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How To Make Money..."Do Not Buy A House!" 10 Ways To Make REAL Money: Ramit Sethi

In this new episode Steven sits down with personal finance adviser and host of Netflix’s ‘How To Get Rich’. 0:00 Intro 03:05 Why should someone stay and listen to this episode? 04:53 The language of money 06:03 Numbers we should know 09:47 How many people are clear on their rich life 15:40 Why people should think twice about buying a houses 26:00 The S&P500 & investing 37:00 Compound interest calculator 44:20 What are the characteristics of someone that will end up little money 47:44 How do I increase my income? 51:47 Optimising your skill sets 59:11 Should I invest in cypto 01:04:13 Always have 1 year of emergency funds 01:04:52 How much to invest & what you shouldn't question spending money on 01:06:30 Business class flights 01:07:54 Always buy the best 01:08:38 Always spend on these 2 areas 01:11:16 Work only with people you like 01:12:59 don't get caught up in the numbers 01:14:02 Talking about money with a partner 01:29:09 Character traits of people that will never get rich 01:33:18 The last guest's question Follow Ramit: Instagram: https://bit.ly/3Om30Gw Twitter: https://bit.ly/3NXDNAH My new book! 'The 33 Laws Of Business & Life' pre order link: https://smarturl.it/DOACbook Join this channel to get access to perks: https://bit.ly/3Dpmgx5 Follow me:  Instagram: http://bit.ly/3nIkGAZ Twitter: http://bit.ly/3ztHuHm Linkedin: https://bit.ly/41Fl95Q Telegram: http://bit.ly/3nJYxST Sponsors:  Huel: https://g2ul0.app.link/G4RjcdKNKsb Whoop: http://bit.ly/3zNvvop

Ramit SethiguestSteven Bartletthost
Jul 20, 20231h 38mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 3:05

    Intro

    1. RS

      Ah, this is driving me insane. To make a lot of money, you don't need to be a genius. You just need to remember a few key things. (music) Rahm Setti. Financial expert. The money man. New York Times bestseller.

    2. SB

      He has more than 20,000 documented success stories. This is your chance to never worry about money again.

    3. RS

      You can live a rich life regardless of where you came from, regardless of your income.

    4. SB

      How many people are clear on what their rich life looks like?

    5. RS

      Less than 1%. When I talk to people who have a spending problem, 100% of the time, they always say the same thing, "I just need to earn more." If you double your income today, do you think your problems would disappear? No.

    6. SB

      Some of the stats I pulled out from your book, about 25% of people who make $100,000 a year plus are still living paycheck to paycheck.

    7. RS

      Makes us realize that maybe the things we think we need are things that we have been socially taught are important. For example, owning a house is the best investment. It means you are successful. But it can be a very bad financial decision. There are far better, far simpler investments.

    8. SB

      So I've got 100 pounds that I want to invest. Where do I start?

    9. RS

      I love that we're getting into the nuts and bolts. Let's do this exercise together, and everyone can do it with us. First off... And then...

    10. SB

      Got it.

    11. RS

      Now there's just one more thing you have to do. Do you know the math?

    12. SB

      I would have 736,000 in my account.

    13. RS

      Yeah.

    14. SB

      Rahmit's ten money rules.

    15. RS

      This is where the real wealth is created.

    16. SB

      Number one... This episode changed my perspective on money. I'm an investor. I've been investing for the last six, seven years at different levels. Big companies, small companies, the S&P 500 funds, you name it. But Ramit changed my mind. He changed my mind on money, spending, investing, and he changed my mind on something that I think 95% of you that are listening to this podcast and that are about to listen to this need to have your mind changed on too. That if you have the right philosophy towards money, the right perspective and mindset towards money, then there is a path to living our rich life, to becoming rich, that enough people are not talking about. He debunks the myths of money, the limiting beliefs about money, and he confronts all of the unhelpful advice about money that stands in the way of you becoming rich. There's an app on my phone that I now have installed because of this conversation, and there are three big investments that I've now made in my life because of this conversation. And there is one key idea that I now believe will make me ten times more wealthy over the next three decades because of this conversation. You're gonna love it. Enjoy.

  2. 3:05 – 4:53

    Why should someone stay and listen to this episode?

    1. SB

      (music) Rahmit, someone's just clicked on this podcast on YouTube, on Spotify, on Apple, and they saw the title, they saw the thumbnail, they thought, "That sounds interesting." Tell me why you think they should stay and listen to what we're going to talk about today, what they stand to gain if they give us their time.

    2. RS

      Whenever someone hears someone talking about money, they get rigid. They instantly think that someone's gonna come in and tell them, "You can't spend money on lattes, you can't go on vacation, you can't buy any new clothes. Save all your money until you're 90 years old, and maybe, just maybe then you can spend it." And I don't believe in any of that. I think you should spend extravagantly on the things you love as long as you cut costs mercilessly on the things you don't. I think you should live a rich life today, and an even richer life tomorrow. And so when you combine money and psychology, you start to understand that there is more to a rich life than just some number in a spreadsheet. People already know they should be saving more. They know about compound interest. They may not know the intricacies, but they understand if they invest some now, they're gonna have more later. So what's stopping them? That's been a central question that I'm fascinated with for the last 20 years. That's why when I studied human behavior and persuasion and psychology, I was obsessed with this question of what are the things we know we should do but we still don't? You can live a rich life regardless of where you came from. You can live a rich life regardless of your income. Now, of course having a higher income dramatically helps, but just like fitness, we can all improve where we are, and that's what we get to talk about today.

  3. 4:53 – 6:03

    The language of money

    1. RS

    2. SB

      When you talk about the language, language of money, what do you mean?

    3. RS

      I mean understanding the nuts and bolts of money. So just the same way that we all learn how to drive, we learn the rules of the road, when to use our turn signals, most of us do not have even the equivalent knowledge of money. For example, the basic language of money would be what percentage of your income are you saving and why? What percentage are you investing and why? When will you have $100,000 or $500,000 or a million dollars, and what will that money get you? 'Cause just having a million dollars in the bank is pointless. What does it get you specifically? This is the basic language of money. You've gotta know your key four, six numbers in your life, not many, just a few, but once you understand those numbers, it's like understanding the speed limit. Understanding the speed limit means you understand a lot. There's a rule of the road. If you go too fast, what's gonna happen? Why do these rules exist? And these rules are similar in money. You can break 'em.... that's okay, but you gotta understand the rules first.

  4. 6:03 – 9:47

    Numbers we should know

    1. RS

    2. SB

      What are those numbers that I need to know?

    3. RS

      There's four numbers that I really like to track. I track these myself, and these are the numbers I encourage. The first is your fixed costs.

    4. SB

      Okay.

    5. RS

      Those would be your rent or your mortgage, your in- uh, your, uh, any debt payments, groceries, the money that you are spending every single month that is essentially fixed. And the number I recommend for that is 50 to 60% of your take-home pay. So, that would be if you're spending 50 to 60% of what you make, what you take home on your rent, your groceries, any debt payments, your car, you're in good shape. Okay? The next one is your savings. That would be roughly 5 to 10%. Savings would be things like an emergency fund, savings for a down payment for a car, things like that. Third is investments. Uh, this is where the real wealth is created. And for this, 5 to 10% of take-home is fine. Of course, the more you put in, the more you're gonna have. And then the fourth category, the one I love the most, is called guilt-free spending. This is going out for cocktails in New York. It's buying a beautiful shirt. It's treating your friends, whatever you love, yoga, 20 to 35% of your take-home pay. So, if you're watching or you're listening to this, just take 15 minutes, back of the napkin, jot down your approximate numbers. You don't even have to get them perfect. And you will be able to benchmark how you are spending compared to those numbers. I'll tell you that those numbers tell me a lot. It's almost ... If you just show me those four numbers of your spending, I can tell so much. I can tell what you love spending on. I can tell what you don't. I can tell what your priorities are. And I can also tell where you are out of alignment. So, I'll give you an example. When I ask people, "What is your rich life?" one of the common answers they say is, "I want to do what I want when I want." I go, "Oh, God, not this answer again." I hear it every day. I go, "Wow, that's so interesting. So, what do you want?" They go, "Uh." Most people have never thought beyond a trite answer. So, then the next answer I often get is, "Freedom. I want freedom." I go, "Great, that sounds good. What is freedom?" "I want to do what I want when I want." I look at their numbers and I see a huge payment that they're making to a 30-year mortgage. I see debt payments. I see car payments. And I go, "Now, this is interesting. You want freedom, but you have essentially anchored yourself down to not be able to travel or to pivot or to move. How can those two be? How can you reconcile those two?" And that dissonance is actually a fascinating moment. I love when we experience dissonance. We all do. I say that I want to work out more, but I don't work out more. Why? And what you'll discover is people often ... They simply have never thought about it. Wha- what our rich life is, these generi- these generic phrases, freedom, flexibility, it's just words. What I really want somebody to say, I want them to go a lot deeper, is to say, "I want to be able to travel for six weeks a year. I want to go to London. I want to go to New Delhi. I want to go to Thailand because I want to visit my family." That's a good start. If we get even more specific, they tell me what seat on the airline they're sitting on. They tell me where they're eating. They tell me who they're bringing with them. But to simply say, "I want freedom," is so vague that when I look at your numbers, there's often a huge incongruity with how you're spending versus

  5. 9:47 – 15:40

    How many people are clear on their rich life

    1. RS

      what you claim your rich life is.

    2. SB

      How many people, from your experience of interviewing people and doing this research, are clear on what their rich life looks like down to, you know, what you described there, "I want to travel for a couple of months a year," and then even further down to which seat I'm going to be in, which class I'm gonna be on as I travel?

    3. RS

      Less than 1%.

    4. SB

      Less than 1% of people know that?

    5. RS

      Yeah. No, uh, most people literally say, "I want to do what I want when I want." That is their- the extent to which they've thought about a rich life.

    6. SB

      Why does it matter to be ... What do that one p- that less than 1% of people that have that planned out have as an advantage or a benefit from that meticulous thought that the other 99% don't have?

    7. RS

      Because they can craft their rich life that is uniquely theirs, almost like getting a handmade glove. And in fact, the more you craft your rich life, the more bewildering it looks to the outside world. So, I'll give you i- i- an example from my own life. I love to travel. I spend a lot of money when my wife and I, we go, we'll travel for months at a time. I love hotels. I love the hospitality. I love the details. Uh, I love it all. I don't really care about cars, not at this phase of my life. It's just not that important to me. So, when I talk about my money dials or the things that I love to spend money on, I might spend a crazy amount on a hotel per night just because I love it, but I drive a car that's almost 20 years old. It's just not important to me, and I want that. I want to hear in your life what you spend extravagantly on, but then you cut costs mercilessly on because I want that duality which indicates you are intentional about your rich life.

    8. SB

      What if we're buying things to impress other people and we don't ... 'Cause it's hard to un- looking in from the outside especially, it's hard to know if someone actually likes Lamborghinis-

    9. RS

      Yeah.

    10. SB

      ... or if they're buying Lamborghinis because they were beat up when they were nine years old-

    11. RS

      (laughs)

    12. SB

      ... on the playground and they're trying to overcompensate and make the world ... And does it matter why they're buying it?

    13. RS

      No. Does it matter? I don't know. Ho- first of all, how would we even know? How would they know?

    14. SB

      Is there a, is there a difference, do you think, just on your, in your opinion, on the impact that that purchase has on us, whether we're doing it intrinsically or we're doing it extrinsically? Because I reflect on...... some of the things that I spent money on, and I go, "That was for someone else."

    15. RS

      Mm.

    16. SB

      Whereas there's other things I spend money on, which are maybe health-related or travel-related, like convenience, flying in a nice class on a plane, which I go, "No, that's actually adding a lot of benefit to my life." Whereas that mansion I bought out in the countryside when I was 23-

    17. RS

      Yeah.

    18. SB

      ... or whatever was a terrible decision. It took me away from my friends because it was an hour and a half outside of the city.

    19. RS

      Yeah.

    20. SB

      And none of my friends ever came to it. So I was just arriving at midnight after work in this fucking mansion with this tennis court-

    21. RS

      (laughs)

    22. SB

      ... by myself-

    23. RS

      Yeah.

    24. SB

      ... sleeping for three hours and then driving another hour and a half back to the city where all my friends from work were. I go, "That was a stupid fucking decision based on extrinsic, external, you know, motivations."

    25. RS

      It's a great question, and, you know, uh, particularly in America, we love this idea of ownership. We are taught you've got to own. Owning a house is the best investment. It means you are successful. And if you're renting, no one really says this, but what they deep down say is you're a loser.

    26. SB

      Yeah.

    27. RS

      Okay? This individualistic strain really runs deep and it has led a lot of people to make poor financial decisions. Uh, first of all, you might be surprised to hear my view is that owning can be a good financial decision, but it also can be a very bad financial decision. In fact, I rent by choice and living in New York, for example, I lived here for a long time, I knew that if I were to buy I would be losing thousands of dollars every single month because it actually cost more than twice as much to own than to rent. But can you imagine the type of pressures even I got from people who would come over and say, "Oh, so do you own this place?" The place that I was renting. I said, "No, I rent." And there was this visible moment of confusion. They're shaking my hand, they know that I'm the I will teach you to be rich guy, but I rent. How can you be teaching money but you rent? Isn't renting for losers? And I have to say because I was rock solid confident in my decision, that pressure did not affect me. But I wanna also say that a lot of us buy things based on status. Like, uh, the idea that we don't buy things based on what people around us think is, is nonsense. We buy things based on status. To deny it is absurd. But I do think that for the big purchases in your life like a house, a car, the big things, you've got to run the numbers. And if you decide, hey, you know what? I wanna buy a house even though it's gonna cost me an extra $600,000 in opportunity cost and phantom cost, but I'm gonna do it because I like it or it makes me feel good. I say God bless. But if you simply make decisions based on what other people around you do, then you will discover like you did, mm, I thought I was gonna feel a certain way and I don't really feel that way. And that for me is an opportunity for you to interrogate your own beliefs.

    28. SB

      And money is a, like a personal zero sum game, right? Like so I can't just spend indefinitely, so-

    29. RS

      Yeah.

    30. SB

      ... buying that ridiculous house out in the countryside takes away from something which might've genuinely brought me closer to happiness, like, I don't know, going away with my family or whatever it might be.

  6. 15:40 – 26:00

    Why people should think twice about buying a houses

    1. SB

      popular narrative is for most people the minute they get any decent amount of money is to buy your first house.

    2. RS

      My God.

    3. SB

      That's what people do. They get, they take a 10% deposit or a 20% deposit, whatever it might be, and they buy a house. Um, why is that a poor investment? Why is that a, a bad thing to do? Because that does kind of sit counter to the popular narrative.

    4. RS

      Well, we have to remember first of all where the popular narrative came from. In America, if you ask people what is the American dream-

    5. SB

      Yeah.

    6. RS

      ... the answer is inextricably tied up with a single family home with a white picket fence. That's not an accident. That is the result of decades of messaging, some might call it propaganda. First of all, most people in the world do not live in single family homes like we do in America. That has caused a lot of issues. But to leave that part aside, this is how most people think about buying a house. They think Grandma bought a house in Austin, Texas in 1970 for $100,000. Grandma just sold it 50 years later for $1 million. Grandma made $900,000. They go, "It's the most profitable thing you could do, buy a house." I go, "Okay, uh, that sounds really nice." Did Granny factor in how much she spent on maintenance for the past 50 years? Uh, no. Uh, did Granny factor in inflation and how that affected her return? Uh, no, what's inflation? Uh, did Granny factor in the opportunity costs of what that down payment could have been used if invested in the S&P 500? Uh, no. And did Granny look at all these phantom costs such as interest on the loan? Uh, no. It's not simply the bigger number minus the smaller number. That's wrong. That is simplistic. For the biggest purchase of your life, you've got to go deeper. Again, when I was living here, I kept a very close eye on real estate and the place right, right next to me, same square footage, same number of bedrooms, same everything, it would've cost 2.2 times what I was paying in rent. So just to give you an example, if I was paying $3,000 a month, it would've cost about $6,400 a month to own, okay? I said, "You know what? I like renting. If I have a problem, I just text my landlord." I took the $3,400 I would've spent owning when factoring in phantom cost, maintenance, interest, taxes, all that, and I simply invested it.... and I made more money doing that than I would have owning.

    7. SB

      What about if you're buying somewhere to, for the rental income?

    8. RS

      That can work. That can work. So, owning real estate as an investment can be part of a well-diversified portfolio if you run the numbers. Right now, there's a lot of hype. People go, "I'm gonna buy a house, and if I don't like it or whatever, I'm just gonna rent it out." Okay, fine, but you've got to remember that if your mortgage is $1,000, that's not just the amount you're paying. There's a lot more. In fact, in my estimations, I add 50% to that price. So, $1,500 a month, which would include a roof repair happening 19 years from now. We've got to amortize that out, uh, labor costs, interest, all that. If you can rent it out and make a profit, fantastic. It cash flows? That's awesome. What you discover is that most people who buy a primary residence, the place they want to live in, they buy it because they want it and then they tell themselves it's an investment. Buying a house can be an- an investment, but oftentimes it's not, and there are far better, far simpler investments. Here's my key message. I want to make sure nobody misunderstands me. I've been accused of saying buying a house is bad. No, I never said that. In fact, I will buy a house myself one day, and when I do, it's going to be a terrible financial decision, and I'm going to do it anyway. My key message is for the biggest purchase of your life, you've got to run the numbers. Sometimes buying can be a good financial decision. Often renting can be a good financial decision. Run the numbers and never feel guilty for renting.

    9. SB

      As it relates to buying a house, I've always been hesitant because I'm scared, really, of the point you mentioned about being anchored to a location. So, I- I, the way that I've kind of justified that away is by saying, "Well, I'll just Airbnb it when I'm not there, or I'll rent it out when I, if I decide to move to New York or whatever."

    10. RS

      Mm-hmm.

    11. SB

      Is there a- a cost in the opportunity of being less flexible about where you can be, um, that people don't think about? Especially when they're younger.

    12. RS

      Yes.

    13. SB

      And they're probably a little bit unencumbered by, you know, life-

    14. RS

      Yes.

    15. SB

      ... at that point.

    16. RS

      Yes! Buying a house is one of the most profound financial decisions that will affect your lifestyle ever. You can sell a car even at a minor loss, but selling a house involves massive transaction costs and labor that most people don't anticipate. One of the reasons that I rent is for lifestyle reasons. Financial, yes. I make more money renting and investing the difference than I would owning, but also lifestyle. I don't know that I'm going to be in the same place for 10 years, which is one of the key things that I would encourage people to decide before they buy. You want to know that you're going to be there for at least 10 years because then you can spread all those transaction costs, spread them out over 10 years. They become much more affordable. It's kind of like buying an expensive jacket. If you buy it and you wear it once, that's really expensive. If you buy it and wear it over 10 years, becomes a lot more affordable. Now take that, multiply it by a thousand, and that's a house. Particularly for young people, I don't give a lot of unsolicited advice. I used to do it when I was young, when I had just learned about money, and I realized nobody really wants to hear it. They really don't. If somebody comes to me, they come to my blog, my social media, great. Otherwise, I'm not going around telling people, "You should do this." Once in a while, though, I get a young person asking me, "I'm just about to graduate from college. What advice do you have for me?" And at that moment, the- the best piece of advice that I have is: move where the action is. And typically, that's a big city. So that would be where there's more jobs, where there's simply more people if you're looking for relationships, and there's a lot of tacit knowledge that happens in big cities. Like, "Oh, have you tried this? Oh, what, have you seen that musical? Uh, have you tried this thing, this idea that's going around?" So often surrounding yourself geographically can be hugely rewarding to you as you grow. You can't do that if you bought a house because everybody told you that it was going to be the best investment. And if I were to say, "Show me where you calculated the numbers that it was going to be a, an, a great investment," 75-plus percent of people have never created a simple spreadsheet.

    17. SB

      How does buying a house compare in terms of returns to something like investing in the S&P 500?

    18. RS

      It's quite poor, actually.

    19. SB

      Really?

    20. RS

      Yeah. Over about 100 years, there's great research showing that it has essentially matched inflation. It's been slightly above inflation. People find this mind-boggling, again, because they think somebody bought a house for 100K and they sold it for a million, so it's 900K, but they don't properly factor in inflation opportunity cost, phantom cost, all that. It's really hard to factor these numbers in, but it's critical because it's the biggest purchase of your life. I'll give you another example of where people don't properly factor it in. Uh, some people pay a financial advisor 1%. They go, "One percent, it's not a big deal. I'll pay one percent." What they don't realize is that that one percent over the course of their lifetime will take 28% of their returns and hand them over in fees. Think about it, if you make a million dollars in investing over the course of your life, $280,000 are going right out of your pocket into that advisor's pocket. Now, that's super counterintuitive. One percent turns into 28%? How does it work? You can simply go online and search for, uh, investment cost calculator and plug in the numbers, add a one percent fee, and you will see. The point of this is that sometimes money is highly counterintuitive, really counterintuitive. It's unlike anything else. If you and I go to sushi right now...... and we get sushi for 20 bucks, it'll be fine. If we get it for a 100 bucks, what do you think? It'd probably be a little better, right?

    21. SB

      Yeah.

    22. RS

      And if we get it for $1,000, the fish will have been flown in from Tokyo this morning, and it will be served in an absolutely stunning setting. So, in other words, you pay more, you get better results. We're used to that. If I spend more on a sweater, it's probably gonna have a different type of fabric. More on a car, it's gonna look cooler, have cooler features. Money's not like that. If you spend more, you don't get better returns. You don't get better anything. In fact, if anything, you get worse returns. People find this mind-boggling, because it is, it's counterintuitive. But in investing, costs matter. In buying a house, you've got to run the numbers, because they are totally counterintuitive.

    23. SB

      Quick one before we get back to this episode. Just give me 30 seconds of your time. Two things I wanted to say. The first thing is a huge thank you for listening and tuning into the show week after week. It means the world to all of us, and this really is a dream that we absolutely never had and couldn't have imagined getting to this place. But secondly, it's a dream where we feel like we're only just getting started. And if you enjoy what we do here, please join the 24% of people who watch this channel regularly and have hit that Subscribe button. It means more than I can say. And if you hit that Subscribe button, here's a promise I'm gonna make to you. I'm gonna do everything in my power to make this show as good as I can, now and into the future. We're gonna deliver the guests that you want me to speak to, and we're gonna continue to keep doing all of the things you love about this show. Thank you. Thank you so much. Back to the episode.

  7. 26:00 – 37:00

    The S&P500 & investing

    1. SB

      So, wha- what is the S&P 500, for anybody that doesn't know?

    2. RS

      Yeah.

    3. SB

      And what are the returns that I'm likely to get from investing in the S&P 500? I really wanna simplify this for people that are at the very start of their investing journey.

    4. RS

      Yeah.

    5. SB

      You know, because, I mean, this is what you spend so much of your time doing, that I just think about my- my team here. Mm-hmm. So, in the Diary of a CEO, there's about 30 people, and we started talking about money one day. And it was mind-blowing how nobody in my team's lives had ever had the conversation with them about investing.

    6. RS

      Yeah.

    7. SB

      We all think of investing as something that rich people after the age of 40 do.

    8. RS

      Yeah.

    9. SB

      Once you have a million dollars. Um, also, if you don't have a million dollars, then the on- only other way to invest, we're taught, is to buy a house.

    10. RS

      Ah. This is driving me insane.

    11. SB

      It's true though, isn't it?

    12. RS

      Yes. And that's- that's the central part of my work, is that you can live a rich life, and that rich life can be richer and more vibrant and more personal than you ever imagined. If you wanna travel, you can travel for longer than you ever thought. You can travel, for me, at nicer hotels. You can, uh, spend more time with your children, with your loved ones. Whatever your rich life is, you can do that. But you've got to learn a few key basic things about investing and money. So, let me tell you what I would tell my family when they come to me and they go, "How should I start investing?" The simplest, simplest way that I advise my family is I say, "Get a target date fund." So, let me explain what that is. A target date fund is one fund, just one, and you pick it based on the year that you're going to retire. So, if you're gonna retire in 2050, if you're gonna be 65 in 2050, you go and you find that one fund. It's called a Vanguard 2065 fund or Fidelity 2065 or Schwab 2065. There's lots of brokers. These funds, it's one fund. All you do is put money into it. That's it. The fund, like a pie chart, is automatically diversified. So, as you get older, it gets more conservative. Because somebody who's 75 years old should be investing differently than someone who's 25. One fund. All you have to do is set your money up to go into it every single month.

    13. SB

      What is a fund?

    14. RS

      A fund is, uh, uh, a set or a basket of stocks and maybe bonds. So, we've all heard of, you know, companies like Microsoft, Google, whatever. A fund owns lots of these. Right? And that's important because we've heard diversification, like you should have diversified your investments. Okay well, how do I do that? You don't need to go and buy 20 stocks and then figure out how much of each to do. That's too much work. And honestly, most people are not good at that, even professionals. You buy a fund which automatically owns lots of stocks, like hundreds of them. And over time, all you, the individual investor, like me, have to focus on is putting money into it automatically.

    15. SB

      So, a fund essentially, I've got £100 that I want to invest.

    16. RS

      Yep.

    17. SB

      Um, I find a fund. Where do I find these funds?

    18. RS

      You can go to Vanguard, Schwab, or Fidelity. All those are great companies. Uh, what you're looking for, regardless of what country you're in, is you're looking for a low-cost brokerage firm.

    19. SB

      So, but there's also apps and stuff that I can- I can use.

    20. RS

      You can use apps. I don't like a lot of the apps, because they gamify you to try to invest.

    21. SB

      Right.

    22. RS

      They want you clicking and trading. I hate traders. Trader- you do not wanna be a trader.

    23. SB

      Hmm.

    24. RS

      Traders lose money. Investors treat investing like watching paint dry.

    25. SB

      Hmm.

    26. RS

      That's how sexy it is. Trust me, I'm not getting my entertainment from investing. I'm going out, go watch a movie, go watch Netflix. But investing is boring and automatic. That's how it should be.

    27. SB

      I used a- a- a company called Hargreaves Lansdown in the UK who have an app when I first started investing.

    28. RS

      Mm-hmm.

    29. SB

      Um, when I first started investing in funds. They- they had a very ugly app, so I wasn't very compelled to use it. I think it's better now. But I would use- just do it on desktop. Which I do get your point, because you don't wanna- you don't wanna be game- you don't wanna screen-

    30. RS

      Yeah.

  8. 37:00 – 44:20

    Compound interest calculator

    1. RS

      This- it's called MoneyChimp.

    2. SB

      Okay. Okay, I've got it.

    3. RS

      All right.

    4. SB

      I'm on it.

    5. RS

      All right, so there's four numbers we need to fill out here. Let's take a look. The first is current principal. That means how much you've got in the bank.

    6. SB

      I'm gonna say $5,000-

    7. RS

      Okay.

    8. SB

      ... and I'm gonna start when I was 16. 'Cause if I'd saved my money when I was 16 and not spent it res- recklessly-

    9. RS

      Mm-hmm.

    10. SB

      ... I think I could have had that $5,000 when I was 16. Um, annual addition. What does that mean?

    11. RS

      How much can you invest per year? So for most people, they think about on a monthly basis. They might say 200 bucks a month, which would be $2,400 annual addition.

    12. SB

      Okay. So-

    13. RS

      What do you want to say?

    14. SB

      I'm gonna say... Can I say $5,000?

    15. RS

      Yeah. That's, you know, about 400 bucks a month. I think that's reasonable. I often find that with people making, uh, s- median or slightly above median salary that there are hundreds of dollars a month of money that is unaccounted for, that if properly made intentional-

    16. SB

      Mm-hmm.

    17. RS

      ... could be invested. So great, 5,000 a year. All right.

    18. SB

      Obviously, I could have... Once I got past a certain age, I could have increased that though, so-

    19. RS

      We're gonna talk about that.

    20. SB

      Okay.

    21. RS

      Hold on to that idea.

    22. SB

      Okay.

    23. RS

      How many years? This was you at 20?

    24. SB

      This was me at 16.

    25. RS

      Oh, okay. And how old are you today?

    26. SB

      30.

    27. RS

      Okay, so 14 years. Let's just do it until today and we'll see what happens.

    28. SB

      Okay.

    29. RS

      All right.

    30. SB

      14 years.

  9. 44:20 – 47:44

    What are the characteristics of someone that will end up little money

    1. RS

      than you ever imagined.

    2. SB

      What are the attributes of someone that's probably gonna be poor in 30 years in terms of their relationship and their behavior with their money?

    3. RS

      They're easy. They don't invest. They feel overwhelmed and anxious about money, and they talk about it all the time, but they've never read a single book about money. And there's these deeper attributes they have. Uh, only rich people invest.

    4. SB

      They think that?

    5. RS

      Yeah. And that's why I'm here. I want everyday people to know, just like me... I started off, my parents immigrated from India. I had no special, uh, investment knowledge, but I had two parents who were educated and encouraged me and said, "Learn this stuff. Here, we'll do it together." And that was a gift. Um, everyday people can build tremendous wealth, which in and of itself is impressive, but it's even more impressive when that wealth is used to live a rich life, a rich life of adventure and spontaneity and generosity.

    6. SB

      Some of the stats I pulled out from your book, about 25% of people who make $100,000 a year plus are still living paycheck to paycheck.

    7. RS

      Yeah.

    8. SB

      According to a recent survey of millionaires done by the US Trust, 83% of the wealthy, wealthy say their largest investment gains have come from small wins over time-

    9. RS

      Yeah.

    10. SB

      ... rather than taking big risks.

    11. RS

      Yes! This is counter to everything we see on TV, because on TV it's really boring. What, are you gonna look at my Vanguard account? Oh, wow, compounding 7% per year. It went down s- 8% last year, and it went up 9% this year. So boring. So we see these cool stories of business owners, and we're both business owners. It is cool, but a tremendous amount of my own wealth will come from low cost, long-term, methodical investing.

    12. SB

      That's like a rule of life, isn't it? That the, the real returns... You know, in reality, the great returns come from patience-

    13. RS

      Yeah.

    14. SB

      ... and consistency, and things that really a- aren't sexy. Like, they're not Instagramable. If I post on my Instagram today, "Hey, I've got some advice for you guys to become wealthy," and I go, "You need to invest in this fund and just leave it there," but if I go, "Listen, I've got this new N- this new NFT collection-"

    15. RS

      (laughs)

    16. SB

      "... or cryptocurrency coin that's gonna make you a million percent this year," people are gonna go all in. That's just like a, uh, something within the human condition, where we want, we want ret- big returns with little effort and today.

    17. RS

      We want to get rich quick.

    18. SB

      Same with a six-pack. We want the six-pack abs in 10 minutes.

    19. RS

      Yeah.

    20. SB

      We don't want six-pack abs with diet restrictions and nine months of work. That's not...

    21. RS

      A- and that is why I have a lot of compassion for helping people unlearn some of the messages about money, because we all have them. Uh, we all ha- uh, have the equivalent of, "I want six-pack abs." But we also have something in life that we've spent time to get really good at, and we know that the secret is basically consistency. If I go ask someone who's an amazing cook, "Hey, I wanna cook like you. How do I do it?" What, are they gonna give me some, "Use cinnamon"? No! They're gonna say, "Get in the kitchen and cook every single day for five years, and you're gonna learn about when to use salt and when to cook it for longer." Fitness, you wanna ask someone who looks really good or, or feels really good about their body. They're gonna give you some secret workout? No, they're gonna say, "I show up when I feel good. I show up when I don't. I show up."

  10. 47:44 – 51:47

    How do I increase my income?

    1. RS

    2. SB

      When you're... Well, let's think about the people that might be listening now. So there's gonna be someone that is a... they're a, they're a bus driver, or they are a social media manager. They are a, I don't know, a cleaner. They're a teacher. They are a personal trainer.

    3. RS

      Mm-hmm.

    4. SB

      W- If you were... If your job was to make that person a millionaire in 20 years from now-

    5. RS

      Hmm.

    6. SB

      ... whatever their age they are right now, what is... And you were their financial advisor-

    7. RS

      Yeah.

    8. SB

      ... and in fact you were controlling all of their p- personal and professional decisions-

    9. RS

      Uh-huh.

    10. SB

      ... talk me through what you would do with that individual at a very detailed level.

    11. RS

      I would do a few things. Number one, the, the most important things I would do would be set up automatic investing-

    12. SB

      Done.

    13. RS

      ... and be aggressive about it. Two, they have to increase their income.

    14. SB

      Okay, I'm gonna be that person. I'm gonna embody-

    15. RS

      Okay.

    16. SB

      ... that person that you've just described. So increase my income. I'm a personal trainer.

    17. RS

      Perfect.

    18. SB

      Okay, so what, so what shall I do?

    19. RS

      All right. You're a personal trainer, so first off I would say, "How much are you charging? How are you finding your clients?" We talk about that, and let's say you're charging a hundred bucks an hour, and you have clients. They say, how long do they stay on average? Uh, you know-

    20. SB

      That's exactly what I'm charging.

    21. RS

      Two months. Perfect. Great.

    22. SB

      They stay longer than two months. I'm very good.

    23. RS

      How long do they stay?

    24. SB

      Three months.

    25. RS

      Three months? Wow. Okay. You're very good. All right. So your average client is worth, four hund- uh, few thousand bucks.

    26. SB

      Yeah.

    27. RS

      Great. So you're making, let's say, $60,000, $70,000 a year. All right. Uh, the first thing, after I understand all this information, I would say, "All right. We're gonna double your income. How are we gonna do that?" The first answer everyone gives is, "I gotta find more clients." Okay. You should. You should ask your clients, "Hey, I've got a few slots available. Who would you recommend?" So you should get more clients. Second, you're gonna listen to your clients and you're going to say, um, "What else are you looking for? I know you've got your fitness journey you're going on." They're gonna tell you, "I've got a 10-year reunion. I wanna plan for that." Uh, another person's gonna say, "Gosh, I, I know I should be eating healthier but (sighs) it's really hard for me." So you're thinking about it. Here's what you do. You create... Uh, you package up, uh, meal planning services. You can either, um, do their macros for them and charge them a little bit extra. Let's say an extra 200 bucks a week or 200 bucks a month. You can also partner with a food delivery service and you coordinate with that company to feed over their macros and it gets delivered to them, and you take a small cut. Right there, you've added thousands and thousands of dollars per year per client, as long as they stick with you. In addition to that, um, you can do group sessions. So you go, "Hey, um, I'm gonna do a weekend session. I'd like for you to invite your friends. Invite 'em for free." And of course, of the people who come, let's say you get 15, 20 people to come, you do a free little session on Saturday. You go, "I'm a trainer. I work in SOHO. I have three open slots." That's how you're finding new clients now. So you're doing two things. You're finding new clients. You're increasing your average lifetime value per client. Okay? That's the, that's two things. Now let's do one last thing. Let's increase the duration that they stick with you. They're sticking with you for three months, give 'em a special offer to stay with you for six months. So when they sign up, they work out with you for a month, you say, "Look, it's $100 right now. If you stick with me for a six-month plan, I will give you my sessions at $95 per plan. You'll save X, 5%." One, two, three. You've increased, and if we did the math, you may have doubled your revenue. You certainly boosted your profit in a huge way.

    28. SB

      All of... A lot of that's about making sure you're getting a better return per hour you spend at work.

    29. RS

      Yeah.

    30. SB

      But also making sure all of those hours are full-

  11. 51:47 – 59:11

    Optimising your skill sets

    1. SB

      And one of the chapters that I investigate is this idea of making sure your skills are on the right market.

    2. RS

      Mm.

    3. SB

      So, my company went public and one, one of the things that I, I came to learn from sitting with investment bankers for many, many years was that if you put a, a company, the exact same company, let's just say it's, you know, the company that make these silver mugs in front of me. If I take this company public on the London Stock Exchange, I might get, for example, four times revenue. If I take the exact same company and I list it on the New York Stock Exchange, it will be valued at eight times revenue.

    4. RS

      Yeah.

    5. SB

      It's the exact same company-

    6. RS

      Yeah.

    7. SB

      ... exact same people, exact same business, just moving it to a different market. And what, upon leaving the social media marketing world when I was 27 years old, one of the first calls I got was from a biotech company ran by a billionaire friend of mine that was going public and they brought me in. And on the first week when we're discussing what they might pay me, I'm thinking there's n- they can't really pay me in cash because I've got enough cash, I don't really need that. They can maybe give me some stock. Their offer to me, for my skillset, was $8 million, roughly $8 million in options-

    8. RS

      Mm.

    9. SB

      ... that I would earn in nine months from taking the company from where it was, building out the marketing team, handling their storytelling, and taking the company public, which we did at about $3.2 billion valuation. Their offer was $8 million in options. I reflect on that and go, I'd spent the previous 10 years using the same skillset to sell consumer goods like dresses and iPhones for Apple and Logitech and big fashion brands.

    10. RS

      Yeah.

    11. SB

      I took the same skillset and applied it to a market and industry where it was rare. Biotech people know nothing about Reddit and Twitter and Facebook and social media. So my skillset was rare, scarce in that market, so it was incredibly valuable.

    12. RS

      Yeah.

    13. SB

      And I think about this a lot with, with, especially as this AI thing rolls in. I think people should be looking at their skillsets and going, "Where is my skillset as a writer gonna yield the greatest returns?"

    14. RS

      Mm.

    15. SB

      I could be a social media manager. I could be a, uh, um, a blog writer or I could add a little bow, string to my bow and become a, a scientific writer at, or like work, a writer in biotech and you'll get paid if you can add that little bit of knowledge to your, to your writing skills, you'll get paid, I'm gonna say five times, potentially five times more.

    16. RS

      Yeah.

    17. SB

      And people don't think about the fact that their sk- they're, they, they need to use, place their skillsets in the most lucrative market where it's scarce.

    18. RS

      Yeah.

    19. SB

      And I, it's so... Yeah. Just throwing that out there 'cause it's really front of mind for me at the moment. Like personal-

    20. RS

      It's great.

    21. SB

      ... training, you know. Like-

    22. RS

      Personal training.

    23. SB

      ... you could be at a gym-

    24. RS

      Yes.

    25. SB

      ... and you'll lose 75% of your income to the gym or-

    26. RS

      You can do it virtually. You can specialize on, um, just preparing people in, in the beginning of the year. It's like your best year and every January that is your focus. It can be celebrity clients. It can be, uh, uptown, um, mid-career executives. That's a very lucrative. You choose but you choose carefully.

    27. SB

      Mm.

    28. RS

      I, I agree. That's a bit of an advanced concept. I think most people they start off, they go just, "How do I make more money? I'm a trainer. I have free hours but"... once you kind of master that and you go ... Like, for example, there's a trainer I know here who charges a $175 an hour. That's very good. After you get that and you fill up your entire calendar, you go, "Okay, I'm making $305,000 a year, I want to make more. How do I do it?" Now, you need to get creative. You move to different markets. You add in package things that scale when you sleep. You have video courses, et cetera. There's so many different ways. But I think everyone would do well to listen to what you're saying, which is think about how to move upmarket or potentially to a totally different market.

    29. SB

      Where your skill set is really scarce.

    30. RS

      Yeah.

  12. 59:11 – 1:04:13

    Should I invest in cypto

    1. RS

      moves that line up with your rich life.

    2. SB

      Someone comes to you and they say, "What about crypto?" I get that question a lot.

    3. RS

      Oh, God.

    4. SB

      "What about crypto? Should I be investing in ... My friends told me about this new coin, and, um, I'm thinking of putting a couple of thousand pounds into it." I get this all the time.

    5. RS

      Oh, my God.

    6. SB

      "Should I invest in that coin that my friend told me about?"

    7. RS

      So I get this (laughs) question a lot. I, uh, I got it a lot a few years ago.

    8. SB

      Yeah.

    9. RS

      Let me tell you what happened. You know, people read the book. They know that I'm a fan of low cost, long-term investing, and then all these crypto nuts grow up and ... well, they grew up to be, uh, you know, 19 years old, and they go, (laughs) "Oh, Ramit Sethi, such an old guy, such a Luddite. He doesn't understand investing. This is the new future. Fiat is dead." I go, "Um, I have a couple questions for you. Number one, what does the rest of your portfolio look like?" They go, " (laughs) Portfolio, I put it all in on crypto." I go, "Oh, God. Okay. Um, second, do you think that it's normal to get, uh, 4,000% return per year when over about 100 years the stock market has returned approximately 7% per year?" They go, "Yeah, that's 'cause fiat is dead, you idiot. It's gonna be ... we're going to the moon!" I go, "You're going bankrupt." And many of them did lose a tremendous amount of money. My view on crypto is if you have a well diversified portfolio, well diversified, and you want to have a little bit of fun with 1%, 2%, even 5% of your portfolio, go ahead. And that could be crypto, it could be an individual stock, it could be investing in your friend's bar in Brooklyn. It could be whatever you want, but you gotta limit your risk. And what you find is that the type of people who tended to be attracted to crypto tended to be extremely risk seeking, and, in fact, they saw diversification and risk management as boring.... for old people. (sighs) This game is a marathon. You wanna live a rich life? You wanna be living it for 60, 70 years. I'm not trying to get 10,000% returns and then blow out. And that's what happened to many of them.

    10. SB

      I mean, part of the problem here is that when we do get our 10,000 returns, 10,000% return moment-

    11. RS

      Yeah. We think it's gonna be 10 million percent if we just wait.

    12. SB

      But we also go tell everybody.

    13. RS

      Oh, of course. You never hear anyone saying-

    14. SB

      (laughs)

    15. RS

      "Let, let me tell you something." Thank you for saying that. I went on Twitter 'cause, uh, you know I mess around with these crypto guys a lot on Twitter. I have a great time doing it. I go, "Hey, where'd all the crypto bros go? Everyone seems to have disappeared in 2023. Where'd you guys go?" And there's just, like, crickets. Where in 2020 they were really coming out, you know, guns blazing. I said, "If you have lost a lot of money from crypto, send me an email. I want to share your story. I'll keep you anonymous." I have a lot of people who follow me on social media. I got less than three responses.

    16. SB

      (laughs)

    17. RS

      We love to share our successes. We love it. We do it with crypto. We do it with buying a house and selling it for a profit. We do it with business. We do it with all that stuff. But you almost never hear anyone saying, "Oh my gosh. I bought this. Uh, I sold it for, um, one-fifth the price. Oh, and by the way, because of the transaction fees associated, I actually lost, like, 80% of my money, you know, or, or 85% of my money." You never hear that. It's deeply shameful for people to admit that they lost money.

    18. SB

      It's the opposite of status, isn't it?

    19. RS

      Yeah.

    20. SB

      And we're not wired to seek the opposite of status.

    21. RS

      Exactly.

    22. SB

      We're not wired to voluntarily bring ourselves down in the tribe.

    23. RS

      Exactly. We are safety-seeking. We are status-seeking. And so this is what happens with money. That's why I talk about prenups and why I talk about investing and mistakes and all of the above, is that I want to shine a light and show people if you are only seeing the top of the iceberg, all the successes, of course you feel like you're behind. Of course you feel like everyone knows something you don't. But it's complex. Some people make good decisions. Some make poor decisions. We gotta look at them all, and then we will understand what's right for us.

    24. SB

      So on my, my position on crypto is, um, I believe in the underlying technology of the blockchain. And I, I'm, I've been a big Ethereum holder for a very, very long time. But it does represent less than 5% of my portfolio, although I am a very big holder-

    25. RS

      Mm-hmm.

    26. SB

      ... um, in Ethereum. And I've held it for so long that although I'm at a, I'm at a point of profit right now-

    27. RS

      Mm.

    28. SB

      ... I am well aware that I could go, um, into a huge, uh, you know, into the red.

    29. RS

      Yeah.

    30. SB

      Irrespective of that, it, A, has, is inconsequential to any decisions on my fi- like, my financial, financial portfolio at large. And B, because of that, I have such a long-term time horizon that I could hold it for 30, 40 years and I've never flinched.

  13. 1:04:13 – 1:04:52

    Always have 1 year of emergency funds

    1. SB

      I have no interest in that. Ramit's 10 money rules. I just want to go through these 10 money rules, 'cause you mentioned prenups there, and I was quite curious that number 10 in these rules is marrying the right person. But let's start at number one.

    2. RS

      Mm-hmm.

    3. SB

      Always have one year of emergency funds.

    4. RS

      Yeah. So for me, one year of emergency fund is conservative. It's more conservative than most, lets me sleep at night. And I just keep the cash in a savings account. It's not under my pillow. Cash does not mean it's sitting under my bed. Please don't try to rob me. It's cash in a savings account, totally liquid, and that's what it's for. Emergencies.

  14. 1:04:52 – 1:06:30

    How much to invest & what you shouldn't question spending money on

    1. RS

    2. SB

      Rule number two, save 10%, invest 20% of gross annual income.

    3. RS

      Yeah. This is all about the numbers that I shared and being more aggressive with them. I know that paying myself first now turns into way more later, so I invest aggressively.

    4. SB

      Rule three, pay cash for large expenses like engagement rings or big holidays or weddings.

    5. RS

      Yeah. This one is controversial because for the things that are important to me, I don't want price to be the number one concern. So I'd rather save up for it. When I was in my 20s, before I ever met my wife, I knew one day I would get married. And because I'm Indian, I knew we would have a big wedding and I wanted it to be amazing. So I started putting money aside every single month automatically. I do the same thing for trips, house, et cetera.

    6. SB

      Rule four, never question spending money on books, appetizers, health, or donating to a friend's charity fundraiser.

    7. RS

      Yeah. So the books and the appetizers are a little weird. I have something called Ramit's book-buying rule, which means if you ever see a book that you're even remotely interested in, just buy it. Don't ask a question. Don't equivocate. Just get it. Because if you can learn one thing from that book, it can transform your life. Appetizers, when I was a kid, we couldn't afford to eat appetizers. So we would eat out every six to eight weeks. If we had a coupon, we'd usually go to a pizza place. Getting appetizers was inconceivable. So now when I eat out, to be able to see one or even two appetizers that look good, I go, "Yeah, I'll take them both," it feels incredibly rich. And this is just an example of how our childhood sticks with us. It feels awesome to be able to

  15. 1:06:30 – 1:07:54

    Business class flights

    1. RS

      do that.

    2. SB

      Rule number five, business class flights on flights over four hours long.

    3. RS

      Yes. Again, my money rules, not for anyone else. When I used to ... When I was in my early 20s, I would get on a flight and I would actually in my head scoff as I was walking from the front of the plane to the back. I'd be like, "Why would anyone spend four times the money paying for a first class ticket? It makes no sense. We're all getting to the same place. Ha ha ha." I wish instead of disparaging that, I would've gotten curious, and I wish I would've said, "Wow, if somebody can afford to get those seats, why would they? I wonder what they're spending money on. Aren't we all getting to the same place?" And if I had gone from disparagement to curiosity, from D to C-... I would have understood that some people have their office paying for it, some people do it for health because they want to get there, they want their back to feel good, they maybe need to go to a meeting, and some people just have enough money that they can do what they want. And when I started to become more curious about money, that opened up my eyes to be able to spend on certain things and spend extravagantly, but also to realize, "Wow, maybe I try this certain type of food once, cool. I don't need to do it again." So, for me, my money rule so that I don't have to decide every time I take a flight, boom, this is my guideline. It's done. It's written. Never have to think about it again.

    4. SB

      Rule six, buy

  16. 1:07:54 – 1:08:38

    Always buy the best

    1. SB

      the best and keep it as long as possible.

    2. RS

      Yes. I love this. I think we all intuitively have this idea of quality over quantity, but if you look in somebody's closet or you look at the things in their house, there may be some incongruity. So, um, for example, uh, my car is 17 years old. It's a good car. It's a ... I mean, for me, it was a fine car. I don't care. It rides fine. It's a four-door Honda Accord. I told you, very sensible, long-term great. Uh, buy the best, keep it for a long time. It's the same with clothes. Um, those things matter to me. I like that, and so I'll buy something that might seem very expensive, but I'll keep it for a long time.

    3. SB

      Good for the environment as well.

    4. RS

      Yeah.

  17. 1:08:38 – 1:11:16

    Always spend on these 2 areas

    1. RS

    2. SB

      Rule seven, no limit on spending on health or education.

    3. RS

      Yeah. This, this one is important. Um, I learned when I was in my 20s and I started training and learning from personal trainers and nutritionists that I really loved it, and I also realized that I needed help. I needed great teachers. And so eventually, I just realized I'm gonna give myself unlimited spending on this. Same for education. So I'm a teacher. I teach different programs. Of course I'm a student as well. I want to learn from great teachers, from taking accounting classes here at Columbia to buying every conceivable book and digital program there is. I've given myself the freedom to do that, and all that came from, uh, I had a scholarship, I had many scholarships that paid my way through college, and one of the scholarships set up an account for me at the Stanford bookstore. So when I walked in there, I could get literally any book I wanted. It was like, uh, Willy Wonka and the Chocolate Factory.

    4. SB

      Mm-hmm.

    5. RS

      For a guy like me to have unlimited books, it was, like, unbelievable. And when I graduated from college, I realized that would be going away, and then I remember having this conversation with myself and saying, "How much would it really cost to recapture that feeling?" That feeling of being able to get anything I wanted. See a book on the bookshelf? I'll get it. And the answer is really not that much. So over time, that then expanded to health and education.

    6. SB

      Health I find really compelling because it's clearly, clearly the most important foundation of all of this. It's clearly the most lucrative investment any of us could make, um, because everything we've described, the rich life, doesn't exist without that foundation.

    7. RS

      Yeah.

    8. SB

      So, yeah, it's all good investing in your Vanguard, but it doesn't matter at all if you're gonna die.

    9. RS

      Yeah. I- if you ask people what's important to you, they'll often give you the same answers. They'll say relationships, health, maybe travel.

    10. SB

      Korea, maybe.

    11. RS

      Yeah. I go, "Okay, let's take a look at your spending. Show me where you spend on those things." It gets really quiet really fast. Now, it's one thing to spend time on relationships, and we should, but we can also spend money to enrich those things. It might be surprising your niece at a showing of, uh, Michael Jackson, or it might be surprising your family by going home and visiting them. There are lots of ways you can use money to enrich those experiences. Same for health. It could be what you buy at the grocery store. It could be training or a gym membership. It could be whatever it is that's meaningful for you, but if we claim something's important to us, it sure

  18. 1:11:16 – 1:12:59

    Work only with people you like

    1. RS

      better show up in our time and our spending.

    2. SB

      Rule number eight, earn enough to work only with people you respect and like.

    3. RS

      I love this one. I decided long ago that I only want to work with people that I like and respect, and so I earn enough money so that I can do that. And to me, who you surround yourself with matters profoundly. Ideas seep into your consciousness. Values seep in. If I'm around people who, when I look at the calendar, when I have a meeting with them, I dread it, I already know it's the beginning of the end.

    4. SB

      Most of us have to work with assholes though, right? Like we-

    5. RS

      Yeah.

    6. SB

      No, I say have to. I shouldn't use that word. I don't like saying have to, but most of us spend most of our lives, especially the early part of our lives-

    7. RS

      Mm-hmm.

    8. SB

      ... working with assholes.

    9. RS

      Um, we work with people that we may not particularly choose ourselves. I think that's probably-

    10. SB

      Assholes. (laughs)

    11. RS

      (laughs) So yes, I built a life where I could make that decision for myself.

    12. SB

      Yeah.

    13. RS

      I'm the CEO of my business. But I think what is important there is the intentionality behind it. It's like even if I worked at a company, I would be deciding on which division I want to work in, which boss I want to transfer under based on do I like and do I respect him? That's it. The intention is there. You... Again, these are my rules, not anybody else's. But if this one strikes you, then the way that I would interpret this is, "Wow, who in my life do I not like? Who do I not respect? Do I need to be around them?" Maybe it's not work. Maybe it's the friend that I hang out with socially on Saturdays. Again, we have a choice. Not on everything, but in the things we do have a choice, what a shame if we don't use it.

  19. 1:12:59 – 1:14:02

    don't get caught up in the numbers

    1. RS

    2. SB

      Rule number nine, prioritize time outside the spreadsheets.

    3. RS

      Yeah. Too many nerds love a spreadsheet and they, they go, "I gotta optimize cell B43. B43 never talked back to me."

    4. SB

      (laughs)

    5. RS

      I go, "Ugh, all right, look. Yes, you need to know your numbers. Yes, you should be automatically saving and investing, all that. Yes, do the conscious spending plan." But at a certain point, you won.... the turkey is cooking. You won. You know your numbers, turn the page, get out of the spreadsheet. A rich life is lived outside of the spreadsheet. So, on a personal level, that means I spend less than one hour per month on my finances. It all runs. It's a machine, it's a system. I speak to my wife, we talk once every couple of weeks about money. Besides that, do not spend time tweaking, because the rich life is lived having conversations like this. Seeing friends, seeing my family. That's where I want to live. Not tweaking things endlessly for no marginal gain.

  20. 1:14:02 – 1:29:09

    Talking about money with a partner

    1. RS

    2. NA

      Number 10. You mentioned your wife there. Marry the right person.

    3. RS

      Yeah. Maybe the most important one of all. Um, marriage is the most consequential financial and relational decision we ever make. And people, they're a little weirded out by this rule. They go, "What does this have to do with money?" I go, "What do you mean?" The partner you choose will affect where you live, what you spend on a day-to-day basis, what type of house you buy, if you do, how often you travel, the values, if you have children, that you pass down to kids. Of course it's important. And so these are conversations that if you are starting to date, it's great time. There's natural moments i- in the dating process, or even the relationship process, where you can bring up money. So, it's like the first time you take a vacation together, you take a trip, you go, "Hey, um, just want to... You know, this is on my mind, I'd love to just like put it out on the table. Love that you invited me on this trip, I'm so excited to go. I'm just curious, how were you thinking about paying for the trip? Who, who in your mind pays for it? How would you see us splitting this?" That's a great way to bring it up, and you learn a lot about your partner. Um, there, there are questions you can naturally ask. You know, "How were you raised with money? What do you remember your parents telling you? Here's what I remember about my parents." Genuine curiosity. It also tells you a lot about your partner. And then there's a few other natural moments in a relationship where it just makes perfect sense to talk about money. Uh, when you get engaged, when you get married, uh, if and when you move in together, pre or post-marriage, uh, if and when you have children, there are these natural moments where you get the gift of being able to talk about money.

    4. NA

      Do people talk about money? Couples?

    5. RS

      They talk about it, uh, when something goes wrong.

    6. NA

      Outside of that, what sort of percentage of people, couples, do you, do you think talk about money?

    7. RS

      Rarely. Th- it's very low. I know, I speak to them all the time. I ask them, "When do you talk about money?" They go, "When we're fighting." Or when they talk about it, it's like, it's these grooves that have been created for 40 years. "Oh, every time she goes to Target, she spends too much, ha ha ha ha." And I'm like, "That's not that funny." Like, the running joke between you is that she spends too much at Target?

    8. NA

      Sounds like resentment.

    9. RS

      Yeah. Why not it be something different? So that when you talk about money once a month proactively, you always start off complimenting your partner. You go, "You know what? I really appreciate that, when we travel, you always pick the best flights. I, I have total trust because you always get us there on time, and you pick the flights that are so comfortable, and I just love you for that." That's a great way to reframe how we talk about money. But instead, we often simply do not talk about it proactively. We only talk about it when something is a problem.

    10. NA

      Do you think our partners should know how much money we have?

    11. RS

      When you're married. Probably a little before that as well. Like, uh, I'll tell you what happened with my wife and me. So, in my book, in chapter nine, I talk about how to talk about money and when to talk about money. And first of all, there's a lot of, uh, personal finance experts, they're like, "You should talk about money on date one." I'm like, "Have you guys ever been on a first date?"

    12. NA

      Can you imagine?

    13. RS

      "Who's talking about their asset allocation on the first date?" I'm like, "Get a life." So, uh, she had, um, asked me, like years into our relationship, some 401K question, and I was like, "Read this book. See- learn it, it's in there." So, I knew all about her money, we had talked about her finances, and then as we started getting more serious, one day, she came to me and she said, "I don't feel comfortable because you know everything about my finances and I don't know anything about yours." And that was it. A sobering moment, because I realized I had violated my own rules in chapter nine of talking about money early and proactively.

    14. NA

      Why didn't she feel comfortable?

    15. RS

      She didn't feel comfortable because she felt like I knew everything, and she didn't know anything about me. Being in the dark about your partner and their finances is very uncomfortable. Y- your plan- we were planning to get married. So, what does that mean? Does he have debt? Does he not? Does he have this much money or not? Does he expect me to pay the exact same amount for this apartment because I don't know if I can afford that? There are mil- w- what does it mean for children? What does it mean for our elderly parents? All that stuff. This is what money means. Money is not just a amount in a spreadsheet. It's where do we live?

    16. NA

      Security.

    17. RS

      Security. Who do we get to be? And, you know, security is a really good... That word haunts me.

    18. NA

      Mm.

    19. RS

      Because, uh, we, we... I realized, to my horror, that I had not shared about my finances, so we had a series of conversations, and as we got engaged, um, we had more. We started talking about money a lot. And, uh, I mentioned to my now wife, I said, "It's really important for me that by virtue of me running a business for so long, I've accumulated this business, these assets, and I love you, but it's important for me that we talk about a prenup." And I was very, very scared. I had talked to a lot of friends, and I'm sharing this because prenups are another thing that always happen in the dark, and I don't want that. I want people to shine a light and to understand how these conversations happen, 'cause nobody talks about this. Well, I'm gonna talk about it.So I was nervous. And all the advice online is awful. It's like, um, "Have the conversation." I'm like, "What conversation? What do I say?" Or some people, they tell you to blame your lawyer. My lawyer insisted I have a prenup. I'm like, "If I can't be honest to my soon-to-be wife, what kind of relationship do we have?" So, th- that's what I said to her, and she responded, like, awesome. She was like, "Wow. I didn't expect that. I don't know much about prenups, but I'd be willing to learn more." I said, "Fantastic." So we start talking more about it. We both get lawyers, as you're both required to. And it was going pretty well, until it didn't. And we started really disagreeing about money. And we were... We were just, like, fighting, and she finally said, "We should go see somebody, because this conversation's not going the right direction." And, and I totally agreed with her. So we literally went on Yelp, and we searched, like, "therapist near us," and we found one right there. We went. And we sit down, and this therapist was great. She asked us, "What does money mean to you?" And she asked me first. It's, like, so obvious. Money means growth. Like, I could literally see the compound interest charts in front of my eyes. I know about the rule of 72 and expense ratios. Growth, of course. She asks the same question to my wife. My wife says, "Safety." Like, "What?" That's like somebody saying, "Metal. Money means metal to me." I go, "Huh?" And it was that that we realized, we saw money completely differently. Completely. It explained to me why my wife wanted more money in... just sitting in a checking account. When I go, "But that checking account is losing potential interest. Why would we lower our yield?" Blah, blah, blah. We were looking at it through two totally different lenses. So, that single question was very helpful in us reframing our conversations. It didn't change everything overnight. We still had a lot of conversations we had to have. And even once we got married, we still have conversations now. They're different. They're about spending and investing and prioritizing. But it was a new way for us to look at the way re- related to money.

Episode duration: 1:38:21

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