Personal Finance Basics
I was thinking about money as I was backstage, and I was thinking about what we think about when we hear money advice and I don't know is anyone else tired of sixty five year old guys telling us we can't spend money on lotteries if if I tell you not to spend money on lotteries in the next two days, please kill me because we're not going to be talking about that. What we are going to be talking about is how to use money to live a rich life. So today, we're going to talk about money management going talk about the psychology of money stuff that most people don't talk about, uh, what we find when we open up a money book, what do we see? Anyone? What do you see when you open up a money book, what's the feeling you get what you read in those money books, anybody know? Boring? Yes, what else? Charts, graphs, charts and graphs, as if another mathematical graph is going to make us be like, yeah, ok, I'm definitely going to change my ways, no, and yet most people think that what they do is they...
totally ignore the psychological side of money, all right? So we're going to talk about that, we're gonna talk about why we know we should be doing better with our money and yet we don't then we're going to talk about marketing entrepreneurship we're gonna talk about how to take your creativity and turn it into income, and then on the last day we're going to talk about careers so everything from interviewing finding out what should I do with my life too? Negotiating and by the way, this works if you have a nine to five job, this also works if you're negotiating with clients so let's say that you're a photographer or a writer and you are constantly getting clients who are saying like, okay, yeah, why don't you build me that website for seventy eight dollars? You're like, I don't think so this costs twelve thousand dollars, so we're gonna talk about how to negotiate with those clients and find the right ones, okay, so that's going to be over the next three days and today we're going to start by talking about how to dominate your finances, all right? So let's, let's get right into it. What? We're going to have a lot of time for discussion, we're going to talk here in studio, we're going to talk with the folks were watching online as well, I wanted to start by telling you what we're going to cover, so we're going to cover the psychology of money we're going to talk about how to save money I'm going to show you where you're going to be at the end of today, but most importantly, we're going to talk about living a rich life, and my belief is, if you you know, you should find the things that you love and spend extravagantly on them, as long as you're cutting costs mercilessly on the things you don't so that's quite different than most advice, which is no, no, no cut on everything, and we're not going to be talking about that. We're going to talk about how to actually spend mohr on the things you love as long as you're managing the rest of what you do. Okay, so why are we starting with money? One of the things we know has anyone here lost a lot of weight or gotten fit, change their life in terms of health? Okay, great. Did that have any other changes on the rest of your life style? Dawn. Like what? Um well, over the last year, I lost ninety one pounds. So, um, effected the way people talked to me on the way they look at me and judge me just on daily interactions. Um it changed my relationship with my husband. It changed my kids, my kids have lost weight now, effecting my finding I had to buy a whole new order, so it's affected absolutely everywhere, and I love that. Congratulations by losing anyone pounds amazing what we know from the world of psychology is that there are these certain areas of life that if we change them called keystone habits, if we change them, they're actually able to affect a lot of other areas as well. Health is definitely want finances, definitely another one so lot of us who are watching today or even who are in here, we have a full time creative positions. Some of us have nine to five, jobs and creative jobs on the side. Why are we talking about roth, ira, or automating our money? Because if we get this right, then we when we wake up in the morning, we don't have to worry about what am I doing with my money in my saving on this two dollars, on trade, right? Or can actually focus on the things I love to do, the things that add value to the world, like, uh, creating amazing photos, writing things that will move people and change behavior. That's what we want to do, we don't want to sit around worrying about bill pay it's just not worth our time, okay, so that's, why we're starting with money, because we get this right, everything else can actually have the room to soar, right? So let's, talk about where we're going to be at the end of the amateur. You're quick diagram here. This is the money system that took me about eight years, eight to ten years to build. I'm pretty slow that's why I took you how long, but basically if I ask anybody who's watching, I'd say, um, what are you doing with the next hundred dollars? You make most people would have no idea, they say, oh, it's going into my checking account and then I'll just spend it. And what if I said, hey, I want to take a trip let's, go to thailand at the end of the year, most people would have no idea how to actually make that money work for them. They be like, ok, I don't know, I got a look at that and then they just go look in the checking account, see some amount and have no idea what my students can do after going through. This is no exactly where their money is going, so I'm just going to give you a quick breakdown of this and then we're gonna go into any detail don't worry about the details right now, basically, in this system, you get paid. Whatever that may be, you may get paid from a client you may get paid from a nine to five job. It goes into your checking account. Think of this like an email inbox right? Your email inbox is now filtering money where it needs to go automatically. You don't do anything you're not sitting around writing checks no way it's happening without you doing anything. The thing I love here is you have guilt free spending. Look at this guilt free means if you really want to buy two hundred fifty dollars para shoes five hundred our genes take a thousand dollar weekend trip to vegas, do it because the rest of everything is happening without you doing anything again, you have to be able to afford it. I'm gonna show you how to do that today, tomorrow and the third day what's the point of this system and why are we talking about systems? This is all about psychology because most of us believe and has anyone said this? If I just try harder, I can save that hundred bucks. Has anyone said that they say, you know what the words we use if I just try harder, I can lose those last ten pounds let's actually go to the web as well and as we do it here, what are the cold words that we've used to talk about willpower if I just try harder or I really need to get serious this month, what code words have we used in the room? I just need to figure it out. Great one love that that took us about six months to crack that code for a dream job course that we're doing, I just need to figure it out. What do you need to buckle down? Very good. Anybody else have any code words? Got a couple online? We've got vintage jones who was saying I just have to convince myself honky tonk says if I have someone hold me accountable yes, interesting it's interesting that we want to be held accountable and yet when we think about it, when was the last time someone actually held us account? When was the last time someone actually said, you know, hey, mike, I really I think you did an okay job, but you really could do a lot better and I think you didn't give it your all this time. What was the last time someone said that to us when we were kids? Probably very few people actually hold us accountable, and we're going to talk more about psychology and willpower. We have a bunch more coming in, yeah, what's your share so it's good, we have donley photo photography says, if I could just learn this stuff we have forty a fifteen, ninety six say if I only had a magic wand yeah that's a good code word that's a good one I haven't heard that one daily pay if only I wasn't working so much oh yes I love that like a lot of creative I don't have time to do marketing I'm I'm working too hard right? Okay, this is a great one because I believed everybody has probably said this in their life yeah says if I could just win the lottery yes yes you know it's funny there's a there's a study done and they ask people like, do you think you'll be rich? And twenty one percent of people believe that they would become rich by winning the lottery? I was like, I'm going to kill you okay, so so what happens? Ok, so we talk about the system we're gonna cover that now where your friends will be in twenty now this is a half joking. Okay, your friends are probably not gonna be waking up into solving every morning and control of but what we know is that we tend to put our money off until much later, right? I'll do it one day I'll do it when I have time I'll learn about this stuff later all start investing once I have some money to invest has anyone ever said that right, which is so ironic because the way you actually grow your wealth is to start investing you don't just wake up one day, have a million bucks in the bacon, okay? I think I'm going to start investing today all of these things are code words for putting it off until another day it's almost like cleaning your garage. Nobody wants to clean their garage and yet, you know, what'll make you feel good or clean up all the cobwebs in your head and even in the garage, but there's not some magical day we're going toe want to sit down into our finances? The beautiful thing is it's actually not that hard I'm gonna show you how to eliminate most of the noise you hear and when you do it like I spend less than one hour a month on my finances, okay? And they run automatic like finally tuned machine is beautiful and thousands and thousands of my students do the same thing because they use that system. So let me just quickly tell you why I'm talking about money. What kind of weird indian kid gets into starting to study about investments? It's the kookiest thing so I, uh my parents we're very middle class family were pretty big family and my parents said, ok, you want to go to college that's great, you need to get some scholarships all right, so I'm a weirdo in the sense that I love systems I'm not I'm not the smartest guy in the room I've never been but I loved systems meaning I could do a little bit of work and then kind of scale that massively and I think we all have that that dream of being able to do just a little bit of amazing work and then scale it so we can repeat it over and over over again so I built this system to apply to about sixty five or seventy scholarships and I started getting scholarships and I remember the first check I got was for two thousand dollars they wrote it directly to me I was like, oh, that sounds pretty good we'll make it and that's a lot of money for like a seventeen year old kid. So of course what does everyone do with their scholarship money? They invested in the stock market and I promptly lost half of it immediately I thought it was so smart so I said, oh, man, I better learn how this money thing works and I started spending a lot of time reading all the books watching all the tv shows, etcetera and at the same time I was studying psychology and persuasion at stanford, so I'm doing these kind of dual tracks and learning about money I'm learning about persuasion and human behavior and something doesn't add up it's, almost like the emperor has no clothes because I kept reading stuff like keep a budget don't spend money on lattis and I look around and like no one is listening to that advice. How many people here have heard someone say, don't spend money on lotteries, one hundred percent of people in the room and how many people continue to buy your morning latte? Okay, love it, I love it and I approve you should buying lot not buy lots is the stupidest advice money people can give. Let me tell you what, first of all, it doesn't save you that much money they're like if you is the argument, if you cut back on your lot is for the next forty years that will add up to thirty two thousand dollars. Yes, except I want to commit suicide every morning. I don't have caffeine, right? That's what people say and by the way, three dollars is not in the grand scheme of things it's a cognitive tax instead of focusing on stuff that could save you one hundred thousand dollars, which I'm going to talk about. So I just sense this disconnect and I started writing about money and I started trying to teach people money and people look, they're like, oh, that sounds great, I'll come to your free class and then nobody would show up why because it took me years to figure this out because we hate going to events about money because it makes us feel bad about ourselves right? And if you buy a book on money what does that say about you? It says I don't know anything about money I should know this nobody really teaches us this but I somehow should magically know this so I started this sight I will teach you to be rich dotcom and I started writing about money in a different way away like you and I would sit around and have a beer talk about called people I see look that's stupid what you're doing or a man like I just I can't figure this stuff out and over time I built the system that I showed you and I learned that like understanding how investments working stuff that's important but nobody ever woke up in the morning and said yes I want to learn about the difference between corporate and municipal bonds nobody nobody cares right they just want to know what what are the words we use when we talk about money let me give you some examples is thrown to the web as well what do we say when it comes to our money? How about shit I just crossed ten thousand dollars in credit card debt or I just had a son how am I going to pay for his college what are the words we use when it comes to our money? Anybody with code words failure I don't say that if I don't save enough very good what else what else I go between there's never enough or there's so much abundance where do I focus on raping that so I kind of go between good ok good. So very different dichotomy okay, good we think about money in ways that have nothing to do with an encyclopedia of terms I will never give you an encyclopedia terms same because we don't care right it's like nobody wants to learn all the different ways to do an ab workout it's that they just want a six pack right? They want the results I will teach you to be rich right? We want to be rich we don't necessarily want to learn the difference when corporate municipal bonds so yeah we got some from the web yes, yes there's always that little delay so we have a bunch of letters come in what we've got we've got someone who's saying they're out of control I love it out of control anybody here feel like that like your money just out of control here's donnelly photography says if the government didn't take out so much in taxes I could save a little bit reid ok, we'll talk about that I believe that uh I don't necessarily agree with that but we'll talk about that okay g a crystal says some of it just seems so complicated yes it does it does seem company we'll talk about why wall street makes it complicated yes again says money is the key word that will make me bury my hand in my head in the sand that's right? Okay, so there's a lot of emotion going on with money and yet when we talk about money it's almost never presented with that background it's always like here's the mathematical chart duh and we just shut down because it doesn't resonate with us. So I learned a couple of lessons as I started studying these two parallel tracks, right? And I want to cover these lessons very quickly. The first is that you don't have to be the smartest person in the world to be rich and what why am I saying this? Because sometimes we think I just need to I need to learn a bunch more before I start investing right it's a very common belief that I need to learn a little bit more before I started like a lot more like give me a couple of years of reading these books of course do we read these books? No, but we put it off because I need to get smarter what we know from the literature is that even the fanciest wall street money managers they can't even beat the market eighty percent of the time let me say that again. These guys were paid millions of dollars a year. They can't even beat the market when they invest eighty percent of eighty percent said they failed to beat the market. I want to be crystal clear about that. And by the way, everyone in this room can actually match the market, meaning you could get better returns than professional money. Investors were going cover exactly how to do that, okay? And I'm not gonna give you a few books. By the way, who here knows someone? Who's complained about money for, like twenty years. They're always complaining. I don't have enough money blah, blah, blah. Baba has this person ever read one good book on money? Ever know never they complain about it for their whole lives. It's like get a life. You don't get to complain around me if you haven't read, go read one book I listen to your complaints or there's everyone who has bought the books but they stay sitting on the show love that because, you know what's funny in the self development world is so great. People believe often that if I buy a course that that's enough, they wash their hands, so I'm done, I bought that course. That doesn't do anything you have to take action today the whole point is the difference from what we know and what we do that's that nexus that we're going to be exploring today so I'm gonna give you actually three book recommendations that I really like these are not my books I think my book is great too but I want to give you three other books that I really liked as well ok, so one is the smartest investment book you'll ever read it's a very short book great book on investing and it really exposes a lot of the hypocrisy is of wall street it also shows you how individual investors should behave very simple stuff and the way you can actually significantly grow your wealth without getting scammed or tricked we're having to learn a million different things about investing I love this book next one the millionaire next door now this one is a bit at odds with my philosophy but I still like it and it talks about how many people think that t to get rich or to grow your wealth you know you have to be running a hedge fund and you have to be doing all this evil stuff and that's actually not true these researchers did studies of millionaires and they discovered how they grew their wealth and it turns out that it's very counterintuitive most people who are wealthy did it through systematic slow growth they didn't just inherit their wealth from someone etcetera. They actually did it very slowly and they spent less on average than their neighbors like they dropped well, you know for me you guys already know what kind of car I drive, right? Indian people we only drive two cars honda accord toyota camry boom we only have two honda accord for me so they actually drive they drive these like very simple cars compared to their neighbor who actually drives like a much better car but during debt now my point of my system was when I said spend extravagantly on the things you love that is assuming you can afford it okay lot of jackasses they're like well, come on man I'm twenty six I need to be driving a mercedes like no no you don't okay that's a good book and the third one why smart people make big money mistakes this a good one as well touches a lot on the psychological side of money okay again something that is totally ignored by most money people and I think we know that if we're honest with ourselves we think about how do we feel when someone talks to us about money it almost feels like, you know, it's our it's uh like a parent lecturing us about something and it just doesn't connect right lot of nods here why's that anyone could anyone resonate with that sarah is, um has, like, a really nice freelancing career makes tons and tons of money whenever he talks to me about these things, I just feel terrible the conversation never goes anywhere because I'm not as successful as he is in that way. And so it's always sort of, like hard to listen to one because I know that I could do it, and I'm not doing it, and so it always feels like, oh, it's it's something that he could dio sort of very good who else? Who else feels like they've been lectured to yet megan, but when that happens, I feel so far removed from where that person is it's hard for me, tio kind of connect the dots and see oh, this is the trail I could follow to get where you are, right? They're like, just put twenty five percent your assets into a trust. Like what? I don't even understand what those words mean, what you talking about? Yeah, we've got some from the web. Actually, this is for me personally, I generally feel like it's something because money is so ingrained in our lives and it's something that I feel like I should just know, right? So when someone tries to tell me something, I'm like, get defensive like, oh, I should already know that, and I don't open myself up to actually learn it and so that's the older we get the more we feel that way which is so weird yeah drew you know is now a professional photographer and I look at myself on like why didn't I just do that or why didn't I have that idea? And it kind of sets you back even further than you already were because you you know you beat yourself up over an idea you think you should have had right something that may have never come to you in the first weighs a lot of what I'm hearing is comparisons we make other people right and why didn't I do that or I should be able to that or I'm smarter than that guy why is he making more than me right tons of things especially guys we love to compare ourselves to our stupid friends like this jackass that's just the way it goes right and women women also love to compare themselves two other women in different ways I'll tell you a very interesting example I have a friend of mine who lost a ton of weight and she actually two kids and lost more weight than her pre pregnancy so she looks great and she went to her reunion just a couple days ago she texted me afterwards and said you're not going to believe what people said to me she said three independent women came up to her and that's what this is the exact phrase they use, they said, I just have to tell you, I hate you, you look so good now that's, a very gendered look at all the women in here, like kind of smiling, it's, a vory gendered language to use a guy would never say that. What I come up to you. Hey, dude, I just want to tell you I hate you. You look amazing. No, never it's, a very gender thing to say so money and jenna were going to tackle that later today, but dirt, our differences in money and gender. That's, that's. I know that's, so shocking to say, but it's, actually very true. We'll cover that as well. Okay, so three great books. I recommend those air very good. Start with that.