The Psychology of Money
Personal finance is at least fifty percent psychology and I've kind of hammered this point home so I won't belabor it I'll just say this all of us when we were kind of nodding our heads saying people way feel like we've been lectured to right when that happens, what you're really hearing is that the person is not they're not resonating or connecting with you and it's very easy to feel lecture too with money because it's something we should know but we don't and so we immediately feel defensive and actually kind of like stupid oh my god like ok, yeah, I gotta learn about this stock thing and then they're like and then there's what I used to do I was very overbearing when I started learning about money because my friends maybe sitting there at the dining hall and they'd be like, uh, meat, I got my twenty fourth overdraft and I was like, you just need to do this and they're like, ok, ok? And I'm like no really you need to do this and I was coming on too strong right? And I think probably ...
we all have somebody who said something like this like no, seriously, you really need to blank and do we ever listen to that? No, because it doesn't it's just it's lecturing, so what I want to do is kind of show you how to connect money with yourself how to connect money with your partner if you have a partner and of course, the stuff we learned today is directly applicable as you grow your business because think about it if you've ever felt lectured to do you think perhaps you've ever lectured your clients like you really need to pay for this extra package, a lot of connections here between money and entrepreneurship. So we've talked about how let's actually spend a second on this. How money makes us feel we talked about out of control, which is a key phrase. How about some positive emotions? Let's, get positive and negative from the web. Tell me the phrases people use when they feel bad about money, but also when they feel good, who here can tell me when you felt like very triumphant about money. There's crickets in the room, by the way. Okay, good. Get all like, I'm baller status. Yeah, I love that. Where it's like it's. Yeah, it gets more. It just feels good. Very great making good purchase in hindsight, you look back on it, you're like that was a great purchase. You feel great and you feel like you should make more, very that doesn't necessarily always lead to good things. Yep, anybody else? A positive note. How do you feel good about on the internet we've got several people who are saying something along the lines of having money in the bank makes me feel sick you're yeah very good now what does that actually mean feel secure for many of us it means freedom right let's talk about that means I don't have to work with someone I don't want to work with if some client comes to me and they're like do it like I need this I need it by tomorrow I need this I need you to work on weekend I'm like you know I really appreciate that but this probably isn't a good fit who gets to do that someone who has money in the bank one thing that I can do and this is I have a couple of extravagances to be very honest for me living a rich life and we'll talk about what this means for all of us but for example when I was a kid we didn't really buy appetizers like that's just wasn't we don't do that I don't think any immigrants by appetizers for that matter but we certainly didn't buy that we didn't get dessert okay never and when we went out to like out to pizza which was like once a month we would like ask our dad like dad can we have a quarter and then if we went toe aspect for a second when my sisters were like no no, no that's too much well now I don't have to worry about buying appetizers and actually for me that's a huge cognitive load off which means like three or four dollars purchase it just doesn't it doesn't even register and for me I love that cause I wanted freedom from having to worry about little purchases anything else from the web that's interesting grubs is saying that it makes it makes them feel like they want to walk down the street ninja kicking everything okay that's a really weird answer what else we have a leak that says it's such a reward to buy food at the theatre because we can I was not allowed to growing up totally another thing that happened from my childhood you'll find there's a reason I have a very weird sense of humor thanks to my parents so we would eat a taco bell like again once a month or something and do you guys remember those talk about mexican pizzas anyone remember that I still remember the price three dollars in forty nine cents because we could never buy it never my mom was like not in us too expensive kate to this day I have never bought a mexican pizza because I could definitely afford it but I'm like no no no no no no no that's deaths up there I gotta work for that one so we all have like these weird ways that our childhood affects the way we think about money now all right so let's let's keep moving on your money and behaviour that's really what we're talking about here notice that I'm not saying money and attitude most of us most of us believe change the attitude then the behavior will follow think about that like if I go up to say don it's really important that you understand how much you need to eat healthy you're like I already know I need to eat healthy already know that I'm not doing it by need to I know it right we all know we should be better with our money does anyone disagree? No I don't even wait for the answer because I know they don't disagree everyone knows they should be better with their money everyone knows they should be working out more eating everyone knows we should be calling our mom and dad but we don't so why is that that difference in what we know and what we do is really where we live in fact I will teach you to be rich the stuff I'm talking about today it's disguised as money stuff tomorrow is disguised as entrepreneurship and creativity for business but it's really all about behavioral change that's my background that's what I do in my personal laboratory on I will teach you the rich dotcom because if we can figure out a change our behavior, our behavior and others behavior ethically there's almost nothing we can do does that make sense? So this is a behavioral change masterclass disguised as money and creativity and entrepreneurship. I just want to be crystal clear about that. Because this stuff we talk about here is about behavioral change. Okay, a few answers. Why? We know we should and we don't. And they were going to get into the tactics of exactly what you should do with your money. Your debt, uh et cetera. All right, we're going, tio, by the way, let's start with how much dumb advice there is out there. There's my favorite. We should've started off with thisa slide one. All right, keep a budget number one piece of worthless advice. So who here has heard someone saying keep a budget. Okay, where have you heard this from, mom? Personal finance expert. Who else? Tv? Why don't we just kill kill ourselves right now? Okay, if we hear this again, why doesn't okay, by the way, does anyone here actually keep a budget? Okay, one I love this note that these are people who flew in for a money class and even better even you guys don't keep a budget. Of course you don't. I'm not blaming you by the way, it's normal human behaviour, ok, what happens is this is exactly what happens. Some money expert will sit in a room and be like, well, the first step to growing your money is to know how much you're spending so blood all you need to keep, but okay, they never actually tested on anyone. If they were to just watch twenty, people read their book, they would discover that nineteen out of twenty failed to keep a budget within about two weeks. And almost nobody keeps a budget consistently like you. Like me. And I wrote a book on money. Okay, it's, not human behavior. Why is that one? Ah, budget makes us feel bad about ourselves. Think about that. Well, is anyone here has only have felt bad about yourselves looking at how much you spent? I know you guys in studio. You actually looked at your spending. Anyone here feel bad? Yeah. And what were the phrase he used? You said I shouldn't have spent that much on that. What else? That was dumb. I guess I spent that much things like that. Also, a budget is backwards looking, so we look backwards or like, ah, shit. Yeah, and then we go on to the next month. We don't do anything so there's a different way to do it, I'll show you a country spending plan, but budgets feel free to ignore when someone says that because they don't really know what they're talking about they don't understand the psychology of human behavior they just think it sounds good then it doesn't really work no more lottie's we've covered this and why this advice doesn't make any sense I wantto introduce a phrase to you from the world of psychology and this is a phrase called cognitive miser we are all cognitive misers which means we have limited cognition and limited willpower think about this very carefully because it flies in the face of most of what we know every day we wake up we have fifty things we could do with our money pay off debt by that lot don't buy that lot go to lunch, take a friend out block pay off debt whatever faced with fifty decisions what do we do the same thing we've always done nothing because there's so much anyone here had so many choices that you just felt overwhelmed just shut down and did nothing the paradox of choice another terrific book okay, why would I want to take your think of willpower is a muscle every time like if you pick up like a fifty pound bag of bricks or whatever after you do that twenty times you're going pretty tired alright why would I tax your limited willpower and limited cognition to say four bucks I'd rather tax it to negotiate your salary ten thousand dollars which I'm gonna teach you how to do on friday or uh otto fix your credit score so that your you know the difference in how much you save from buying a house with one hundred thousand dollars four dollars I don't give a damn and the next one is invest in gold commodities and for some reason ron paul you get all these weirdos get all these weirdos were like, oh my god armageddon is coming better but put it all in gold and then for some reason they're highly correlated with ron paul I don't understand I like ron paul to some extent but I don't know you could feel free to ignore these guys who who almost seemed to want the world to end so they can prove they were right I you know you have a simple belief that if you believe that the world is going to continue getting better and in most measurable ways it has then it makes sense to put money into the market and I'll show you how to do that safely and responsibly but to grow your wealth over the long term not to hope and almost pray for some kind of catastrophe to occur okay now yes and any responsible investor's portfolio there is a place for gold but putting all your money in tow one investment whether it be stocks or gold or whatever probably not a good man all right, lots of dumb advice, there's more I just wanted to keep moving on too much information. A lot of us said we felt overwhelmed right way feel overwhelmed in what way we turn on the tv. What happens when we hear when we turn on the tv buy this buy that like someone scanning me somehow I just don't know how to write what else do we hear when we? Where else do we get confused with too much information our parents might say like you should buy a house that's the best investment, by the way that's not necessarily true. What else do we hear from our friends or like I invest in this russian stock? You should definitely do that cultural like a set path that means cultural success. So tv newspaper friends like you should be at this point in your life and there are certain metrics you're supposed to hit that's certain years of your life think about it what anyone here when you're in, you're like let's say, mid twenties and anybody here have a friend who bought a house or an apartment think about how the reaction was when someone went over to their house and they said like they had a party people like oh, so you renting this place is like, no, I own what did people say? Wow, wow think about that anyone here experienced that or you're kind of like how did they how did they go on three vacations a year that sense of awe and we love that there's no point denying it we do love it if someone says like wow how'd you know I'm like yeah that's right I did that way love that however that doesn't necessarily mean it's the best decision do we want to be guided by someone else telling us that their success is my success because it's not so too much information is another thing that happens to us and the result of all this is no action right we turn on the tv we hear all these people selling us something we don't know how how are they making money off us I don't know but somehow I know they are we hear all these weird terms like for one k five twenty nine roth ira and we just do nothing I'll figure it out later all right this is the key of today you don't just need more information you don't just need more information you need a system just like that system I built to apply to sixty five to seventy scholarships which allowed me to basically right one scholarship application almost per hour and I was making a huge amount I paid my way through undergrad and grad school at stanford using that system you can do the same thing with your money and you can spend a couple of hours a month on your finances because everything will kind of run automatically it's it's where we want to be because we don't want to be bill paying and wearing oh I need to transfer this here or oh my my friend is having a bridal party next year I don't know if I can afford it we're going to know all that stuff right there on paper will be able to see it so we need a system because the system makes up for our lack of willpower ah system keeps running when we're tired assistant keeps running when we're hung over that's how a lot of my region are hungover constantly my degenerate readers ah system keeps working when I just don't want to do it and it just does it for me all right? That's what we need a system not someone telling us every morning you wake up don't spend money on lot so you pass by that starbucks or whatever you like I really want you but that weirdo expert told me not to and then you don't do it today but the next thing you do that's not what we're gonna do we're gonna work on a systematic approach so three steps one ignore useless advice ah lot of this we've discussed from people on tv people in some of these money magazines were constant trying to sell you fifty eight best stocks no, that's not we're not listening to them, okay? And we've been so almost brainwashed that we believe how many people here believe investing equals picking stocks. Anyone here? Yeah, way believe that because we've been told like gotta buy apple they've got this new iphone coming out. Okay, what the hell are you talking about? Do you really understand how tow tow evaluate a company as a stock? Do you know what gps is? Do you know what all these terms are? No, we look at it. We're like, oh, they have a good iphone coming out we should probably buy that doesn't make any sense you're competing against guys who are doing this their whole lives, they live in new york, they're paid millions of dollars, they're much better than you, and even they can't beat the market that's a losing game so ignore useless advice number two the eighty five percent solution I had a really interesting rieder uh I asked. I sent out an email to my list and I said what's one thing that you know you should be working on to improve that you're not. And can anyone here let's actually asked that through that to the web's? Well, what's one thing you claim that you want to do, but you are not I could start out with myself of I at one time was going to yoga all the time and now I'm not so very good okay yeah so you should be working I want your baby I should be working right? Who else I know we all have one don't lie you guys good very good what else? How about eating better should be eating better a lot of people say flossing everyone here is like yeah how do you think about that? You know I feel horrible okay? What other what the other things we should be doing but we are not a lot of for many people is going to the gym so it's very common thing daniel murphy says spend more time with my kids katy says quit smoking very good lot of people say who her parents say be more present with my kids as well instead of being on the phone all the time what else? This is very interesting saying no so for example people will ask you to do what? Um hey, can you help me with this project and I get really excited and I like helping people and then then all of the sudden I have like twenty project your chronic yes they're alright we'll tackle that in a couple days what else? Katie says I should quit smoking okay? And oh addy k photo says I should read more to my kids so people talk about the family very good procrastinating stop procrastinating stop procrastinating that's a good thing I should really stop program. They say that as they're like online reading gawker like I really should stop procrastinating. Okay, okay, so I had a very interesting reader. She even me and I asked this question what is something you claim? You want to do what you haven't done? And she said, I want to go running three times a week and I said that's a great goal why not start with one time a week and do you know what she said to me? I found this so fascinating she said that doesn't even it seems pointless running one time a week that's not gonna do anything and I thought to myself how interesting this young woman would rather dream about running three times a week than actually run once a week. Anyone here have that experience? Can we tie that back to our own lives? Who here can tie that back to their own situation? Oh, everyone okay, good. Well for me, it's the perfectionism look, I'm not gonna do it one hundred percent then gosh, I shouldn't even start correct. Very good. What else making you were not perfection it's like if there's a stain on the floor if I can't clean it up right, then it's going to stay there for a week like if I can't do it on very good you don't want to take the baby steps to getting somewhere where you want to be you just want to be there yeah uh huh what else for me is this oddly reverse psychology thing where it's like I understand how important habits are and I'm like one week one day a week isn't going to help me form a habit so why even do it right by the way? Great book recommendation I wanna make I just interviewed this guy charles do hit his book the power of habit one of the best arguably seminal books on habit change which just came out this year is a terrific book what we got from the web we've got someone adrian far saying that it's fear failure ha ha if I try and I fail, you know someone they actually was launching a new course on how to earn money on the side and I asked somebody who didn't join us that how come out of curiosity how come you didn't join and he said this is very haunting he said roommate, I've joined so many courses if I joined this course and I didn't take action again it would be too much psychological trauma for me to handle I found that very sort of dark and haunting what else we got from the web um at ikea photo says she would rather dream about losing fifteen pounds than work to lose two pounds uh exactly the case so I would propose something to everybody watching and everybody here I call it the eighty five percent solution which means it's better to get eighty five percent of the way they're meant to dream about getting one hundred percent of the way there and this is true for your money as well. So many of us believe that I need to get all my accounts together. I need to do this. I need to isolate that and you transfer here. You know what? It's probably never gonna happen. Why don't we just do it and sort of stipulate that you're going to have a few cobwebs? You're gonna have a few mess a little bit of messiness in your accounts that's fine, you might not be able to save a thousand dollars a month like you want to, you might yield only saved eight hundred or two hundred or starting out twenty but it's better to do that than to dream about saving five grand a month. By the way, I was thinking my book called the tuner strategy the hardest thing to do is actually to set up your first automatic savings and transfers once you do that let's say you just set up twenty bucks a month a very modest amount once you get comfortable with that you're like okay, I can live without twenty bucks a month you can tune that two forty one hundred, five hundred five I have many, many, many readers who have done this they tune their savings they tune their investments okay, so they start off by investing like a very modest amount twenty bucks fifty bucks a month soon it's a grand a month soon it's more that actually happens more than you would believe. So the eighty five percent solution stop dreaming about something and even start doing something that's just a quarter of where you want to be. Okay, um the third is to be brutally honest about your behaviour. Who here wants to wake up earlier in the morning? Okay? Uh interestings you're like, why is that, um because I stay up late at night and I just I've never been a morning person. Okay, very good we'll we'll get to that sarah, you definitely want to wake up earlier. Yeah, I sleep in really late but I'm also a night owl so I understand not being able to sort of burn the candle at both ends. Okay, very good many of us have these things were like I really should block and waking up early in the morning is one for other people it's like I really want to spend more time with my kids it said let's, talk about waking up early in the morning, cause it's a great example. Look, we have our rhythms and many of us have been wanting to wake up early in the morning since college, and we keep on beating ourselves up about it, and we meet people who wake up early in the morning and the reason I know this is I'm a very early morning person, okay? And when people hear that, they're like, oh my god, I'm so jealous, and I'm like, why I pretty much shut off after four pm I can't do anything, I just I'm bedridden, I just sit there like, oh my god is that happens every day at four p m o god and and so people, people like they believe that it's a moral fiber thing that I wake up in the morning, some about no that's just how I am I know that I plan for that being brutally honest about your behavior says how many of us have had these scripts in her head like things like, okay, like starting saturday, saturday, I'm really going to read that book and then, like, get it going, megan what's that smile about do that all the time all the time have like thirty books going, and I'm only into chapter three and all, uh, you okay? Is that my book? Is that one of them dropped those other books and hit my book? Are actually I just checked it out from the library and is due back before oh, my god, wait, okay, that's pretty funny, right? So here's, the deal, this is a lot of people don't like to hear this, but it's true, our past behaviour is actually a very good predictor of our future behavior, so I'll speak, for example, for my readers, who are, you know, a lot of them are in their twenties and thirties, a lot of them like to drink, all right? So they're like, hey, I'm goingto really read this cognitively taxing book on a saturday morning like, no, you're not. Dude, you're going to be in bed hungover watching jersey shore let's be straight. So my point here is to be brutally honest about your behavior if you don't wake up in the morning, fine, you're a night owl you plan for that don't constantly dream about something you should do but actually work around the schedule that you have. How does this relate to money? If you constantly say I really should do x and it hasn't worked for three years, why don't you scrap that approach and try something else? Write a lot of us get caught up in this idea we get tunnel vision saying I really should like research for one case well okay if that hasn't worked for three years maybe there's a different approach maybe you can call someone to help you maybe you can actually pay someone to help you if you really want to. The point is not to focus on the tactic it's to get the golden if the goal is to get a four oh one k open then figure out a way to do that. I'll show you different ways today, okay? Brutally honest with ourselves that's what we're doing so being brutally honest mr painter says ra meet your readers are awesome good looking and winning so sky's definitely been reading my stuff for a long time I so we're going to do we're gonna do a case study here okay, so this is just a quick I like reading people's language because it tells us a lot when we say things like fear of failure everyone's kind like well yeah, but when I say, you know, I was afraid because I've already bought all these products I never do anything with them that's much more impactful so I like reading people's language because it gives me insight into the way they think this guy said I was young ho about starting to do freelance but I never took action in fact, just talking about what I was going to do it made me feel good enough not to do anything to me and there's a whole bunch more but how many of us have felt that way? Remember when I talked earlier about like we buy a course and we feel like that's good enough I did my job or I've planned all this stuff how money let's get a sheet of paper and write down like, what am I gonna do with my money? What am I gonna do when I have twenty clients? We don't actually do anything like I like planning it's good, but the focus here today's on taking action, okay? So now we're actually going to do a little exercise with our conscious spending plans. So in my book I outlined an alternative to a budget again a budget is backwards looking a conscious spending plan, what it does is it allows you to say, where do I want my money to go and okay? Knowing that like and you can be really honest, I want to spend five hundred dollars a month on clothes fine, I want to take a trip every two months to visit my parents great can be as extravagant as you want, and then we'll figure out how you can afford it and if you can't have to say for it so I want to ask three simple questions I believe you have a worksheet here in studio the questions are really simple the first question is who actually let's have someone actually read off the question that will go over the answers um don't can you read off the first question of this exercise? Where do you think you're spending your money? Okay, where do you think you're spending your money so how many of us would even know that if we were if I was to say like where's your money going most of us before we did this exercise would we have any idea where our money was going? We'd kind of like I don't know like I spend someone rent I guess I go out probably I don't know like I know so what did you discover when you went through this exercise like what surprised you about that? I know for me um I was really floored with a lot of, um getting hit up for stuff for the kids that wasn't expecting like five fundraisers from the school in one week plus um like a band fundraiser and all these other things that we just weren't expecting thing but looking back I felt like I should've seen it coming and you know should have had a plan of action or something in line for when that comes up like you said, I should have seen it coming that's very interesting we're going, I'm gonna show you how a pro actively plan for unexpected expenses, which is kind of weird. How do you plan for unexpected expenses? I'll show you how to do that. So where do we think our money's going notice that I'm not saying, you know, go out and keep a budget for eight million years. I'm just saying, like at a high level on the back of a napkin, where do you think your money is going and what I did when I first did this exercise, I just can't put like five to eight categories, it was like rent, you know, entertainment, which would kind of like eating out, going out, stuff like that, you know, etcetera, etcetera, and I just kind of broke it down into percentages just really high level, so I encourage everyone to just do that it's like a sixty second exercise, and it doesn't even matter how accurate you are because the second question, justin, you want to be the second question where you actually spending, where you actually spend it? So on the first question, which we did on the back of a napkin in sixty seconds, he said, where do I think my money's going the second one is probably one of the toughest things that you will do today? Okay and I want it for the people watching I'm gonna tell you how to do this you guys already done this to an extent simple way to do this I like service called mint dot com I'm not compensated for recommending it here on camera I like them because you could go there you can plug in your accounts just type in your username and password and it'll actually aggregate it for you and show you a bunch of charts and stuff you don't have to go in there and enter data which nobody's ever going to do well and you know you can continue using if you like but I like it just for this step which will tell me its very high level general where's my money going okay so now we know where do I think my money's going where is my money going and let's pause right here who here was surprised by the differences between one and two okay megan well uh I found that I was spending most my money on housing um education for my husband and auto and transport which really surprised me because we only have one car what kind of car for a family uh two thousand won for tourists that's your mistake you got a ford big mistake now it was given to talk tio okay who else has a difference between what they thought they were spending what they were actually spent who else yeah I'm spending more in debt reduction and regular bills then I realized like I spent it on my business and food stuff and I kind of forgot oh yeah I pay regular bills like phone and internet yeah it's very good okay, you know there's a lot of things these days that are subscriptions for example and they kind of tend to creep up on us right? Five five ten dollars ah but someone's have fifty dollar expenses hundred dollars a month which are for businesses in particular I have some expenses that are four, five hundred dollars a month uh and they're just regular subscriptions that stuff I mean fifty bucks a month one hundred bucks that stuff really adds up right? So it's just to meet I like this exercise because it really surprised me when I did it about where I thought I was like oh I'm so I'm so organized it's only going to these areas and it's so no and it wasn't it was like all over the place and it wasn't going where I wanted to go which brings us to our third question drew why don't you read the third question off uh where do you want to be spending it? What do you want to be spending it? Forget the first two now if you could design your life to be a rich life however you would want your money to go where would it go tell me what happened in your experience as you did this third question, yeah, really excited to get kind of back to spending as much money as I did on clothes and travel on savings when I have my corporate job and my I was surprised at what my emotional experience was writing that down, so I was like, oh, no, you should be doing this like, no, I really want to go for it. Yeah, but what I really want to spend money on is that, yeah, I love what you said, by the way, I have this thiss like, fun thing, I don't like asking friendly, what would you do if you were a guy for a day? Ask a girl, then what would you what would I do if I was a girl for a day? And it quickly becomes very, very sorted and tawdry, but but, like and I've thought about this a lot, but the funniest thing is, when I ask someone this and they're like they'll be like, well, I wouldn't do that because that would be safe. I'm like it's your own fantasy. Were you talking about and like some people can't even imagine what they would do in a fantasy scenario, so I love that you were like, you know what I'm going to put logic aside and I'm actually going to just like go for it and I'll figure out the details later but what I love about this exercise I want to come to some other folks on the web as well if I were to ask them what would you do if you could do anything with your money where would it go for me? The most amazing thing is let's say that I say I want to spend twenty five percent of my take home pay on clothes let's just say okay and let's say I even put a dollar amount next for easy math let's just say it's one thousand dollars a month well right now it's in my current financial situation again in this scenario I don't make a thousand dollars a month okay let's just say put that aside because tomorrow I'm gonna teach you how to earn way more and explode your earnings like you wouldn't believe but for now I just want to know in an ideal scenario where would your money go? Right? So who else had a different emotional experiences? You went through this last question my logic completely took over and I was like if I could really if I could put it where I was spending I would put it in saving so the family was protected but I wouldn't even allow myself to you because I was just like that's unrealistic so I have a polar opposite reaction it almost made me feel bad even thinking about it very interesting okay interesting who has some inside on dawn's experience anybody? I'm curious it's a it's a particularly um female approach to want to protect the family especially financially that's very common, very common what we see in general is, you know, women are they focus more on the savings and frugality side men focus more on the investment and entrepreneurship site in general, I'm speaking generally but it's not it's, not a typical it's very common, but I'm interested we should dig more into this about the emotional side of you know why that logic took over any insights on your own? I just instinctively I just didn't want to let myself go there like, you know, if the world was limitless and I could have anything, what would it that's? Not my reality? So when I think about that it feels good for five seconds and then I get slapped with a bill it is like that hurts, so I didn't want to even be vulnerable to that very interesting you have great insight into your own thinking, I think that's very interesting for me um when I go when I would limit myself like that would be a, uh, level of like, I feel like I don't deserve it or if I'm if I'm taking this for me than other people can't have it, and so is so I definitely want to make sure they have it because I don't want it, I'm already doing okay, yeah, yeah, it's a very common thing to believe that the pious fixed and you will see this in all kinds of pathologies with money that there's a fixed pie, and if I'm taking it money out of it that I'm taking away from someone else, my whole belief and something will cover in great detail tomorrow is that you can actually expand your pie like you wouldn't believe, so you'll see these really weird behaviours that people do when they believe there's a fixed pie, for example, they will over fixate on taxes like our friend who raised a question earlier today, she said, if the government just didn't take his much taxes from me, then I could get by. Really? How about you focus on growing your income and focus on serving your client's better? And you can actually grow that pie way bigger than you can change fiscal policy. All right, look, we could sit around and debate fiscal policy all day, I'll have that debate with anybody but that's not gonna change anything for our day to day situation, what can we do? What can we control? We can grow our pie we could manage our money better and we can stop complaining without having ever read one, but we can also stop buying ford cars all right, so what we got from the web from people who did this this minor exercise quickly, what did they say we have? I mean, I'm going to summarise everyone melissa b and lewis sir and ryan are all saying travel, travel or saying travel I would travel by the way, I find it interesting that people say that because, you know, a lot of people are like when I retire or if I had a million dollars in the bank, I would travel the world, I would go to saharan desert both, and then you see, like, retired people and a lot of times they're like sitting on the couch like watching I'm like, come on, really? So I agree, though, travel is like a number one. In fact, for me, that was one of the things that I wanted to do to live a rich life, so have a lot of friends in different cities, and I wanted to be able to decide on a thursday hey, I'm gonna go see my college buddy fly out there on a friday and spend the weekend there like to me, that was very important if I could have any amount of money in the world okay what else we got going on I know she would agree with you traveled yeah, that is exactly my answer very good there are a lot a lot of people are also talking about family again um and kate dick losses I would spend money on a home for my parents right? Very good. Okay, very good. Adrian far says an engagement ring for my girlfriend lovett saving up for a baby uh huh. Ah ah lot of with our traditional audience a lot of people are saying here can you hear that applies to other absolutely whatever needs toe fund your hobby yeah, what else we have todd aaron who says I would buy a house in seattle and hang out with creative live more uh talk about an ass kisser I love okay, so why are we doing this exercise? Because most of us never even think about the difference between what we think our money is going and where it's actually going. Okay, we just like I say we kind of just blindly look in our bank account every so often maybe get an alert if it goes below we have no systematic way of thinking about our money we don't forget investments we're just stuck in the spending area like all and we will say things like like I try really hard but every month I just any money that comes in and just kind of goes out you say that, don, you said that earlier today, right? It just comes in and goes out. I just have no idea, so we're not even if the systems approach was certainly not the investments that were just like I don't even know what's happened with my money, there's a better way to do it, and this exercise will help, so I'd encourage everyone to do that. If you join this course, that exercise will be in the course. It doesn't take that long, it's like a few minutes to do, and then you go into mit that'll take you maybe less than an hour, and it can really just change the way you think about your spending in a very dramatic way. So let's, keep working on here and before we go on actually it's, let's pause and ask people the biggest insight so far, so we will get to the tactics. But we're in the psychology area and I'm willing, and I insist on spending a lot of time on this because I want to change the way we think about money. We constantly well say thing, you know, we'll say things like, I really should or I'll do that tomorrow we'll feel guilty when someone lectures us. You know, like like it almost feels like we're back in grade school, but we totally ignore the psychological side. So that's, what we're covering right now, what's been the biggest inside so far, and we're just part way through the first day of this course let's go, we'll throw it to the web as well and let's, talk to folks here in studio who's got insight, don I think I don't really think about money because I try to block it out. Uh, because I have such a negative association with it. So any time I think about it just takes me almost to, like, a dark or negative place, so I just don't want to think about it deal with it, I just block it out, and then I'm not conscious of anything that's going on with any of my money on that very good, very common, okay, we're going to change that. So you know, the weather is getting sort of crappy in seattle in portland as well. Before I left my boyfriend, I were going to buy bike gloves, it's, about a thirty or forty dollar investment for, like, a nice pair of bike clubs, and when I thought about I was like, oh my god, why would I spend so much on these gloves, you know, to take me sort of through the winter, and then I realized when I looked at sort of like my conscious spending that I easily spent forty bucks mohr on crappy, you know, bar and then, you know, like happy hour places that I didn't care about and that definitely weren't going to be a cz useful is this investment? I love that. Well, I love that there are things you spend on that you really don't care about the money just kind of trickles out right stuff we don't care about what we do because someone asked us, hey, can you contribute to this or that or like stuff if we if we had our choice in our third question, where would my money go? It would not even appear in the top town, and yet we do it why momentum, social pressure, et cetera, but if we actually sit back quite in a quiet room and we design our life with money again on the back of a napkin, forty dollars for biking gloves, which you're gonna use maybe five times a week and you're gonna love it every time you put those on and you could have him for five years it's a no brainer, that's conscious spending that's not feeling guilty about space, that's conscious spending spending extravagantly on the things you love and cutting costs mercilessly on the things you don't. And by the way, all this can be helped as we grow our income as well, which we'll talk about. Just get inside for me so far. Be the correlation between, uh, behavior and attitude and, uh uh, that example you gave about the girl that want to run three times a week and then but wouldn't do it one day. It's. Like just taking that first step to get going. I love that. If anybody remembers one thing from today, behaviour first attitude follows. That's. Completely different than what most people believe. They believe. Attitude first, then behavior incorrect. There's a one of my mentors from stanford. Bj fog he's, the director of the stanford persuasive technology lab. He and I did an interview on my site. I will teach you to be rich dotcom, which you can sign up there and get it. And actually, we have ah, you earl. I will teach you to be rich. Dot com slash creative live. So if you sign up there, there's a bunch of bonuses I'm giving away today, uh, and tomorrow, the day after so you can sign it there and get all this free stuff, we did an interview where we talked about flossing I don't need to convince you that you need to floss like you'll know like yeah, I should floss it and was like, yeah, I'll do it later we don't so he came up with several ways and several very innovative techniques to get you to floss more and it all follow this idea of behaviour first do whatever it takes to even floss one tooth just one just one and once you do that the rest will follow so behavior first if you keep saying yourself I want to clean the garage e I don't need to convince you to clean the garage what would it take would it take for you putting one hundred dollar bill somewhere buried in there to go out whatever it takes behavior first attitude will fall why does that to fold? Because psychologically we have this thing called commitment if we do something we look at ourselves and say wait a minute I'm doing this no one's telling me to do it I must find it important therefore I'm gonna keep doing same thing with the gym I'll tell you a quick example of how I changed my gym going habits I usedto claim I wanted to go to the gym I want to go to gym and by the way used to be forty pounds lighter than I am I'm like a really skinny dude I used to say I have the body of a supermodel a female supermom so it was like really bad right? I could not gain weight I thought to myself I'm not the kind of guy that can gain weight like I'm not the kind of person that can have a successful business where I'm not the kind of person that can have ten thousand dollars in my savings account it was my self concept I saw these guys were like big and I was like, oh there's no way I could be I'm just a skinny indian guy so I started trying to go to the gym and I went to the gym actually didn't do the exercises right I didn't know how to eat, so I reinforced my own self concept I tried working out I did it for six months I'm not big therefore I'm not the kind of guy that can get big so anyway my friend started teaching me how to actually work out properly. I started learning about this but I couldn't get myself to the gym consistently I wanted to go like three, four times a week I would wake up in the morning it's freezing cold and I'd be like, oh, I should go I should go I'll go after wearing congo later and I never went and so I started experiment started running simple tests and I would actually track which worked or not simple one week tests really simple and so I would try stuff like you know I would like motivate myself I would give myself a reward if I did it whatever the thing that worked for me I finally figured this out after really deep introspection so my closet was in another room it sounds so simple when I woke up in the morning it would be freezing and I'll have to walk over to the other room and get my gym clothes and that discomfort alone was enough for me to be like screw it I'll do it later and like I'm not a stupid guy it has nothing to do with intelligence it's human behavior so what did I do? I took those clothes I folded him I put him next to my bed so I couldn't even get out of bed without stepping on the clothes my gym compliance rates soared it was that simple but what's embedded in that story okay that I've used that by the way for years uh number one I didn't look at myself and say you're a failure will mean because you're not going to the gym actually said okay, this isn't working I'm gonna test my behavior and see what I can do to change it number two I didn't try to convince myself that going to the gym was important how do you know it's important? We all know it's important I said what can I do to test my behavior and I tracked it one week you could track it on the back of the neck and I don't give a damn three once I found something that worked I did more of it. Very simple. All right, so let's keep going on with biggest insights from today anybody else here in studio then we'll go to the web. All right, let's, go see, we got on the online s so we have a number of different people like it's just they're rolling in. Wei have canadian creative who says start now even if it's a small change save that twenty dollars a month instead of waiting to save a thousand dollars love that, um not needing a budget that was a big one. Uh, w tink in and um who's somebody else also said the same thing that the idea that you know keep a budget is dumb advice yes spread the word spread the gospel to all your favorite personal finance writers uh, ryan mueller says the biggest insight so far is the difference between what I am doing and what I want to be doing why the heck aren't I doing what I want to be doing? Probably fear and complacency, huh? Very good a personal psychology someone realized our gunter photography realized my parents survived the great depression and it affected everything related to money in their life and my life saved they say s so good so good you know there's this great story about having guys where this elephant story the elephant the spikes and so when they get an elephant a circus they tie little chain arounds leg and they'll kind of nailed into the ground so that the elephant doesn't escape ok well as the elephant gets bigger the elephant can rip that chain out right it's so strong but the elfin doesn't realize that it's so strong and so it's actually held back by the same chain that kept it down what was a child similarly I don't buy a three dollars forty nine cents mexican taco because I still believe like oh my god that's too expensive and now it's like a half joke my my readers are like for me I'll buy you that mexican pizza anytime like not I'm keeping this thing going but we all have beliefs from our childhood probably that our parents displayed that really profoundly affect the way we behave about money by the way I think about that some of the deepest invisible scripts we have about money are from our parents who odds are didn't really know much about money right? Who here has we'll go back to the biggest insights in a second but who's got script from their parents scripts meaning thes deep assumptions that are so deep we almost there so invisible we almost can't see them who here has some of those things? Yeah there's never enough that uh you have to work hard and sacrifice your own self care and that those are the two big very good very common. Very good uh who else? Necessities I mean for a while there I was obsessing about like little stuff like sarah you know these these gloves for me it was like I don't know is mascara a necessity like is it you know should I spend seven dollars on this tube it's ridiculous it's funny it's funny but it's very true to you like it's it's it feels real to you when you sit here and you think about your like seven dollars it's really means nothing but at that moment it is very powerful that feeling what else? Yeah, and I think that I learned that from my mother where when it was time to buy school clothes she would rather go to the you know, no offense, mom she's not watching um I don't think she knows how to use the internet, but she would rather go and buy us like you know, twelve shirts at a buck each that would fall apart, you know, almost immediately then spend like a couple you know, the extra money to buy like, nice thing, right, a lot of lot of frugality scripts here a lot as if almost extreme frugality is a virtue, right? And doing something and thinking about earning mohr is almost non existent. Why don't more personal finance experts talk about earning more because they don't know how most of them don't know how they work at a nine to five job, they've never considered things like negotiating your salary, taking a side job, delivering massive value to clients, raising prices they haven't, they write about cutting back on, you know, how many orders of eta mama you order when you go out and and there is value in being frugal to an extent I come from an immigrant family. I know that better than most would even think, but there's also value in expanding the pie and changing both our behavior and the way we think about money. So I appreciate all these comments about how our parents have influenced us and other people because they're so deep. Sometimes we're out buying mascara or whatever, and we're like, why am I being such a weirdo about this four dollar purchase? And you can trace it back forty years, very interesting.