and your long-term self so how much of a difference can this make so if you look at the financing for these two cars well we're gonna call the affordable car the less expensive cost four hundred and twenty one dollars a month the more expensive fancy car costs seven hundred and forty-seven dollars a month that's a big old payment so that difference is about three hundred and twenty six dollars per month so if over the thirty six months or three years that you would finance these cars let's say that you took that three hundred twenty six dollar difference and you invested it and let's say that you assumed you could make ten percent on average on that investment by the end of three years you would have thirteen thousand seven hundred thirty four dollars so not only would you have a paid for a car you'd have an additional fourteen thousand dollars that you could use for the future by the way ft Daniel created these slides and he totally okie-doke to me and the pre-show planning because I saw this I like Daniel it's great but 14 grand ago motivate anybody and he and Daniel said but wait there is more he does like he's totally been hanging out with us for a long time so both show them because we talked about this deferred gratification we the big live oak that we're building of wealth creation starts with a tiny sapling what does this thirteen thousand seven hundred thirty-four dollars have the potential to become so if you let that thirteen thousand seven thirty for work for you for the rest of your working career so this goes out to forty years total that we're looking here by age 65 you would have five hundred and forty seven thousand dollars save for retirement in total all that you put in the pot all you contributed was eleven thousand seven hundred and that turns into five hundred and forty seven thousand dollars so the question you have to immediately ask yourself is was that fancy car that I bought in my twenties was that 2005 Acura TL worth half a million dollars of retirement dollars the thing and this just hit me to is I always think about what could money generate for you in the future because it's like all whenever you're playing any of those on lion games you know the secret to those utopian type games mob wars are far with I came in with the farm on farmville is that you need to get enough stuff working for you as soon as possible so the money just starts rolling in that five hundred and forty seven dollar forty five hundred forty seven thousand dollars a safe withdrawal rate that could easily be between twenty to thirty thousand dollars a year in retirement so this is one of those decisions that if you screwed it up it haunts you out on what it could have been that would buy you one of those affordable cars every year in retirement so it's just it blows my mind so understand the power of getting to know where you are so that's number two is know where the traps are number three is is recognize that they're unknowns but you can prepare for them look when we talk about financial order of operations I think people get a little frustrated because they all want to do the sexy stuff we all want to create wealth so you get excited in Euros $100 a month is gonna make me a millionaire well if that's good let's start doing $1,000 a month as fast as we possibly can the problem is this is why we did financial order of operations you got to make sure you don't get so excited about saving for the future that you're not taking an account that there are some things that could come your way just like we're talking about American Ninja Warrior or even we could think about it and wipeout you got you got have some big red balls that are gonna be there are things swinging it you know they come your way that will knock you off track when you're not expecting it I mean that's why that show is so successful is because they go across the wall and then boom they get hit in the face wall and they fall into the mud there is something entertaining about that but it is catastrophic if this is your financial life is because there's bad things that can happen to you you you know you can people unfortunately get sick people unfortunately we don't have to be as dark as that with us a storm that comes as saucers comes and blows off the shutters or lightning strikes and blows up you know a lot of stuff in your house like a condition in it your car radiator quits working I mean there's all kind of things so we want to create what are some checklist that you can do to make sure that you account for the risk or the things that can derail your wealth building process or so we thought okay just sort of a five-step checklist number one you have your loved ones covered and these are kind of the basics anytime someone talks to us and they have someone else that's dependent upon them for their food shelter maintenance that sort of thing do you have wills do you have life insurance do you have disability insurance do you have the things in place order to protect the ones who are depending upon you so that's you just name some big stuff the Wills life insurance disability insurance those are all the big things to make sure people you're not leaving behind people that you care about in a really horrible situation buh next number two health is nurtured use the word nurtured the reason I use the word nurture yeah is because I think it is something when I hear the word nurtured I think about something you have to love on you and to take you don't take it for granted because look maybe it's because I'm in my 40s sure I mean and then we went through this whole pandemic cycle where I was locked in the house for two and a half months and didn't get to work out guys you you get to a certain age it starts falling apart I just tell you because you either you choose how you want to a k-- or your body will just a catcher away for you because I mean you think I'm trying to be funny I'm saying I played basketball in high school I have some ankle things that I struggle with I mean I have some ankle issues when I'm working out and when I'm exercising they go away they magically go away and I can't figure out that's because I'm sore so many other places that my body is like well we're not gonna bother him with that ankle stuff right now when I quit working out I I don't know it's been years my ankle started giving me a lot of issues I had a hitch essentially when I was walking I almost started developing a limp because my ankle and I'm telling you guys you can't take your health for granted because that's one of the first things you ask a wealthy person what they wish they had they didn't take for granted it's usually their health and you know just taking that there go be here tomorrow nobody has guaranteed that so make sure you're working on that Fitness bow it was that you know I pulled every delicious because thank God I don't actually listen to lyrics because otherwise all that slash or metal I'll listen to in high school and everything would have probably made me a much darker person was the same thing I pulled up to make sure I was getting work on that Fitness right uh-huh fur you look Fergalicious is kind of it's not not a clean song not a clean song but you know I didn't I don't know that I caught on to all the stuff in it yeah when I listened to but it made it any so health should be nurtured all right how about number three protect yourself from the blindside I mean years do you have stuff to cover your property and your casually losses do you have your homeowners insurance do you have auto insurance do you have umbrella insurance if you're someone who either has a healthy income or you have healthy assets do you have the insert that sits over top to protect you from those unknown unknowns that's I'm glad you took that one because that's the stuff that cuz that really is your buying stuff you hope you never use it yeah it's the worse so we've covered that so you got the boring one I'm the least go get number four which is the much more excitement was invest with intent we pick on people all the time we don't pick on them because that would be cruel we do we have discussions with people all the time about balancing the fear and greed yeah it's because yeah you know think about it man what a perfect case study year mm-hmm now look we're not out of the woods yet yep I mean I'm just glad that asteroid then I saw read an article like over the weekend there was an asteroid maybe it's still bearing down on us I'm just assuming since we're still here it's in 2020 say it really didn't hit us it's kind of like those memes you've seen where they they unlock something like a mummy or something uh put it back in the ground 20 20 20 20 doesn't need anything else I mean there's just so much that that's going on but it is one of those things that investment in tents of fear greed we've had a lot of volatility in the financial markets this year and I think it is a perfect case study of why you do want to balance out the fear cuz we get it when things are going down we're just scared we make crazy decisions but there's also greed when markets start making money you don't want to say hey you know you don't wanna be the 70 year old that's going I saw oil was down below that should we load up a bunch of oil I mean maybe it's a right decision but is this what a 78 year old should be loading their portfolio up with as of this recording you know 2020 has been a very interesting year we saw a very very rapid decline of the markets and now we've seen a very very rapid recovery in the markets we don't often get opportunities like this but if you are someone who found yourself making bad decisions or having very bad thoughts in the downturn since the market has now recovered at this point it's not a bad time to reassess your specific risk tolerance if you literally had to like sit on your hands to prevent you from going online and selling everything maybe your portfolio did not fit where you presently are and it's worth or revisit take this as an opportunity because normally we don't get them recovering this fast and who knows where it will go from here it could go down another 20% it could go up another 20% you want to make sure that you have a portfolio that is designed well for you that will allow you to stay there for the long term and that's a great lead-in to risk tolerance versus risk capacity just because an a your younger self could handle a lot of ups and downs emotionally you might be at the age now you don't have the years to recover that's well that's the difference between risk tolerance versus risk capacity risk tolerance is hay market losers 20% are you going to emotionally go sell fine you know yeah you might be a cowboy emotionally but you fast forward over here to risk capacity or look at that topic you just might be if you're in your late 70s probably shouldn't have the portfolio of a 24 year olds right so so pay attention to those things and then we say this and but it's so true gotta know the why of your goals if you can understand that stuff it'll help make sure you're balancing everything else I think oftentimes we ask people okay well you've done great you've built up a very healthy portfolio what are you doing and they're like I don't know oh I want to retire okay great you're retiring from work what are you retiring to yeah oh I don't know investing where the tin is answering the question to those I don't know so yeah you got it you got to have purpose and know what you're doing yeah we'll talk about that with happiness in a second but last thing kind of closeout number five get the kiddos out of the nest yep I mean Millionaire Next Door talks about economic outpatient care we see this with adult children that you struggle to get out and look there's reasons but I've been I've been talking to a lot of our clients who have adult children I've been scaring the heck out of the kiddos by showing them that New York Times headline it says my retirement plan is you living with you is living with you I mean it is a horrifying thing but it is one of those things where I want you to work on having a healthy relationship start having those discussions now with your your children as they're getting older help help them that's why I like the dollar for dollar matching get your kids saving for themselves you can jump-start those habits early you probably run a much higher propensity that they're going to be successful in their own right love it so let's transition number four this is tom is your most valuable resource yeah we we say it all the time and we even showed you you know for a 20 year old one dollar can turn into 88 and then as you go through time it decreases we say it all the time but I think a lot of us we don't we're in our twenties we don't think about that like I don't ever see a 20 year old like even we talk to our interns or like guys you have so much opportunity the fact that you're doing this internship and you have your entire working career ahead of you there is so much you can do and you can just kind of see like oh yeah I get it but you don't actually get it until you're sitting where you're sitting now Brian thinking about all the decisions your 20 year old self made that have now paid off so well we talked about it this is going to be surprising tom is more valuable than actually your savings absolutely and this is I you know was funny Bo in the show notes I took this line out but I'm putting it back in is that I am now mr. Morrow my economics teacher and the fact that I can I can see his mindset when he probably looked at us and he says I'm jealous of you guys because all you have to do is save $100 a month and you'll be rich because that means mr. morrow I don't know if he was in his late 40s I don't know if he's in his 50s we made that say because when you're young you think everybody's old but it is one of those things where I'm now old enough that I see what his point was and I'm gonna be this is cold hard reality for everybody out there if you're watching this in your 20 if you're 25 if you're 30 if you're 35 and you don't have financial success you know who you have to blame for that you because you have the easiest path forward because you have Tom on your side and nobody talks about that because it's so easy to get distracted by consumerism so easy to go look like you're in a nice car nice house have this fake life that you did everybody especially in America aspires to have but the hardest part it's just doing the simple stuff just save a little bit of today for that great big beautiful tomorrow and and this is both show them because don't take our word for we showed you takes just a little bit of savings but we've actually put numbers to we have FTE Daniel create some great teachable moments yes and Brian yeah I think you're the first one who maybe didn't invent this idea but you're the first one who put this into mathematics for me and I was like that is really remarkable so we talked about that for a 20 year old to get to a million dollars by the time they get to 65 you got to save 95 dollars a month you've already recovered that well when you get to a million you will have only put in fifty one thousand three hundred dollars but the earnings on that will be nine hundred and forty eight thousand seven hundred ninety five percent of that million dollars is from earnings not your dollars that's just time compounding it is unbelievable so when you think about get-rich schemes because you hear all the you see the the stat where somebody will post MSN or CNBC will post this on repeat like least once a year I'll say thousand dollars in the Amazon would be worth this more millions today yeah oh my gosh what no put a thousand dollars in nobody put a thousand dollars in because all the ups and downs in but this is the same thing same concept you've put in fifty one thousand dollars yep and it's gonna be worth a million ninety five percent is the growth but you said even thirty year olds should still be excited so again you save two hundred and seventy dollars a month yeah you will have put in more than the 20 year old you will over the course of your career you will have saved one hundred thirteen thousand but still eighty-nine percent of your million dollars eighty nine percent of that growth or 89 percent of that value was growth not contributions for a 40 year old even at forty seventy seven percent is growth at fifty he goes to 55 percent and it's sixty goes to 22 percent look at how much easier if all you did was just look at the like dark blue areas if you're out there listening in iTunes iHeartRadio Stitch your podcast world come check out the YouTube channel look at this chart because it is amazing how much less work the young folks have to do than the older folks and every older person we talked to I've never once heard someone say I mean I wish I would just save less money in my 20s yeah I should have been spending I should have been spending more man that's always I should have been saving more and that's what that leads to man we created one more slide to show you the power of this clot of you probably right now you're going man that is powerful stuff next year I'm gonna let us start doing this because it's so easy to kick the can down the road I'll just do this next year and it will be okay I'm gonna be honest with you guys I have money now mm-hmm I didn't feel like I had money until probably two years ago as mid-40s yeah look I've been saving the whole way that whole forced scarcity is a real concept with me but that for scarcity was working so well that even though my tax return - OH - I had good income fill him pretty daggum broken bronze layin because I had a lot of boxes I was trying to check and I we've created an illustration to show you how the reality of life because there's a lot of 20 year olds there watching one that sounds great but I'm gonna need two more years to get my income up to a point that I can do what these guys are talking about I'm gonna hit the pause button on this but here's the reality there's always going to be things that are gonna screw up your ability to save for the future yep and we just threw in a think about college all the student loan debt all the obstacles then you get into a relationship you got marriage and things like that and you got houses you got kiddos as a reason we call it the messy middle that's right I mean Bo's go give us a detail and they get to retire the only time you feel like you have money is when you get old that's the cruel world that we live in this financial world they say oh you know what what thou to do is that twenty years old that'll give you this big pot of money and then you're spinning and you work the rest of your life well that would be kind of sad but it is interesting right you have all these obligations early on and the amount of disposable income relative to your commitments is not exactly where but here's what's beautiful there is this eighth one of the world called compounding interest that if you can just figure out how to defer just a small amount early on it gets so so powerful what you have to recognize is if you look at this chart you're that 20-year old say you know what I'm gonna go buy the nice car I'm gonna go backpack you're I'm gonna go do all the things and not save any money I'm gonna wait until 30 well then you do get married and you buy the house and you have the kids so you know well I'm gonna get my family laughs normal wait till I get 40 the longer you wait the harder you have to work if you can make those very small decisions early on it is gonna set you up so well later in life so don't kick the can down the road take today go set up just a little bit because guess what you get addicted to saving yep it's a healthy addiction no that's why there's no support groups for ya it's because you become an empire builder and then everybody just like you said when you reach a level of success they go pow how do they do that it's because you took just a little bit of today for that great big beautiful tomorrow that's the mindset we want you to think about that's financial mutant territory when you're doing stuff like that let's close this out number five on the five things I wish Americans knew about building wealth is money's just a tool yep now III think we talk about financial order of operations all the time and I think there's some misconceptions about that cuz there we do have these nine steps there's a step zero step zero step zero is be generous and I know that sounds like whoa be generous and like yeah what do you think the abundance cycle is built off of this entire concept of this money guy show was I was a nerdy guy who got my first ipod I always wanted to be a school teacher my mom was a school teacher my grandma was a school teacher at that heart of an educator and I just wanted to love on you guys I just wanted to give and pay it forward get this stuff out because I didn't have you know money was not rolling around back then but I at least wanted to give a little bit of my time but as the money has kicked in I have tried to be generous there were toddlers we do all that stuff that we believe the more you pay it for you don't get hurt I've never heard anybody say I was so generous it hurt me I just gave away too much because it I have found and it's this weird thing the more I give it away it seems like the more it comes back and I know that sounds that gets into some philosophical stuff that makes people feel a little weird but I'm just telling you I have never been disappointed by being generous and that leads to relationship of money and happiness because a lot of you guys we all want you saving but I don't want you hanging on so tight that you don't even know what your wha is because you get things all out of sorts I mean I watch there's some so many shows on Netflix now that I watch these people and and I see like they're selling real estate and showing these fancy cars these fancy I mean that's people don't look happy yeah they're pretty yeah that's a big house but they're not happy I mean so you ask well what what are they missing it's the why they're missing the why is what they're doing they're trying to fill some big hole inside of them with something that's insatiable and that's what the thing you'll go do a Google search you say how much money is required to be happy and you'll find the same answer a gazillion different links to seventy-five thousand dollars you like would it $75,000 but what is what is $75,000 the reason that $75,000 is the income for happiness this is where the basics are covered it's where you have food and you have shelter and you have some of the necessities of life below that it gets kind of hard it's a struggle but once you get to that level according to statistical evidence they found you've covered the basics now that's happiness though no that's not happiness novel that's survival it's not fulfilled that's not happiness I think happiness is you wake up with purpose and you have fulfillment you know that's what I think sometimes money is a side effect to doing what brings you fulfillment actly right I mean that's what's happened in my life and that's what and look a lot of us are pursuing happiness we know that this is something because so many unhappy people in world you're trying to figure out how do you get more happiness you've got to focus on what your why is what do you put on this planet to do and then you also need to think about the things you can control there's so many things going on right now that you could I mean literally out the world is out of control right now I've had some some moments where you you if you're not careful you can reflect into your in tears to the point because there's some just sad stuff going on right now I mean it's just emotional and then you cross anniversaries in your own life where you've had a losses and you're like man you can start really getting pretty negative with this thing but then you start your wait a minute what can I control what can I personally control so I can be something that's positive going forward and here's that there's research on this guys we didn't come up with this here's the biggest things that will lead you towards fulfillment it'll lead you towards the why and lead you to true happiness not survival but happiness and here's number one faith when you hear faith people get oh here he goes remember we're not two we don't try to alienate people here but I do think there is something about thinking of things that are bigger than you I mean you definitely got get outside of yourself number two family you know what's always in happiness discussions how stronger your relationships with people you care about because you can have all the success but if you're not actually enjoying you know having somebody to share discussions with the there really is something about having friends and family and your law number three community I mean guys pin does the world need community right now I mean talking about being charitable to others and then of course we put this as number four and this is what the research says work are you waking up and feeling like every day when you get out of bed you're doing your own little part to making the world a better place yep I feel like we are blessed bow because we do wake up and on Tues Mondays I have a hard time sleeping because I know the stress I know the pressure of we have all these thousands of people yep every week that are showing up to listen to us but I love it I absolutely love it I am doing exact what I was put on this or work you know on this earth to do it is beyond the $75,000 a year and look here's the thing we only get one crack at this life we only get so many years here on this planet your mind isn't that will not waste them doing things that aren't fulfilling that don't give you passion that you're not excited about that doesn't mean that you have to go do something incredible a world changer you might just be a basket weaver but if you really love weaving baskets and you do it with passion you do it with excellence financial success fulfillment it will find you that's the way that it works buts just a matter of you having again that positive mindset and taking the small steps to move in that direction I mean so much in this show I mean I felt like we got analytics in there we got the squishy stuff we got the purpose so I mean if you can understand you're wise guys this is the abundant cycle we have a blast doing the show we've been doing it since 2006 I'm just so thankful I get I get emotional thinking about how happy I am that I even have a group of people like you I think in this crazy world we're in now I think you probably would would do some good I appreciate I thank you guys I love that you let me be your your nerdy friend that comes in and shares these financial basics with you and we have a lot of stuff and so we keep this abundant cycle is about to expand guys we have even more things we're working we have a team I mean boat what's crazy is like we're recording another show this afternoon it's a very popular it's a concept that we came up with a while back very popular on YouTube and then when we were looking at we're like why are there no slides it's because we didn't have FFT then we didn't have rebe working for us I get so excited that this our tribe here is growing the money got you know we are I think that this the abundant cycle in our own way too and the way this keeps expanding so go to if you want to know what you can do got a money guy com go look at all our resource page yeah if you haven't cannot tell them what it is really because we got the new one cut we have a brand new resource coming out it's coming available on refinancing if you're someone who's thinking about refinancing how do I think about it what do I need to think about what's the math that I do it is in the very final stage of being finalized it's gonna be available out there the only way you're gonna know when it's released is if you go out to the website give us your email address stay plugged in with us go check out all of our other resource if you like some of the money multiplier stuff we share some of the 88 times over it's all out there if there are folks in your life they're in their 20s and 30s that need to know these things go out there grab the deliverable send it to him say oh my gosh you got to check this out it'll change your life and then last abundance cycle we work with clients in 41 states now that was not why this show started but man you guys have loved on us where we it's a growing enterprise I love the team I mean cuz I was I was I was doing some analysis for this entrepreneur group that we're a member of and I looked at the growth of our employees and seeing how many team members we have guys business owners do love at least I know this business owner loves his people and you guys the abundance cycle is also allowing us to change our employees lives too and just thank you so if you've ever wondered what is this like go to abound wealth com go to money god comm we have a Contact Us page we'd love to bring you into the family as well but thank you thank you thank you and guys keep tuning in we're going to keep growing we're gonna keep doing what we love and I think that that purpose that y is going to continue to bring fulfillment to you as well thank you so much money got team out

Channel: The Money Guy Show

Views: 63,018

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 Things Every American Should Know About Money!

Id: VB-d706Z4t0

Length: 63min 50sec (3830 seconds)

Published: Fri Jun 19 2020