Do This to Be Rich! (The 3 Secret Ingredients!!)

do this to be rich three ingredients exposed it's brian preston the money guy i like it brian so uh what i think is great that i mentioned i'm excited about this show i don't want to forget telling everyone that what i think is really interesting is we have a unique perspective right we've um been fortunate to have some success ourselves but in our day jobs we get to be feeling financial advisors that work with folks from all walks of life right so we've actually seen how people become successful like what they did what are some of the common traits what are some of the common threads and we get to kind of take that knowledge that we've acquired over you know a combined three decades and apply that and see if there's like you know some common threads we can weave throughout the show that we present well we talk about the process of wealth creation a ton matter of fact i mean you guys know go get the free deliverable just go to moneyguy.com resources and you can download our our financial order of operations for free uh the deliverable of all the nine steps so we always talk about the process but i want to talk about there's something bigger than even the process there's actually ingredients are forces that are out there at work that you need to harness it's not only just and it is look it encompasses the behaviors but it also you have to know about these elements and these ingredients to even harness the power that they offer to you um and what i think is interesting is that bo you picked on me about this in show five oh yeah i thought it was hilarious is that i talked about and i've been i've mentioned this on quite a few shows if you go because we talk about the seven habits of highly effective people we talk about um good to great we've talked about how to win friends and influence people and every book that you've written on management processes structures if you read these books you're going to be like wait a minute i kind of see that theme that's running under the current there that you can see they're saying the same thing and each book is just presented a little bit differently i wouldn't even say that i see the same theme i i it's almost like i hear the same exact stuff like no one's saying new stuff they're just like you said repackaging a little bit and you start thinking well okay are all these folks like copying one another or something else going on is is timeless advice truly just timeless right so i think money and sound financial management are the same one sure and and i i brought you love it when i bring props i think you think i'm carrot topping there's no show up with this uh you need to be a little more jacked but yeah you are certainly uh i saw carrot top live when i was at uga he was not you're not drinking no it was it was prejacked so it's um so he's not always been muscular yeah so i just wanted to make sure that's probably more vegas carrot top when he was doing the college scene athens was he was very he was very college student looking um but you guys know we have multiple copies this is this is kind of an older edition we have this version back here but when you look at the millionaire next door you don't have to go very far i mean you can see right there on my paper clip is because you know dr stanley he didn't mess around he kind of gave you right at the beginning the seven factors of becoming a millionaire next door yep and it was it was some pretty common trends and and we can even put these up there on these seven factors sure is that they live below their means yep they allocate their time energy and money efficiently in ways conducive to building wealth yep i gotta turn the page number three they believe that financial independence is more important than displaying high social status love it number four their parents did not provide economic outpatient care okay their adult children are economically self-sufficient love it they are proficient in targeting market opportunities okay they chose the right occupation love it so these are the seven and when was this book written when was 1996 1996 so he so dr stanley said hey in 1996 i figured it out these are the seven factors that i've noticed across wealthy people so bring up prop number two okay prop number two chris hogan rope everyday millionaires yep this is part of you know if y'all don't know chris is kind of like dave ramsey's right-hand guy on personal finance sure so ramsay solutions they have lots of research matter of fact this book is based upon supposedly the largest research study of largest pool of millionaires that's ever been studied all you have to do on this one and man i totally wrinkled some things but um if you look at chris's table of contents let's look at chapter seven live on less than you make wait a minute it sounds a lot like uh stanley's they live below their means there's a reason fte daniel slipped that right underneath they live below their means um chapter eight is think ahead millionaires are goal oriented wait a minute oh they allocate their time energy money efficiently working towards common goals towards things they want to achieve chapter nine do what it takes millionaires are hard workers oh so they think that being actually financial independent is more important than high social status they work hard towards that goal and then stick to it millionaires are consistent so they choose the right occupation they know what they're going to do and they stick with it and they move through yeah there's a lot of common threads there so chris's book was written written one 2018 2019 sometime around that i think it was was it was it 2016 2018 somewhere in there somewhere in there i think you know what hang on but it was a number of years after 1996 yet 2019. the data hasn't changed the information hasn't changed it seems to be pretty consistent through time this book right here was published in 2019 so but what i think is interesting is that we can go even a step further yep we have our own wealth study that we do on our clients that are that are money guy clients uh and we found some interesting trends too we found optimistic so yeah are millionaires more or less optimistic when it comes to their general view or outlook on life the majority of millionaires consider themselves to be optimists we actually pooled our group of millionaires these are money guy listeners that have turned into a bound wealth client so we found that 81 percent of them would self-classify as optimus so if you're thinking about one of the traits of being a millionaire optimism and thinking the glass is half full as opposed to half to empty is probably a pretty consistent thought so that's a powerful one the second one is is these guys are and you heard this both from chris hogan you heard it from dr stanley they're starters self-doers in a lot of ways and you can see that in the stat that do millionaires actually inherit their wealth our research and this ties into those two previous books that i mentioned the exact same data yeah we found that uh 11 of the of the folks that we pulled inherited over a hundred thousand dollars so i would argue that that's inheriting some wealth like if you inherit six figures you know that's that's material that's going to give you uh another 12 inherited less than a hundred thousand dollars now we're not six feet they had some level of inheritance but maybe not a meaningful thing that's going to be supe super super life changing but 77 of the folks that we pooled inherited nothing yeah they are first generation millionaires which is pretty remarkable so if you think about that i mean it's it really is amazing how you start noticing all these trends but i wanted to distill it into i think when i looked at this i was like there's even more here it's because you hear you know the seven traits and then you know everyday millionaires has all these survey data i was like i think when i see this i i start spotting that there's actually three key ingredients that you have to recognize and they kind of make up all these components you hear about talked about in all these other publications and those three key ingredients is discipline number one money number two and then time and i want to explain what i mean by these you guys you've heard me talk about this because i've been throwing out those three words a lot recently because they just they keep popping in my brain they keep just jumping out and like if everybody can just understand these three components they will know what the most important parts of wealth creation actually are because if you can figure these three out it's not that difficult to become wealthy it's a fairly simple process not necessarily an easy process but pretty simple it's only three ingredients it's hard to screw up that recipe well yeah and it's just like there's so many checklists i mean when i when i think about processes you can get overwhelmed yeah for sure that's why i do think systems like dave ramsey's baby steps works for a good group of people i think financial order of operations for the more advanced type of planners is good but at the end of the day when you start out you've got to start somewhere three seems like about the right number to start with so that you don't let the big stuff slip by so that's why i want to go deeper into each one of these so the first one discipline yeah let's let's talk about discipline a little bit this is the clearest sign that you're a financial mutant i mean that's what you're really trying to figure out are you you know and i always think about you know professor xavier okay you know he's always running from the x-men right of course because you're looking to see do you display the behaviors that mean that you're gonna morph into this incredible financial mutant that builds all kind of opportunity for your family but also makes the world a little bit better place because you're able to be generous and other things you're looking what are the indicators that i might actually have this mutation that creates tremendous potential yeah and i think the probably the the clearest example of this or the most easy example to see inside of a financial mutant to really suggest that they get the discipline part and they're mastering the discipline part is deferred gratification and so whenever we use any sort of vocab vocabulary like that we want to make sure we give you a definition and deferred gratification describes resisting the temptation of an immediate reward today in hopes of a greater reward in the future you you say it a little bit differently yeah i'm saying that you need to just just give a little bit of today for a great big beautiful tomorrow i mean you guys know love me some walt disney world and great big beautiful tomorrow is exactly what you can build if you can just do that a little bit of today and this isn't some new idea new concept that we've come up with psychologists have actually studied this for years and years and years and they've even kind of studied this in children right when we've talked about this proves in the show where there's uh what's called the marshmallow test where essentially you're supposed to take a kid age three to five uh my kids are three and five right now i've not done this yet i need to and you're supposed to put a marshmallow in front of them and say hey listen junior if you don't eat this marshmallow i'm gonna walk out of the room i'm back in five minutes when i come back if you don't eat the marshmallow i'm gonna give you two marshmallows and you're supposed to have a camera set up or something so you can watch your kids reaction when you leave the room well we think that uh what you want to see happen is your child sits there and waits patiently and the marshmallow just kind of sits there and they come back and they say mom dad i was so patient look how well i did i'd love to get to marshmallows now i have one kid that that might happen with my other kid before the door shuts behind me marshmallow's gone guaranteed no doubt about it well that's human nature yep i will tell you there's a reason i use the terminology financial mutant is that this was easy if this was normal you wouldn't be a mutant that should be like everybody else so that's the part so we do consider kind of this deferred gratification the adult marshmallow marshmallow and the fact and here's the parts that i think are impacted by discipline your mindset are you are you viewing the world i mean we heard that millionaires are much more concerned about reaching their goals than what their status looks like so your mindset will be impacted your strategy you're going to have discipline built in your strategy your lifestyle will likely likely reflect it why do you think both of these authors use titles that give you visualizations of the millionaire next door it's common that makes you think of hey that person that lives in the normal street just like you live in might have a million dollars and you would never know it same thing everyday millionaires these are people walking down the street like everyday people you know that you pass at the grocery store the difference is they got seven figures sitting in the bank so think about your lifestyle will be impacted your behavior will be changed and definitely your habits that's going to be the biggest thing discipline will show up in how you're living your life so discipline effects mindset strategy lifestyle behavior habits but also it affects your finances it's no different and what we recognize is that if you can start the process of building your army of dollar bills a little turns into a lot in a big big way oh my goodness yeah this is definitely building wealth it gets so much easier if you'll just start early and i know look we have so many debates about people like no i mean even today this morning twitter right now i've got some tweets sitting out there that um people don't invest anything until you get all of your debt paid off i'm like guys you're only going to be in your 20s 10 years and it's one time you're done yep you're only going to be in your 30s one time yeah here's what i'm in my late 40s there's gonna be plenty of time to pay that debt down let's just try to get some assets that are working out there for you because you're going to realize when you get in your 40s when you get in your 50s you might have squandered some key opportunities in your 20s and 30s i see it all the time in our comment section when you go look at our shows on focusing on 50 year olds and 60 year olds so if you're in the 20s maybe no watch our buy age series just for the 20s and 30s sure go watch the 50s and 60s so you can go read the comments and see people say go no these guys i wish i would have seen this when i was in my 20s you will fix these mistakes because the fact of the matter is the earlier you start the easier it is we wanted to put together an illustration just showing how much you would have to start saving at each age in five year increments to get to a million dollars by the time you turn 65 to be a millionaire and we just assumed a descending rate of return so 10 at age 20 then it decreases by a tenth of a percent each year until you get to 65 you're earning five and a half percent so we actually have the rate of return decreasing well while you're young it only takes 95 dollars a month for a 20 year old to get to a million bucks by the time they turn 65 that's not that difficult that's not crazy heavy lifting if you wait until later in life and you wait until you get to 40 to get serious about it now you have to save 780 dollars a month at age 40 your 20 year old self had to do so much less work than your 40 year old self has to do to get to the same place by age 65. i think i can already i can already head them off at the past there's a girl be a group that says yeah but that 20 year old by the time they reach million dollar status it's just not going to be worth it but here's here's something i can tell you guys you know how you the easier easiest way to get to three million dollars have a million dollars about four years earlier that's right i mean because that's the thing is this tell the tell of how you need to not think linearly you need to think exponentially guys because what happens is after you cross a million you'll find you cross two million within probably the next three years this thing starts multiplying it gets intense really quickly so don't give me the inflation issue get off your duff and actually start building the wealth because you start at 20 it gets easier and i'm just telling you don't let yourself have excuses or coping mechanisms that derail you from that dream now this is what we see happens most often right this is where the stacking gets so exciting because someone who starts saving 25 95 at age 20 probably doesn't stop there they probably don't stop and just save 95 they might by age 25 be saving an additional 158 on top of that so if you add those two and you're saving that much at 20 guess how much you'd have by the time you get to 60. five you'd have two million dollars you can actually start stacking again the earlier you start the more powerful the dollars will be the sooner you figure this out the sooner you're gonna make your life so much easier i even see folks in the comments saying oh yeah you know i really didn't start until i was 30 or 32 or 35. that's okay you still have tons of time people ask us all the time when is the best time to start saving money when's the best time to start investing our answer is always the same the single best time to start was yesterday which makes the second best time to start today so if you're listening this now and you are behind the gun get caught up and start today start doing something you will not regret it so show them we got them all excited i felt like we should have hit the hype button or gotten everybody just recognizing what we just shared but that's not the reality though no it's much sadder and i we put this more as a this is a sober test to let people realize this is what your peers if you think about that first day of college they always scare people just look to your left look to your right you know only so many of you go make it through it this is kind of that slide in the fact that the majority of you can't come up with a thousand bucks yeah it's it's pretty disheartening uh bank rate found that 59 of americans have less than a thousand dollars in savings and brian i have a real real world example of this my wife was hanging out with a friend the other day and this is a friend that she's known for a long long time and they had their kids and they were going somewhere and uh my wife was heading back to the house and other ladies that was going to stop by zaxby's or something or somewhere to get some food and i was like hey uh can you just uh pick up some food for us and i'll venmo you to pay you back and her friend was like oh okay yeah no problem but i need to check my account i need to check my checking account and my wife was like i don't understand i was like no she didn't she didn't have any emergency she didn't know if she had enough money to be able to cover additional food i think a lot of americans live in that place that is not the place that you want to be that's not sound financial mutant money management that's certainly not exercising discipline no you need to have margin because that's what discipline does create margin so you have the flexibility so things you don't take your life into financial ditch there's a reason we talk about financial order of operations you got to make sure you have your deductibles covered first before you can even move on to the next step so let's keep it going though because i want to talk about what does discipline actually look like so let's give you some actual how does this apply to your life yep so the first thing that we think discipline looks like is living happy on less this is the idea of deferred gratification if you make a hundred dollars don't spend a hundred dollars live on less than what you make and be happy living on less than what you make and literally that one statement living happy on less is step number one they live well below their means step three they believe that the financial independence is more important than displaying high social status and number six they're proficient in targeting market opportunities all those things are made available yep possible by living happy unless so disciplines about not doing some things and it's about doing some other things we think it's also about not trying to outsmart yourself when we see people do this all the time a really really easy example is folks start investing and they start saying oh i got to go figure out when the net what the next stock is what's going to be the next tesla or the next apple or the next google it doesn't have to be that complicated when you're just starting out when you're at the beginning of your financial journey you should be able to answer two questions how much can i save when do i want to retire if you can answer those two questions there are fantastic solutions out there for you in target date retirement funds that will solve the complicated piece for you until you graduate to needing something more sophisticated and i want to i just want to add the emphasis index target retirement funds are the ones we definitely love the most and you can a good place to go do some some due diligence is go look at fidelity investments they've got the the fidelity freedom index funds vanguard has the target retirement funds these are things that you ought to go do some research on because um we get picked on sometimes people will say you're not given actual specific recommendation just listen to our content we are telling you what you ought to focus on and yes there is if you can go look at target retirement funds it will do everything you need until you get to a level of sophistication that hopefully you'll graduate through the abundance cycle another thing i think that's so interesting is that even folks that have mastered deferred gratification to an extent they've been able to build up really healthy portfolios large pots of money they still struggle with this not outsmarting yourself how many phone calls have we gotten this year from uh friends of the show other things saying hey you know if this election goes this way i think i want to go to cash yeah or hey i think if it's this is going to happen then i think i'll want to go i think that when you try to time the market and figure out which way it's going to move you are outsmarting yourself and you're setting yourself up for a big heaping pile of failure i have personally sent out our election episode on our my texts like if you go to my personal friends text threads i'm sending them copies because they're asking should we just go to cash and i'm like watch this watch this watch this do you have enough cash to cover your needs for the next yep two or three years that's essentially what your emergency reserves is supposed to do chill out it'll be okay no matter who wins we will still be here it will be all right you just said something perfect because that's the kind of the third bullet that we think discipline looks like covering your risks you mentioned emergency reserves that's a great example if you're a disciplined person you do first have that thousand dollars that 59 of americans don't have but then you've also recognized you've worked through the financial order of operations and you have your three to six month of emergency fund funded your three to six months of expenses you're making sure you're doing the things you're supposed to be doing yeah and then up this one got put in there i will give you credit for this growing up oh yeah yeah and look i do i think this is something that's interesting is that we know dave we love we love dave ramsey he's got his baby steps we all hate his children somebody tells you do it this way because i told you because i told you so that's right and i think that's where dave's situation and rightfully it needs to be that way because 80 of the the public they're just horrible with money you've heard the stats 60 kenyan come up with a thousand dollars they need to do stuff because dave told them so and i completely tie into that if you're a financial mutant though you're getting a little more flexibility you're growing up you're out there on your own you have the ability to understand that there might be some differences in your plan from somebody who struggles with credit card debts because credit card debt is a four-letter word you don't even struggle with that if you actually understand how good money management works so that's why we do have financial order of operations it gives a lot more flexibility we call it adult steps that's right if you want to look at a graduation path here is because there's a lot more flexibility built into it if you can't handle it though make sure you're staying back with dave because he will keep you safe and doing it the right the way that it is much more it's much more you know stringent rightfully so if you don't have the right discipline because that is this key component we're talking about all right so that's ingredient number one discipline let's talk a little bit about ingredient number two for how to be rich or be wealthy or have financial success money guys you know look the guys broke my heart in the content meeting this morning we i he did he buried that lead did you know he didn't i mean you it was last week we're preparing the show and i'm thinking about money is the lubricant that allows wealth creation to occur okay now a lot of people we've done a whole show on does money bring happiness no is money going to be the thing that's going to make you look cool to the the people that have all treated you bad in the past no it's basically a tool it's a lubricant to create wealth and other things for the future so you can spend time on your means well there's a sci-fi book out there dude i'm i'm just going to zone out of this part of the show i'm going to just hang out over here y'all share with me because i because i look at money as the spice must flow meaning that it is it is one of those things where it will this is what's going to create the process but don't misunderstand what money actually is in the wealth building process but the parts that y'all broke my heart as you shared this movie has been pushed off oh yeah they're coming out with 2021 the movie dune which some of us were excited about and the rest of us weren't brian and uh look there are a lot of our viewers that are my age they're gonna be just as excited don't you you you you guys don't know we're gonna we're about to see a bunch of people my age that are just as sad as i am that that movie's been pushed off but we'll keep on or james bond and probably james bond which i love james bond too by the way but but seriously money is the lubricant that's going to create wealth so and this is and this is such an important thing to me that i want to i won't even pick on myself a little bit in the fact that i get it sometimes on this show i'll use the word save and invest interchangeably we literally had someone earlier in the live chat comment on that oh you're not talking about saving you're talking about investing and i get that and truthfully that's a it's a valid sure can statement but the reality of the situation is if you're thinking about in terms of financial order of operations where you are with your money each dollar has a purpose you're a good field general you're using your army of dollars well that there is i do think about it interchangeably in the fact that if you're saving money that money's not sitting on the sidelines sitting stagnant unless it's part of the emergency reserves core unless it's part of the deductibles covered part but everything else has got a plan and it's probably getting put to work somewhere so but that is something i'll try to work on but i do think about those things interchangeably is that if we're saving the money we're probably putting that money to work love it and what i think is so interesting is if you were to poll most folks and say hey all right uh we're doing this show on ingredients and a lot of you guys did this hey we're doing this show on ingredients what would you think are the big ingredients you need to be successful and people say oh you need money you got to have lots of money if you want to be wealthy you got to have lots of money lots of money lots of money that's false it's false what i think is so interesting about money is it's not even all that important because just like we said with discipline if you figure it out early it only takes a little bit of money to do some really really big things in your financial life it really is that pebble that you're starting to to roll down you could do snowballs you can do you know mud you know because we're from the south i mean it doesn't matter what you want to start as the smallest building component it can start really small and like i said quit thinking literally think compounding exponentially it turns into something huge yeah we have a great deliverable out on the money guy website and go to moneyguy.com resources this is called how powerful are your dollars the first time i've ever gotten it right on the first try and this shows two things one you know this does show okay how much i have to save each month to be a millionaire instead of going in five year comments this is at each age so if you are a 33 year old you can see exactly how much you need to save to get to a millionaire and you can see early on in life the earlier you start the less money is required but what i think is so valuable is if you look at the wealth multiplier how powerful your dollars can be one dollar one little piece of money one single dollar for someone that's the age of 20 is the equivalent to 88 dollars by the time they get to retirement the earlier you can figure out this multiplier the better off you're going to be so if you're someone who's been saving and you're someone who's 32 and you say you know what i've got 15 000 saved up and i just feel like i'm behind the gun you ought to take that 15 000 multiply it times your wealth multiplier which would be 18.05 and that's what you're on track to have by the time you get to 65 without saving another dime your dollars can be that powerful and it doesn't take a lot to go a long long way well i mean that's why we are constantly the biggest thing i think i i hope people recognize there are key components that i say so often it's because i want to make sure that you incorporate this and the biggest is saving 20 to 25 of your gross income and i get it if you're in your 20s you're like that's tough brian can't do that yet we've all been broke in our 20s and the good news is you might not even have to be at that point in your 20s because as you're figuring things out but really by the time you're in your early 30s i really do want you to be hitting on that 20 to 25 percent of your gross income and and here's right oh wow there's a big a quick exercise we can do can you build wealth with a low income can you build well yeah we just showed it for a 20 year old exactly 95 bucks a month yeah yeah yeah unequivocally yes you can build wealth of low income but can you build wealth with a zero savings rate and the answer is no because you can multiply a million times zero it's still going to be zero so i'll rephrase the question can you build wealth with a low savings rate and the answer is no if you don't start early and if you don't have a big enough shovel that's your term shovel and the fact that you're talking about how big is your income that's right and that's that's the parts where it gets much more difficult if your savings rate doesn't reflect what is needed from the time as well as your age which those things are all interrelated you go start noticing these things are relative to each other they are cousins that you better respect each component of this wealth creation because they they interchangeably work with each other all right so you're like all right guys i'm bought in i'm on this money train now what do i do okay what do i do well uh we think that there are two paths and this is maybe the most simple most basic financial advice that we could ever give when it comes to the money piece of the three ingredients you really have two options if you need more of it you can make more or you can spend less it's literally binary it's that simple if you need more money to be able to put into savings more money to put into your portfolio more money to put into your army of dollar bills there are only two ways to do that make more or spend less so let's talk about these two things you can control sure this is the the first one to making more money pay attention to that college major guys oh that's a huge one i mean because there's a lot of young people that watch this show and um i'm i will tell you as i've gotten older i'm amazed how decisions from such a small window of my life have impacted everything i i mean i'm talking about i've even thought about you know because i was a finance major sure i switched to accounting mm-hmm would i would we have all this if i had to stay in finance i just don't know because look back when i was things are different now bo actually has a financial planning degree yep meaning you can actually go get a degree in financial planning now you couldn't do that when i was there finance people typically turned out to be salesmen stock brokerage firms i mean that was that was kind of the path that scared me out of that major is because i was like i don't know anybody with money and i look like i'm 12. there's no way i'm gonna be successful in this industry you know i think it's you know picking your major is one big piece of it but i think even probably picking your school is another big piece of it too uh when you were coming through what was the most prestigious accounting program in the country do you remember like what what's a school that's like known for accounting well i mean at the at the time back this is back then back then i mean it's going to be embarrassing to all of us dogs florida had a really good accounting program at the time i immediately remember being careful asking me questions that you don't know here's the point that i'm making someone comes out with a degree from florida with an accounting degree and they had to rack up tons of student loan debt to do that right that drafts you know tons and tons and tons of student loan debt someone else comes out with a county degree from a smaller more affordable in-state school but they both go out and they both passed the cpa exam and they have a few years of experience was all of that student loan debt that that person acquired at florida was it worth it or perhaps could they have achieved the same ultimate career goal career trajectory career film the blank if they would have gone the less expensive route and i'll even i'll tee this up in a better way because we get a lot we get a little flak on this because we never give this this college hack that people scream it in our comment section i'm like you're right why don't we mention what about going to community college for two years and then transferring into that procedure that's cool um there's a lot of people their diplomas look exactly like my diploma it's just it was a lot cheaper to do with those two years so and look if you've got the money without going and getting in debt or you know family members go have the full experience but i i love the situation that you've got to get creative so that you don't straddle yourself with lots of debts and other things that hang over you for a long time um let's talk about new jobs i mean let's take a look maybe maybe you're not not in the college maybe you're in the i want to give you a perfect case study anybody here a lot of you guys when you graduate to abundance cycle you see we have an awesome team behind us the uh best financial planning team in the entire country and i've got i've got an uh a lead advisor here um named erica eric doesn't even know he's in the show notes he has no idea but um eric moved to from texas he you know big4 accountant um was working in industry money guy fan reached out to me and my goodness he's moved from texas to tennessee and he's now part of the team guys that is talking about making tracks and controlling your destiny and seeing an opportunity and trying to figure out am i doing what i need to be what was i put on this earth to do he did it yep i mean i think about our i mean we have that case study i could do that on a lot of other employees and others you can look at your own life and go am i where i'm supposed to be question that and figure out is there an opportunity and maybe you even have to move down a little bit or even sideways to make that happen i know that sounds kind of counterintuitive yeah but i need to ask you to self quit thinking in 12 month increments start thinking 3 ten years because that just like investing is a long term in nature so it's living your life guys so so so get out of 12 month mindsets and think more long term but you know changing jobs and those are big decisions i mean that's big life stuff that perhaps yeah if you're not doing what you're putting the surf to do certainly figure that out and try to improve that but sometimes we're just like we got family commitments and we got the mortgage and we got the car we got these things so maybe we can't do that big go start a new career at a new place with new people but what's great is one of the things you can do to influence how much income you have coming in this is the greatest time i think in the history of civilization for side hustles for sure so go out there and do a side gig to generate a little bit of extra money i would say it's much easier now than it was when you came out of school for sure i mean because you can i mean it's so easy with all of our mobile apps and everything else if you want to go deliver food you can do it yep if you want to go buy groceries for somebody you can do and by the way what a weird time with this pandemic that if you're a younger person you have lots of tom and you have older people that are in in a very tough situation you're doing good too i mean because these people would count on you and need you so you're not only making more money but you're also helping those who can't provide for themselves right now i think that's a win-win situation and here's a challenge i want to give you if you're in your 20s i want you to really think about your day i want you to look at your phone like i know apple products have an audit feature where you can see how much how much screen time yeah and i want you to ask yourself should there be maybe two or three hours of that that was used for something more productive because i can tell you you're gonna get to your 30s and 40s and go what the heck was i doing in my 20s because my wife and i literally had that conversation no it happens all the time i mean it happened to all of us so i don't want you to be hard on yourself but you're going to look back at your 20s and go what was i doing i mean because you just you're you'll see life will engulf it'll suck out all that time and capacity that you have and that's okay when you're in your 20s you're broke so once you but you've got abundance of time whereas what's what's sad you get to be my age i'm not broke i ain't got time for anything though guys i'm just going to tell you i'm getting pulled in all directions so i got all the money uh you know to go do the shows but i don't have time to to do much of anything so that's that's that's the balance you need to look at and figure out if there might be an opportunity with a side hustle and we even have a case study i want to i want to give you some credit here brian because when i was just a wee lad in my 20s i remember we were sitting this was down in mcdonald georgia you showed me this illustration and you said but let me go ahead and let you said something really dumb but it was like let me show you what your future looks like or let me let you speak in the future it because it did uh but you know looking back it's kind of funny but you showed me this illustration right here and you said let me show you how how cruel i think was the words you use but it's not really cool it's just reality let me show you how real life is and this is the illustration that you showed me well it is it's one of those things where you think about what you have coming in income wise what your commitments are and there's a reason we call it the the messy middle messy middle i mean because when you're in your 30s i mean think about not only do you you you start a family but that's when the average person buys their first house and you're going to figure out there's a lot of things pulling at that back pocket so you just you need to recognize that look there's a reason i think all the happiness surveys show once you get in your 50s there's this confidence that comes yeah you're carrying on a few extra pounds but you know what you don't care you do not care and a lot of this that's why i look at your disposable commitments goes down to the ground meanwhile your disposable incomes typically all right it's gone down a little bit but the separation is tremendous take heed this to see if there's something actionable for you but you might be out there listening and say oh i don't want to drive uber or i don't want to do postmates or i don't want to do fill in the blank because it's only a couple hundred bucks right it's only a couple hundred bucks a month well we asked daniel to put together an illustration for us and hey how valuable can a side hustle be how how good can this be and this is what we found out with someone that starts at 30 years old if we assume they can earn nine percent on average if they save an extra 200 per month starting at 30 that could be almost 600 000 by the time they get to 65. i'm gonna say that again the little side hustle a little thing that you're doing that generates an extra 200 bucks a month if you take that 200 and you invest it towards retirement it can mean an extra six hundred thousand dollars by the time you get to retirement 200 doesn't sound all that crazy 600 000 sounds like a big big deal when you think about retirement income i mean that's that's that's going to be the part that lets you feel comfortable enough in retirement to have the margin to really enjoy life absolutely so let's that we spent a lot of time on making more but what if you look at your situation and maybe you maybe you're in the messy middle you're in your 30s you're like i ain't got time ain't no way no one let me put the baby down to watch this this is this next section let's talk about spending less i mean that's what we know we we don't talk about budgeting a ton because we're and i i've heard you guys asking for content on cash management plans and for scarcity we're going to create something on that for sure but it's um but budgeting if you haven't reached to the point of understanding having a cash management plan there is no shame in doing a budget nope not at all get out there and um do we have any resources on the web on our on our website with the budget we have some old ones we don't have any good ones we're going to that's one of the things we're working on is we're growing the money guy family have more resources avail some sort of cash management tool but yeah if you haven't mastered those foundations i had a phone call the client of the day is like hey i'm making more money than i've ever made in my life but i just don't know where it's going you know i feel like i've got this going on and that going on and i really don't have a bead for it and i told him i was like hey i know that you are well you're a wealthy individual you have a super high income you're in a great spot but maybe you need to go back to the basics for the next month or two just track where your spending is going because it's hard to know where your money's disappearing to if you're not actually marking it down and figuring out okay where's this money going so that you can figure out where you can squeeze where you can cut out some margins i have another client you know this one she had like a subscription to everything you could possibly subscribe to right she had like the netflix and the hulu and the what's the clothing that they send to you uh stitch fix shout out she wasn't using any of them and i told her i was like hey why don't we think about like you know cutting some of these out like trimming that footbed oh my goodness it saved me like hundreds of dollars a month on stuff that i didn't even realize if you start tracking that's a really easy way to find some extra money in the budget there there's no doubt if you will just get very deliberate with how you're spending every dollar um you know there's a reason you know we just did that show on graham stefan and he lives kind of a minimalistic lifestyle yeah and i've often told you guys that i had a conversation with my wife when we were in our 20s and 30s if she'd just go on this journey with me by the time we were in our 40s we'd kick it up a notch and i'm not look i'm not telling you to be a miser no i don't want you to be scrooge mcduck where you're you're not you know or maybe scrooge mcduck was but just think about you know ebenezer scrooge mcduck he was such a miser that he's not enjoying any of the money i want you to have a bedazzled basic life i still want you to go on trips and other things but instead of spending twelve thousand dollars to go to europe you might be spending four thousand dollars to go to europe i mean those are the things you can still have a lot of the same experiences it's just not going to be the luxury variety but that's okay because your memories blossom anyway and while you're in your 20s while you're in your 30s you put up with a lot more than you can i promise when you're in your 40s and 50s and you're waking up in the middle of the night naturally so you can deal with a lot more in your 20s and 30s so just deal with those decisions enjoy life but think about in a bedazzled way what are some ways i can kick up my life but not jeopardize the savings goals and the other things i need to be doing now here's a little bit of cold water one of the things you have to do because lifestyle creep is a real thing and it exists for all of us and it happens if you're someone who finds yourself in a place where your lifestyle has kind of expanded possibly beyond where it needed to you'd have a hard conversation with yourself if you've listened to one of the shows we've done on car buying and we say hey if you have a luxury automobile it has to be paid off in 12 months and you say well guys guys guys i got like this 60 month loan on my bmw and i can pay it off in 12 months we would argue you probably can't afford that car i've had that phone call with some folks where they're what's bad is when they're in their 40s like i've got to do the bmw guys i mean come on yeah just i got to do the bmw i'm just going to finance it and i'm like if you can't pay for it you just can't afford that because i can't afford it that's the truth you need the honda that's right i mean what are we doing here you know why are we still just because you live in this neighborhood and that's that's the hard decisions i think a lot of people struggle with that's a reason we have that rule on financing we do give you flexibility but if you can't pay same as cash on luxury vehicles you can't afford a luxury vehicle right exactly so so take that take heed of that so i think we came pretty hard on we're trying to create more spice or more um lubrication through the process which is money we want to make sure you're greasing the skids so you can create least resistance for your success and that what's going to provide that viscosity is going to be money perfect none of this was interesting lubrication viscosity i just want people to know this is going to money is going to be the lifeblood that creates that's right because there are just in review two things you can control your discipline and then the money that's created from that margin that you can put into the process those are the only two things you can kind of control and sadly the next component i'm going to talk about tom is the most valuable but actually the most out of your control too yeah i would i don't i don't i don't know if we thought through this i don't know if we did this in order of importance or an order of impact or power well i've done it in kind of the i'm once again thinking in terms of like financial order operation what's the first step that has to occur discipline okay you're not gonna have any margin unless you have discipline and then that creates the actual tool that will allow you to actually start the process which is money but then that leads to the the most patient the slowest the boringest but also the most powerful part of this entire process is time and you you said something brian again this isn't like your old man on the front porch wisdom for the team he said hey team have you ever looked at other financial planning firms have you ever went out and looked at you know you have colleagues or counterparts that work at other firms have you ever noticed a common thread that all of their names have in there yeah it's it's big old trees big old trees there's there's oaks and big woods i don't know if that was o-l-d or o-l-e big old trees big old trees so it's um but you see we have a big live oak tree here and in this picture that we put up and that's what you see that i mean we we know a firm it was red oak i mean because it gives you this imagery and here's something and look this whole section time is something i've thought a ton about because i think about 88 times over there's a reason that i focus on that so much because it really is driven so much by tom and then i'm reading the the psychology of money morgan household and he had a great analogy that i'm going to use in here but he also to set up the analogy he talked about trees now he didn't talk about firms and trees but he did say look you plant a tree you come back a year it doesn't look any different that changed a whole lot crud man that thing's slow growing and then you come back 10 years though like wow that tree trees kind of made some progress you come back 50 years after planting a tree and you're like holy cow that's that's a dadgum tree i mean that's that's kind of how money and wealth creation is too is because it's if you go and you put money unless you bought tesla last year but if you put money in a financial instrument an investment typically a year later you're like all right okay it's up a little bit all right you come back 10 years like wow that's that's kind of incredible you mean your money doubled and and you know in that amount of time or maybe even tripled you're like wow that's pretty impressive you come back 50 years you're like whoa holy because once again the human mind we think literally we're thinking you know one two three four five six seven you know we're thinking like no that's not the way if you you know in the example it's also made if you exponentially think about two four sixteen yeah sure man i'm i'm about broken um you know you run into limits but that is the way money grows and there is a perfect i mean show them the 88 times yeah that's we talk about all the time you think about a small seed turning into a tree that is the 88 times over a person who is 20 years old one dollar can turn into 88 a person who is 30 years old one dollar can turn into 23 a person that's 40 year old one dollar can turn into seven even a person that's 50 you still have time on your side one dollar can turn into almost three dollars and that assumes if we just stop at age 65 we're thinking about like normal sort of retirement the earlier you start the more powerful your dollars can be time is what does it it's one dollar all across this entire chart it's the time that changes how powerful it is that the key secret ingredient to this chart is 45 years what's crazy is if we took this to 55 years it's it changes i mean it's incredible so we actually have a case study on somebody and this like i said i'm i'm i'm benchmarking this from morgan household's book um the psychology of money and this is something that we got a perfect case study warren buffett i got to be honest um i don't often get surprised when we're doing like show prep and that kind of stuff uh dare i say this one blew my mind the whole financial world is on fire for this case study and i'm kind of mad we didn't think of this first because it's so simple but so it is very simple but this is why this is so effective so i want to bring up warren buffett's financial life now look warren he's a unique bird he's a unique bird he realized he started investing seriously investing when he was like 11. um and you know like wait a minute what are you talking about no i'm sick like because look if you come from some some families of means like we have families sure multi-generational will have set up a savings account trying to get the kids excited about money i've seen you have personal meetings with some of these some of the kids teens early teens or whatever where you're like hey let's talk about investing why you do this that was warren at age 11 he had a few thousand bucks back then back then back then so i mean this shows warren didn't come from poverty but man he has done something with it but by age 30 he had a million dollars mm-hmm all right okay million dollars by three that's pretty back then that's pretty powerful still from an inflation adjusted that's even more powerful by age 50 300 million dollars but i want you to notice not a billionaire yet nope not a billionaire at age 50 by the way m show prep bogos brian you got three years [Laughter] with a straight face you got three years to get that i'm not gonna hit 300 million in three years well don't sell yourself i get close age 65 look at this this is what's crazy he had 10 billion dollars unbelievable he crossed what did we figure out it was 56 right 56 he crossed into a billion um so he he went from 56 to a billion the first billion to age 65 he was 10 billion and look at this age 90 he's now 80 billion dollars and by the way he's giving away a chunk he's giving away he's giving away a lot of it i mean it so do you see exponentially this is not growing literally this is growing exponentially this is the part that i think people can get their brains around is how much because look it wouldn't surprise me if warren has the ability to continue to live like he's doing if we could go to age 92 this could cross 100 billion i mean it grows that fast so we wanted here's what morgan kind of threw everybody on there threw up things upside down he said warren's biggest feature is he is now 90 years old and he started investing when he was 11. that's a lot of time i mean i'm running 88 times over on 45 years yep so he said what if warren buffett was just like everybody else yeah i think what's so interesting when you think about okay why was warren so successful everyone said oh well he's the best investor of all time yeah he just knows how to pick stock so his rate of return is what makes him so special it's why he has so much wealth so because his rate of return is like 22 a year yep that's right so let's let's but let's think about in reality of what the typical investor or person is they they enjoyed themselves in their 20s so if they felt they were broke but even though they're broke they went out and still had a good time yep didn't bedazzle their life they actually just used the credit card seemed like the perfect bridge don't worry mom dad i'll save later sure i'm just going to enjoy my 20s warren didn't do that but that's what the typical person does so let's just assume warren gets 230 and he saved up 25 000 which by the way is not bad if you're a 30 year old you got 25 000 invested again you can go look at the wealth multiplier multiply that times 23. still pretty strong still pretty strong uh so then we've already mentioned his rate of return right so let's assume that he takes that 25 000 and he's still able to earn the phenomenal returns of 22 percent annualized which is unbelievable over an entire working career let's say that it's the investment prowess that really makes him something special but let's decide that he decides not to continue working let's say that he decides to retire at 16 wants to go play golf it's interesting did morgan use golf or we come up with golf because he's more of a bridge player isn't he isn't that his game he does like to play cards daniel did we come up with that was that morgan morgan did golf well morgan i would guess that warren would play bridge but you know what it's your example we'll go with it so this is what we said by the time he retired if he is this phenomenal investor what would his net worth be at age 60 you know if he's the best investor in the world so it's not like we throttled his performance no all we did was we kind of stripped him of some of a lot of his time because he's done more of a normal conventional working savings career of 30 years yep what we found is that starting at 25 000 by the time he got to 60 he'd have 12 million dollars now don't mishear us 12 million bucks is still a lot of money it is a lot of it's not that's not some small we don't know who warren buffett is though we we a lot of you guys that are part of the money guy family the abound wealth family this could be you this could be we know a lot of you guys out there that have built levels of wealth at this level you warren the thing that made him so special is he recognized how powerful the third ingredient was how powerful time was and that's the part that's the the key thing that i want you to understand is make sure you have time working for you i want to go back to that same picture of that tree that we used in the beginning but let's go ahead and let's give the oracle from omaha is due and put a warren buffett quote on top of it because this is what he said someone's sitting in the shade today because someone playing a tree a long time ago he started he started planting his seeds at age 11 and now at age 90 he's got a whole bunch of shade so it's gosh guys i mean if you will just harness those three simple ingredients discipline yep money and then definitely don't squander time because time is gonna be the one that's the exclamation point it's gonna be the one that gives you the explosive exponential growth and then also guys don't limit what you can become because i think that's the biggest thing if you're in your 20s right now or 25 or even 30 and you're watching this you're going to live to be a ripe old age don't let somebody tell you hey i gotta live for the day because tomorrow is not promised statistically you're gonna be old so go ahead and start acting accordingly and let your money have the opportunity to maximize and create the best life that great big beautiful tomorrow is just sitting out there waiting for you uh if you like free resources you like deliverables pdfs you want to know what the nine steps of the financial operations are you can go out to our website moneyguy.com resources we're going to be adding some news we have some that we're working in the hopper right now that we're going to release if you're someone who wants to know am i doing the things with my dollars i'm supposed to be doing you can actually go check out our financial order of operations course you can go to learn.moneyguy.com check that out and then if you're sitting out there and you're just renting your seat here on youtube and you've not bought your ticket you won't believe how cheap it is all you got to do is hit subscribe and then uh ring the bell for good service yeah okay that one works ring the bell for good service yeah haven't you ever eaten at arby's or someplace no he's for it the cowbell i guess that's our thing we're gonna ring ring that like oh no that's a like button yeah i didn't you're trying to figure out yeah i was trying to really want to do something to the like button yeah i was trying to get them to turn on notifications oh okay well yeah you can do that too so do those three things uh and yeah that's all i got there's a reason he's got 2 million subscribers and we have 80 84 000 at this point so we're working on it guys thank you for subscribing the abundant cycles at work just keep coming we're going to keep loading you up and just thank you thank you thank you we enjoy all of our time with you i'm brian preston mr bo hansen money guy team out

Channel: The Money Guy Show

Views: 44,636

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, Do This to Be Rich! (The 3 Secret Ingredients!!)

Id: Ta36Qcn_e8g

Length: 59min 46sec (3586 seconds)

Published: Fri Oct 09 2020