9 Surprising Lessons That Made Me a Multi-Millionaire
Summary
TLDRIn this insightful video, the speaker challenges common financial misconceptions, advocating for a balanced approach to money management. They discuss nine counterintuitive lessons, emphasizing the importance of not just saving but also investing and spending wisely to enrich one's life. The script addresses topics like the potential downside of extreme frugality, the value of buying time, and the emotional aspects of financial decisions. It encourages viewers to reassess their relationship with money and make informed choices that align with their life goals.
Takeaways
- 💰 Frugality can be counterproductive; saving too much can prevent enjoying life and spending money on things that truly matter.
- 🤔 The concept of 'enough' is often vague and should be calculated with a buffer of 15% to account for unforeseen expenses.
- 📊 Financial health involves saving at least 10% and investing 10% monthly, ensuring fixed costs are below 50-60% for guilt-free spending.
- ⏰ Money can buy back time, which is valuable; using it to outsource tasks you dislike can improve quality of life and free up time for more enjoyable or productive activities.
- 🏠 Renting can sometimes be a better financial decision than buying, depending on various factors including cost of ownership and market conditions.
- 📈 Paying off a mortgage early isn't always the best financial move; sometimes it's wiser to invest the money elsewhere for potentially higher returns.
- 💼 Hiring a financial advisor can be costly; understanding fee structures and opting for hourly or flat fees can save significant amounts in the long term.
- 🔑 Passion alone does not equate to profitability; building a business should involve identifying skills that are marketable and enjoyable.
- 😄 Money can indeed make you happier when managed properly, allowing for enjoyment in life without constant denial of pleasures.
- 🚗 Avoid making expensive purchases based solely on monthly payments; consider the total cost of ownership to make informed decisions.
- 📋 Effective money management isn't about tracking every small expense but focusing on high-value areas like savings rate, investment rate, and asset allocation.
Q & A
What is the main message of the video script about money management?
-The main message of the video script is to challenge traditional money advice and highlight nine counterintuitive lessons to help individuals take control of their finances and live a rich life, emphasizing the importance of understanding one's money psychology.
Why does the speaker suggest that being frugal can actually cost you in the long run?
-The speaker suggests that being frugal can cost you because it might prevent you from investing or spending money on experiences that enrich your life, potentially leaving you with a large sum of money but no skills or desire to enjoy it later in life.
What is the speaker's philosophy on money in relation to living a rich life?
-The speaker's philosophy on money is that it should be used to live a rich life both today and in the future, rather than living a restricted life with the sole aim of accumulating wealth.
What is the significance of determining 'enough' when it comes to saving money?
-Determining 'enough' is significant because it helps individuals set realistic financial goals that take into account their needs and lifestyle, rather than arbitrarily picking a number that may not truly reflect their financial needs or desires.
How does the speaker define 'guilt-free spending' and why is it important?
-Guilt-free spending is using money for things that genuinely bring you joy and align with your 'rich life' vision, without feeling remorse or anxiety about the expenditure. It's important because it allows for a balanced financial life that includes enjoyment and fulfillment, not just accumulation.
Why does the speaker argue that spending more can sometimes save you more?
-The speaker argues that spending more can save you more because investing in services that buy back your time can lead to increased productivity, enjoyment, and potentially earning more money, which can ultimately save you in the long run.
What is the speaker's stance on the idea of renting versus buying property?
-The speaker suggests that renting can sometimes be a better financial decision than buying, depending on various factors such as cost of living, maintenance costs, and investment opportunities that could arise from not tying up money in property.
Why might paying off a mortgage early not always be the best financial decision?
-Paying off a mortgage early might not be the best decision because the money used for early repayment could have been invested to potentially earn a higher return, especially if the mortgage has a low interest rate.
What is the potential downside of hiring a financial advisor who charges a percentage of assets?
-The potential downside is that such advisors could cost you a significant portion of your lifetime returns due to their percentage-based fees, which can amount to hundreds of thousands of dollars over time.
What is the speaker's advice regarding the fees associated with investments?
-The speaker advises to be aware of and minimize fees associated with investments, such as management fees, front-end loads, and high expense ratios, by investing in low-cost index funds.
How does the speaker feel about the common advice of following one's passion to achieve wealth?
-The speaker believes that passion alone does not guarantee wealth and suggests that focusing on skills that people are willing to pay for, and becoming good at serving others in those areas, can lead to both passion and wealth.
What is the concept of 'money dials' and how can they be used to enhance one's financial life?
-Money dials are areas of life where one enjoys spending money. Identifying and understanding these areas allows individuals to allocate their finances towards what truly brings them happiness and satisfaction, while cutting costs in areas that do not contribute to their 'rich life'.
Why should one avoid making expensive purchases based solely on the monthly cost?
-Focusing only on the monthly cost can lead to underestimating the total cost of ownership, which includes additional expenses like taxes, maintenance, insurance, and more. Considering the total cost helps in making informed and financially sound decisions.
What is the speaker's view on the complexity of financial management?
-The speaker advocates for simplicity in financial management, suggesting that complexity can lead to misguided focus on minor expenses rather than high-value financial decisions like savings rate and investment strategy.
Outlines
💰 The Paradox of Frugality and Money Psychology
The speaker emphasizes the emotional aspect of money management and introduces nine counterintuitive lessons to control finances. The first lesson challenges the notion of frugality, suggesting that saving too much can be detrimental. The idea is that focusing solely on accumulating wealth without the ability to enjoy it can lead to a life of constant worry. The speaker proposes a balanced approach, advocating for guilt-free spending and investing, and understanding what 'enough' means to the individual. The key is to save and invest wisely while also enjoying life, rather than waiting until a certain financial goal is met.
🛍️ Spending to Save: The Time-Value of Money
The second lesson discusses the concept of spending money to buy back time, which is often more valuable than the money itself. The speaker shares personal anecdotes and examples of how outsourcing mundane tasks can lead to a richer life experience. The idea is to redirect money away from activities that do not contribute to one's 'rich life' and towards those that do. This involves identifying and eliminating non-essential expenses to free up resources for more meaningful pursuits, such as personal growth, enjoyment, and productivity.
🏠 Renting vs. Buying: A Financial Perspective
The third lesson addresses the common belief that renting is a waste of money compared to buying property. The speaker argues that in some cases, renting can be a more financially sound decision, especially in high-cost living areas. They suggest using a buy versus rent calculator to make an informed decision based on actual costs and potential returns. The speaker also touches on the emotional aspect of home ownership and the importance of considering all associated costs, including maintenance and transaction fees, rather than just focusing on building equity.
📈 The Hidden Costs of Financial Advice
In the fourth lesson, the speaker warns about the potential high costs of hiring a financial advisor who charges a percentage of assets under management. They illustrate how even a small percentage fee can significantly reduce lifetime returns on investments. The speaker advises paying for financial advice with an hourly or flat fee instead of a percentage, to avoid giving away a large portion of one's wealth to advisors. They also mention the importance of understanding fee structures for investments and opting for low-cost index funds to minimize expenses.
🔑 The Myth of Passion-Driven Wealth
The speaker debunks the myth that following one's passion automatically leads to wealth. They argue that passion alone is not sufficient for a successful business; rather, it should be combined with skills that are marketable and in demand. The speaker encourages focusing on activities that one enjoys and is good at, and that others are willing to pay for, as a path to building a profitable business. They also provide a link for viewers to find their first profitable business idea for free.
💸 Money and Happiness: The Power of Financial Freedom
The sixth lesson explores the relationship between money and happiness, asserting that financial stability can indeed contribute to a happier life. The speaker introduces the concept of 'money dials,' which are areas of life where one enjoys spending money. They encourage identifying these areas and considering how to increase spending in them without guilt, as long as it aligns with one's financial goals. The speaker also emphasizes the importance of not delaying enjoyment of life for the sake of future financial security.
🏡 The Illusion of Affordability: Total Cost of Ownership
The seventh lesson cautions against making expensive purchases based solely on monthly payment affordability. The speaker explains that focusing on monthly costs can lead to financial strain due to overlooked total costs of ownership, including taxes, utilities, maintenance, and transaction fees. They advocate for considering the full financial implications of a purchase before committing, to avoid unexpected financial burdens.
📊 The True Meaning of Money Management
In the final lesson, the speaker redefines money management, emphasizing that it is not about tracking every expense but rather focusing on high-value financial decisions. They argue against the complexity of multiple financial tools and advocate for simplicity, suggesting that having a few well-named savings accounts and credit cards is sufficient. The speaker encourages viewers to concentrate on meaningful financial metrics, such as savings and investment rates, and to strive for a financially simple and rich life.
Mindmap
Keywords
💡Money Psychology
💡Frugal
💡Counterintuitive Lessons
💡Budgeting
💡Investing
💡Spending Muscle
💡Opportunity Cost
💡Financial Advisor
💡Passion
💡Total Cost of Ownership (TCO)
💡Simplicity
Highlights
Emotional connection to money is a common factor that influences financial decisions.
Nine counterintuitive money lessons can help individuals take control of their finances.
Being excessively frugal can potentially cost you more in the long run.
The importance of not just saving but also knowing how to spend money wisely.
The concept of 'enough' is not a fixed number and varies from person to person.
The recommendation to save and invest at least 10% of your income monthly.
Spending more can sometimes save you more, particularly when buying back time.
The idea that renting can be financially smarter than buying, depending on the situation.
The potential downsides of paying off a mortgage early, especially with low-interest rates.
The high costs associated with financial advisors who charge a percentage of assets.
The importance of considering the total cost of ownership, not just the monthly payment.
The misconception that passion alone can lead to financial success.
Money can indeed make you happier when spent on things that align with your values.
The concept of 'money dials' to identify areas of life where you enjoy spending.
The importance of managing money by focusing on high-value financial activities, not just tracking expenses.
The value of simplicity in financial management to avoid unnecessary complexity.
Transcripts
for the last 20 years I've been helping
people take control of their money and
if there's one thing I've learned it is
that we love to lie to ourselves about
money we tell ourselves I just need to
keep a budget or I don't know how to
invest that feels like gambling to me
when ultimately if we got really honest
with ourselves we would admit that like
anybody else we are Guided by our
emotions and by our money psychology
there's nothing wrong with being
emotional about money but what I want to
teach you today are nine counter
intuitive lessons that I have learned
which are going to help you take control
of your money the first lesson is a big
one being Frugal can actually cost you
did you know that you can actually save
too much money when I say this to people
they look completely puzzled but it's
actually true ask yourself this do you
really want to end up 80 years old with
a million 2 million $5 million in the
bank yet no skills to actually know how
to spend it well I'm going to let you in
on a little secret if you spend your
entire life being restrictive about
money worrying about money and thinking
that ooh once I have xll in the bank
then I'll finally be okay you will never
be okay I've talked with millionaires on
my podcast even multi-millionaires who
cannot bring themselves to spend their
money and this is something that is not
really talked about because most of the
media focuses on how bad things are even
when an economy is extremely strong like
it is right now let me tell you my
philosophy on money I believe it's a
tragedy to live a smaller life than you
have to if you have money you can use it
on the things you truly love and that's
what I want you to do use your money to
live a rich life today and an even
richer life tomorrow the key here is to
figure out what enough is now a lot of
people have a random number they pick
they say a million I go where'd you get
that from I don't know uh 3 million what
does that mean I don't know it just
feels good no first off if you're going
to pick a number pick a number and then
add 15% okay that's cuz you're going to
forget about a bunch of expenses you
need but the truth is that enough is
rarely a number sure you need to have
enough so that you can take care of
yourself and your family sure you need
to make sure that you can live off a
certain percentage of it maybe three to
four% you need to factor in Social
Security all that stuff but most people
don't actually do this they camouflage
anxiety by saying I need a number once
they hit that number they still worry
they still feel anxious it doesn't
change a thing so more important is to
make sure that you are saving at least
10% a month investing 10% a month at
least your fixed costs are below 50 to
60% and you're using the rest of your
money for guilt-free spending if you're
doing these things you can start to live
that rich life today and know that you
will be able to live a richer life
tomorrow in other words make sure that
you are exercising your spending muscle
not just your saving muscle and that
brings me to the second lesson spending
more sometimes can actually save you
more now this sounds crazy but hear me
out one of the best uses of money is to
buy back your time now a lot of people
conceptually agree with me yeah that
sounds so good I want to use my money
buy back my time and then I go Okay cool
so how have you done it oh I I couldn't
I couldn't pay somebody to go get my
groceries for me they don't know the
exact type of cash shoes that I like oh
hiring somebody to do my laundry no they
don't know how to fold my underwear like
I do I like threefolds not two what the
hell are you talking about but when it
comes down to actually spending money to
buy back our time I've discovered that
most of us like the idea of buying back
our time more than actually buying back
our time I'm going to share some ways
from my own life that I actually use
money to buy back time for example I get
pre-made freshh food delivered right to
our home when I travel I don't sort by
price I sort by direct and shortest time
I make sure that there's a car waiting
and this is just a little weird thing
for me but I hate filling out paperwork
when I go to the doctor or dentist so I
have an assistant fill out the paperwork
for me ahead of time I walk in get the
treatment leave it gives me a ton of joy
and there are lots of things that other
people do they hire a personal trainer
they hire a nanny they have a bookkeeper
accountant they get a cleaner to come to
their house once a week or once every
two weeks they have online grocery
ordering they have a personal assistant
go through their email or they hire a
home organizer to calm their house down
what's the point the point is that you
can do these things yourself if you
truly enjoy grocery shopping fantastic
if you can't afford to have somebody
come and clean your house once every
month okay then that's not in your
spending plan I totally respect that on
the other hand if you ask yourself what
is my rich life would doing laundry fit
in there if not then maybe it's time to
take a look at where you are spending
your money and redirect it to get rid of
some of the things you don't like and
what this can free you up to do is it
can free you up first to just enjoy life
you can literally sit on the couch read
a book watch TV you don't always have to
be productive you can also use that time
to earn more if you choose to you can
take one of the programs we have at I
will teach you to be rich to start a
business you could negotiate a salary
increase land a better job whatever the
real question here is what is my rich
life is it actually doing laundry four
times a week or do I want to spend my
time doing more productive more
enjoyable things that are actually a
part of my rich life now let's talk
about a lesson that seems controversial
sometimes lesson number three renting
can actually be a better financial
decision than buying sometimes now
people get furious when I simply suggest
that for the biggest purchase of your
life you should actually actually run a
buy versus rent calculator it seems kind
of obvious to me if I'm going to drop
hundreds of thousands of dollars or more
maybe I should type in a few numbers and
calculate it I don't know is that crazy
I guess it is because in America real
estate is religion in fact we have all
these fun little phrases don't throw
money away on rent weird they don't say
that about eating out at a restaurant
don't pay your landlord's mortgage uh
that's weird do you say that when you go
out don't pay the Sushi owner mortgage
no and we even have people saying hey
why would I rent there's a two-bedroom
house for $600 to rent or next door I
can buy it for $1,600 same two-bedroom
type of unit I should build equity I go
okay I like Equity but did you factor in
a 30 to 50% increase in costs for owning
you need to factor that in when you
calculate the opportunity cost of your
down payment the ongoing maintenance
which you will pay as a homeowner but as
a renter you simply pay what the market
Bears also transaction costs of buying
and selling there's so many other
factors personally I basically add 50%
onto the price of a mortgage to account
for these Phantom cost that's just a
back of the napkin calculation you need
to do your own because nobody does this
instead they just write me angry
comments and tell me that I'm an outof
touch person even though I'm the one
running the freaking numbers most people
don't actually realize the true expense
of owning until it's too late candidly
most people don't really want to know
they want to buy for 500,000 then 20
years later they want to sell for
$800,000 and then they want to go I made
$300,000 of profit it's like dude you
actually lost money you just don't
realize it remember this rent is the
maximum you will pay a mortgage is the
minimum you will pay now in some cities
it can make Financial sense to rent and
to invest the difference this is
especially true in High Cost of Living
cities although it's becoming
increasingly true everywhere right now
in my situation I lived in San Francisco
New York and La it made no Financial
sense to buy I rented I rented an
amazing place and instead of buying I
invested the difference because it would
have cost way more to own that in turn
made me way more money than I would have
made by owning now you can do the same
thing you can invest the difference
between buying and renting you can
choose a lowcost index fund and actually
make more money sometimes I'm not
telling you to buy I'm not telling you
to rent I'm simply saying please run the
numbers to decide if buying or renting
is a better financial decision for you
and while we're on the topic of housing
the fourth lesson I want to share with
you is paying your mortgage ahead of
time isn't always the best decision now
depending on interest rates you can
actually make more money by paying the
minimum on your mortgage and investing
the rest but I got to tell you this is
where money psychology really comes into
play because some people just hate debt
they see any type of debt they go I hate
it I want to pay it off I go um have you
actually calculated that if you pay it
off early you're actually going to lose
like
$280,000 and they just they physically
do not hear me they go whatever I hate
debt for people who truly hate debt even
if you point out the math they don't
care they just want to be rid of the
debt and I used to argue with look at
this spreadsheet have you ever looked at
the amortization this is where math and
psychology intersect in a fascinating
and beautiful way it might seem
irrational for somebody to want to pay
off a lowest mortgage it might seem
emotional for them to say I don't care
about the math I just want to be
debt-free but the truth is we all make
irrational decisions with our money we
all are emotional with money being
emotional is part of being human and
money is deeply emotional so while it's
true that if you have a lowest mortgage
like say 2.5 or 3% mathematically
speaking you should pay the minimum on
it and invest the difference I'm okay if
somebody calculates it they look at the
numbers and they go you know what I can
see that it's going to cost me a lot of
money but I just want to be debt free
it's okay to make decisions that differ
from the spreadsheet as long as you
understand what the numbers are the
fifth lesson I really want you to hear a
financial adviser can actually cost you
hundreds of thousands of dollars without
you even knowing it if any of you out
there are paying a percentage to a
financial adviser please pay close
attention a lot of times if you're
paying a financial advisor you're not
even really sure how much you're paying
I recommend you text them or email him
right now and ask them hey what's our
fee structure how much am I paying you
if they give you anything other than an
hourly or per project fee it's probably
a percentage typically 1% now if you
don't think 1% sounds like much let me
show you some surprising math that 1%
fee can cost you
28% of your lifetime returns for many
people that's hundreds of thousands of
dollars let's say you're 30 years old
and you invest $50,000 and you
contribute another $1,000 a month the
numbers are sort of irrelevant just look
at the percentages in 35 years with a
low 2% management fee assuming a 7%
return you'd have just over $2 million
those are conservative assumptions by
the way but if you pay a financial
advisor 1% instead of having 2 million
in your pocket you'd only have 1.7
million that's almost
$400,000 going into your advisor's
pockets in fees by the way if you pay 2%
that's over
$750,000 in fees there's some very
important things I want to emphasize
here first off I have no problem if you
choose to hire a financial adviser I've
actually hired an adviser myself to look
over my asset allocation and give me
some specific feedback but I paid an
hourly fee just like when I hire a
personal trainer a highly credentialed
personal trainer who gives me specific
personalized feedback and they charge me
an hourly fee I don't even mind if it's
a high hourly fee but they would never
charge me a percentage of my portfolio
so why should you pay the same thing for
a financial adviser now there are a
variety of other questions the people in
the financial industry are obsessed
discussing the differences between a
flat fee and commission-based and
fiduciary there's a lot of stuff you
want your financial adviser to be a
fiduciary yes that means they're looking
out for your best interest but also you
do not want to be paying hundreds of
thousands of dollars in fees
particularly because a lot of people can
do this on their own but if you choose
to hire one go ahead and pay an hour
hourly or per project fee now you can
learn about the basics of personal
finance in chapters 6 and seven of my
book I will teach you to be rich and as
I discuss in there you'll also want to
look out for the fees that you are
paying for your Investments sometimes
people have invested in fees that have a
funds B funds they have front-end loads
backend loads they have high expense
ratios these are all terms that secretly
charge you tons of money what I do with
my money is invest in lowcost index
funds at places like Vanguard Fidelity
Schwab all those places are great now if
you ever want an expert to look over
your numbers fine go ahead hire a
financial adviser just make sure they
charge a flat fee or an hourly fee never
a percentage of your assets by the way
if you're looking for someone who
charges a flat fee I recommend you check
out facet who I'm excited to partner
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follow your passion and you'll never
have to work a day in your life well I
freaking wish that was true because I
love spicy food and I once considered
teaching a class called RIT 60 days to
habanero unfortunately there's just one
problem not one person in America wants
to pay to learn how to eat spicy food a
lot of you think black pepper is spicy
and for those people all I want to say
is please unsubscribe from my channel
just unfollow if you think black pepper
or a little jalapeno is spicy we don't
have anything in common we can't be
friends the point here besides the fact
that your parents really did you wrong
when you were a child never teaching you
how to eat anything more than Pepper the
what is the point what am I even doing
on this video right now here's the point
passion alone does not make you money
I'll give you another example I love to
iron okay I really do I'm not joking I
love ironing my shirts I could pay
someone to do it but it's very leisurely
calming for me so I iron my own clothes
nobody wants to pay to learn how to iron
half of America doesn't even own an iron
it's revolting I see these wrinkles
people going on TV I'm like look at that
wrinkle what the hell is going on
meanwhile I have my own list of rules
for ironing iron so crisply that if your
face touches the crease it will cut your
face forever you think that's weird I
thought that's totally normal but just
because I'm passionate about ironing
doesn't mean that people want to pay me
for it and on honestly what a relief if
you have a passion whether it be
decorating cakes ironing clothes
mountain biking grooming your dog great
if you want to turn that passion into a
business you might be able to but you
don't have to because when you start a
business trying to earn more money
passion is just one part of it in fact
one of the ways to look at this is that
if you start getting good at something
you will often become passionate about
it I'm sharing this because so many of
us are paralyzed for years sometimes
decades trying to find our passion but I
think a much better way to approach it
is to take a look at the things you
enjoy the things you're good at the
things other people will pay for and
then start to get really good at serving
other people if you do that you will
become passionate if you're interested
in taking some of the skills you already
have and turning that into a profitable
business click the link in the
description I'll help you find your
first profitable business idea for free
now that I've shown you that passion
alone does not equal wealth let's move
on to the seventh lesson money can make
you happier yes it's true and personally
I don't want to have to skip 12,000
coffees so that 25,000 years from now I
can finally start living my life ooh
cool I finally have some money in the
bank I'm 93 years old what should I do
today it's like what is that really the
kind of life you want to live every
single day you wake up and you you put
on your glasses like this you go
what am I going to say no to today what
kind of life is that why not have a
different approach why not say yes I
need to hit four numbers my fixed cost
my savings my investments and my
guilt-free spending and once I'm hitting
those I can go out and enjoy myself you
can use my concept of money dials to
decide where you want to spend your
money on a money dial is just an area of
your life where you love to spend money
on you can even turn that dial up here
are 10 common money dial that I see
eating out is the most common Travel
Health and Wellness convenience that's
my favorite experiences Freedom
relationships generosity social status
and self-improvement by the way no one
ever admits to wanting social status
they're like status that's so stupid so
vapid who would ever do that they say
that while they are using an iPhone
driving an
F450 and uh their partner has a uh
beautiful Chanel bag they're like status
so stupid here's the deal look at your
own spending what area of your life does
your spending get you excited about and
don't apologize for it it could be
spending more time with your family it
could be traveling it could be time
working on your hobbies I'll give you an
example from my life I like to wake up
open the fridge and food is there it's
healthy it's portioned it's all ready to
go I love it I'm not going to apologize
for it I love staying at absolutely
beautiful hotels I love that it inspires
me I love the attention to detail and
the hospitality once you've identified
your money dials then you get to have a
really fun set of conversations around
what it would look like to turn those
money dials up now maybe you can turn it
up today or maybe you need to set a
savings goal so you can turn it up later
but what a fun way to look at money to
dream and say what if we could turn up
our spending on the things we love as
long as we cut cost mercilessly on the
things we don't all right I have two
more lessons left to share but before we
get to those if you're not already
subscribed go ahead and click subscribe
for me real quick so I can keep sending
you these videos on money psychology now
on to lesson number eight never make an
expensive purchase based on the monthly
cost I have talked to so many couples on
my podcast who decided they could afford
a house or a car based simply on the
monthly payments and the Frank truth is
that that is how most people make their
purchase decisions and companies love it
when you do this because you don't
realize that the monthly payment can be
be adjusted to be anything if something
costs $50,000 I can make your monthly
payment be $10 a month you'll just be
paying it for decades and what's even
worse is that low monthly payments can
make it seem like you can afford
something when in actuality you cannot
this is why so many people feel that
they are living modestly but they can't
figure out where all their money's going
typically they have made bad purchase
decisions a long time ago because they
only looked at the monthly cost here's
what you do instead when you are making
an expensive purchase like a house or a
car you need to stop looking at monthly
costs and instead look at total cost of
ownership or TCO for example what you
pay for your housing is not just the
monthly payment it's got to include
taxes utilities maintenance including
that roof repair 10 years from now and
the transaction cost of when you buy and
sell that house all of it needs to be
factored in otherwise you will be hit by
surprise surprise after surprise and
you'll be playing defense for the next
15 years when you're buying a car you
need to factor in all the costs not just
the monthly payment but the gas the
parking the parking tickets insurance
and registration all of it for example
when I got my first car my monthly
payment was $350 but when I factored
everything in it actually cost me over
,000 a month that is why you never make
an expensive purchase based simply on
the monthly cost and that brings me to
my last lesson lesson number nine
managing money does not just mean
tracking everything I talked to so many
people they genuinely believe that
having a spreadsheet with 80 tabs and
500 rows is going to make them feel like
they're in control but it's not what
they're really doing is playing small
they're focusing on all the wrong things
trying to cut back $5 here and $10 there
and deep down they believe believe that
tracking expenses is the same as
managing money it's not managing money
is picking high value things to focus on
that would be things like what is our
savings rate is it 5% can we get it to
6.5% this year Investments what's our
investment rate oh it's 8% okay could we
get it to 9% by the way what is our
asset allocation that's high value in
order to do this you've got to fight for
Simplicity in your finances and what I
mean by that is really try to keep your
finances simple typically no more than
two credit cards one checking account a
few different savings accounts that are
named like vacation down payment
Etc and then move on with your day
complexity is not your friend but
Simplicity is all right I hope this
video gets you to start questioning the
typical money advice you hear and helps
you on your path to creating a rich life
now check out this video to watch
more
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