9 Surprising Lessons That Made Me a Multi-Millionaire

Summary

In 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

00:00

💰 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.

05:01

🛍️ 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.

10:01

🏠 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.

15:04

📈 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.

20:05

🔑 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.

Keywords

💡Money Psychology

Money psychology refers to the emotional and psychological factors that influence our financial behaviors and decisions. In the video, the concept is introduced to explain how people's emotions can guide their financial choices, often leading to irrational behaviors such as excessive saving or reluctance to spend. The script emphasizes the importance of understanding these psychological aspects to take better control of one's finances.

💡Frugal

Being frugal means being economical with one's resources and spending less than one might afford. The video script challenges the conventional wisdom of frugality by suggesting that saving too much can actually cost you in the long run, as it might prevent you from investing or spending money in ways that could improve your quality of life or generate returns.

💡Counterintuitive Lessons

Counterintuitive lessons are those that go against common sense or what is widely believed to be true. In the context of the video, these lessons are financial strategies or behaviors that might seem odd or incorrect at first but are presented as more effective or beneficial ways to manage money. Examples from the script include the idea that spending more can save you more and that renting can be a better financial decision than buying.

💡Budgeting

Budgeting is the process of creating a plan to manage one's income and expenses. The script mentions budgeting as a common advice people give themselves to control their finances, but it also points out that simply keeping a budget does not address the deeper emotional and psychological aspects of money management.

💡Investing

Investing involves allocating money with the expectation of generating an income or profit. The video script addresses the common misconception that investing feels like gambling and emphasizes the importance of understanding and overcoming emotional barriers to invest effectively.

💡Spending Muscle

The term 'spending muscle' is used metaphorically in the script to describe the ability to spend money wisely and effectively. It suggests that just as one needs to exercise their physical muscles, one should also exercise the ability to spend money in a way that enhances their life, rather than just focusing on saving.

💡Opportunity Cost

Opportunity cost refers to the potential benefit an individual forgoes by choosing one alternative over another. In the video, the concept is applied to the decision of renting versus buying property, illustrating that the costs of homeownership might outweigh the benefits, especially when considering the potential returns from investing the difference.

💡Financial Advisor

A financial advisor is a professional who provides guidance and advice on financial matters. The script warns about the potential high costs of hiring a financial advisor who charges a percentage of assets under management, which could significantly reduce one's lifetime returns on investments.

💡Passion

Passion in the context of the video refers to a strong interest or enthusiasm for something. The script challenges the notion that following one's passion alone can lead to financial success, arguing that it's more effective to become good at something that others are willing to pay for and then develop passion through mastery.

💡Total Cost of Ownership (TCO)

Total cost of ownership is the comprehensive evaluation of the direct and indirect costs related to the purchase of any goods or services. The video emphasizes the importance of considering TCO rather than just monthly payments when making expensive purchases, to avoid financial surprises and make more informed decisions.

💡Simplicity

Simplicity in the context of the video refers to the idea of keeping one's financial life uncomplicated and straightforward. The script argues against the complexity of having multiple financial accounts and tools, suggesting that managing money effectively is about focusing on high-value financial activities and maintaining 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

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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

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